Fitch assigns PAL BB rating, stable outlook

PHILIPPINE AIRLINES (PAL) has received a BB issuer rating with a stable outlook from Fitch Ratings, reflecting the flag carrier’s position in the Philippine aviation market, diversified route network and financial flexibility.

“PAL’s rating reflects its leading market position in the domestic and international air passenger markets in the Philippines, where it is the flag carrier,” Fitch said in a statement on Thursday.

The rating company said PAL’s business profile is supported by its network diversification, business mix, operating efficiency and fleet expansion strategy.

“PAL’s business profile is supported by its diversified network and business mix, stronger cost-efficiency as a hybrid airline with its sister company Air Philippines Corp. and prudent fleet expansion strategy,” Fitch said.

Fitch said PAL remains the only full-service domestic carrier in the Philippines, holding about 30% of the domestic passenger market and 23% of international passenger traffic to and from the country.

The debt watcher added that PAL has maintained its market position despite capacity and slot constraints at Ninoy Aquino International Airport.

Fitch said the rating is constrained by weaker earnings before interest, taxes, depreciation, amortization and rent or restructuring costs (EBITDAR) fixed-charge coverage. However, it noted that the airline’s balance sheet and liquidity profile help support the rating.

The assessment comes as PAL seeks to strengthen its international network and improve connectivity with overseas markets.

Earlier this month, the airline joined the oneworld alliance, allowing it to offer passengers access to a broader network through partner carriers.

For the first quarter, PAL Holdings, Inc., the airline’s parent company, posted attributable net income of P4.28 billion, down 1.15% from a year earlier.

Shares of PAL Holdings were unchanged at P3 each. — Ashley Erika O. Jose