Philippine Airlines (PAL) income in the first half of the year turned to a net loss of USD25.1 million from a net income of USD136.7 million in the same period last year due to high aviation fuel cost, which is expected to continue to dictate the airline’s financial performance in the second half of 2026.
In a disclosure, the country’s premier flag carrier reported it delivered revenue growth of 5.9 percent to USD1.746 billion and maintained cost discipline in the first half of 2026.
However, these gains were outweighed by a USD219.5 million increase in fuel expenses, driven by the conflict in the Middle East.
Fuel cost increased 48.2 percent year-on-year to USD674.5 million, rising to 39.2 percent of operating expenses from 30.3 percent a year earlier. Non-fuel costs remained well contained, increasing by only 4.1 percent year-on-year.
PAL’s total revenue rose 5.9 percent to USD1.746 billion from USD1.648.0 billion, supported by higher passenger yields and stronger cargo revenue.
EBITDA was USD271.0 million, down 28.5 percent, with EBITDA margin at 15.5 percent compared with 23.0 percent in the first half of 2025.
Passenger volume
The higher air fare and the Middle East situation also discouraged passenger travel. PAL passenger volume declined 3.1 percent year-on-year to 8.2 million in the first six months of 2026, while load factor eased to 78.9 percent from 81.6 percent a year earlier.
For the second quarter, PAL recorded a net loss of USD103.6 million, compared with net income of USD60.2 million in 2Q25, as fuel costs increased 88.2 percent year-on-year to USD422.9 million. PAL moved quickly to mitigate the impact of higher fuel prices through targeted fare and capacity adjustments across its network.
To mitigate the impact of elevated fuel prices, PAL implemented schedule adjustments on selected domestic, Middle East, and regional routes while maintaining a largely stable long-haul international network.
Outlook
The ongoing Middle East conflict remains the key variable for PAL’s second-half 2026 outlook, given its impact on fuel prices, inflation, and travel demand. The Company noted that international demand continued to be robust, while domestic demand has been more affected by higher fares, although domestic operations remain profitable.
“The Middle East conflict has created significant near-term pressure on our fuel costs, and our second-quarter results reflect that impact. At the same time, our first-half performance demonstrates PAL’s underlying resilience. We moved quickly on fare and network adjustments, protected our liquidity, and continued investing in the fleet and partnerships that will strengthen our long-term competitiveness. International demand remains strong, our cost discipline is holding, and we enter the second half with the flexibility to manage through this disruption while staying focused on our strategic plan,” said Richard Nuttall, President of Philippine Airlines.
