​PAL Holdings Inc. 2025 Financial Analysis: Growth Amid Global Headwinds

PAL 2025 ANNUAL REPORT

As of December 31, 2025, PAL Holdings, Inc. (the Group) demonstrates a narrative of operational growth and strategic modernization in a stabilizing post-pandemic aviation market. The following analysis explores the Group’s financial health across its three core pillars, comparing 2025 performance against the previous year.

I. Income Statement: Revenue Growth Amid Cost Pressures

PAL Holdings reported a consolidated net income of ₱10.07 billion for 2025, a 24% increase from ₱8.12 billion in 2024. This growth was achieved despite a challenging global environment.

• Revenue: Total revenues reached ₱183.83 billion, up 3.3% from ₱178.01 billion in 2024.

• Passenger Services: Remained the primary driver at ₱156.93 billion (85.4% of total), growing 1.3% year-on-year.

• Ancillary Revenue: Surged by 25.4% to ₱17.33 billion, driven by ticketing service charges and demand for premium add-ons like seat upgrades.

• Operating Expenses: Increased by 6.0% to ₱169.67 billion. Rising costs were attributed to higher flying operations (₱86.61 billion) and maintenance expenses (₱25.27 billion) caused by global supply chain disruptions and engine reliability issues.

• Operating Income: Stood at ₱14.17 billion, compared to ₱15.03 billion in the prior year.

II. Balance Sheet: Asset Expansion and Fleet Modernization

The Group’s total assets grew by ₱17.36 billion to ₱230.62 billion by year-end 2025.

• Asset Composition: The increase was largely driven by noncurrent assets, which rose 20.2% to ₱183.37 billion due to new aircraft acquisitions (notably the first Airbus A350-1000) and capitalized heavy maintenance.

• Liquidity: Current assets decreased by 22.1% to ₱47.25 billion, primarily due to a reduction in receivables following a deconsolidation event.

• Equity: Total equity increased to ₱45.49 billion from ₱42.88 billion in 2024, bolstered by ₱13.45 billion in retained earnings.

III. Cash Flow Statement: Funding Future Capacity

The Group's cash position remained stable, with cash and cash equivalents at ₱25.97 billion as of December 31, 2025.

• Investing Activities: PAL continued its aggressive fleet revitalization, marking a milestone with the arrival of its first Airbus A350-1000 in December 2025.

• Financing Activities: The Group secured ₱4.09 billion ($69.52 million) in pre-delivery payment (PDP) financing for five additional A350-1000 aircraft.

• Debt Profile: The ratio of floating-rate long-term loans to total borrowings increased to 0.83:1 (from 0.75:1 in 2024), indicating higher sensitivity to global interest rate movements.

PAL 10Y DATA

The Bull Case: Reasons for Optimism

• Operational Excellence: Ranked No. 1 in On-Time Performance (OTP) among Asia-Pacific carriers with an 83.12% rate.

• Market Dominance: Strong structural demand from the expanding domestic middle class and regular "Visiting Friends and Relatives" (VFR) traffic from millions of Global Filipinos.

• Modernization: Investment in fuel-efficient A350-1000 aircraft enhances long-haul competitiveness and cargo capacity.

The Bear Case: Potential Risks

• Macroeconomic Volatility: Significant exposure to US Dollar fluctuations and rising global interest rates could inflate debt service and operating costs.

• Regional Instability: Airspace closures due to Middle East conflicts (beginning February 2026) may cause flight cancellations, longer routes, and higher fuel consumption.

• Supply Chain Disruptions: Ongoing global engine reliability issues and extended maintenance turnaround times continue to pressure operating expenses.