Philippine Airlines said Thursday the United Kingdom’s exit from the European Union may reduce revenues from London operations by $4 million this year mainly because of the devaluation of British pound.
“It’s too early to make any conclusion on the ‘Brexit’ although one of the immediate effects of ‘Brexit’ is the devaluation of the pound sterling and if there is a devaluation, the purchasing power of the citizen of that country is diminished,” PAL president and chief executive Jaime Bautista told reporters after the annual stockholders’ meeting.
“So one possibility is that, the people from the UK, the British will, maybe think twice before they pursue their trip overseas because it becomes more expensive for them to travel,” he said.
Government data showed tourist arrivals from the UK accounted for 2.7 percent in 2010 to 2015, growing by 9.3 percent annually.
The annual deployment of Filipino workers to the UK accounted for 0.26 percent of the total in 2010 to 2014. New hires to the UK consisted mostly of nurses, at 88 percent in 2014.
Bautista said an 8-percent devaluation of the British pound sterling would mean an 8-percent or $4 million reduction in the airline’s revenue from London operations.
“We are expecting to generate around $50 million of income from our UK operations and with an 8 percent, it’s more or less $4 million reduction for our London operations,” he said.
Bautista, however, said there was a “positive side” about the Brexit as “Filipinos can now go to UK and we can spend more.”
PAL expanded its operations between Manila to London to daily flights on June 28, from four-times-weekly previously.
“We are not making money in London yet. But the reason for adding flights is for us to be able to compete with the other carriers [and] we have to improve our product. The four times a week is not really a good product. By the way, we compete with all the European carriers, with the Middle East carriers,” Bautista said.
PAL has a 30 percent market share in Manila to London route.
Bautista also said tPAL was still pursuing its plan to expand its operation in Europe by 2018.
“The plans for Europe is for 2018 so maybe it’s too early to react to that. Because I think this will normalize also. And the exit will take like two years,” he said.
PAL had plans to fly to Paris, Rome and Amsterdam.
PAL earlier reported a comprehensive income of $134.42 million in 2015, up 560 percent from $20.38 million in 2014. Revenues rose to $2.38 billion last year from $2.28 billion in 2014.
PAL flew 11.93 million passengers in 2015.