Displaying items by tag: Economy

PAL feels pinch of Mindanao issues

By: Miguel R. Camus - @inquirerdotnetPhilippine Daily Inquirer

Flag carrier Philippine Airlines is bracing for fresh challenges in 2017, as it deals with potential lower traffic following the declaration of martial law in Mindanao apart from fierce competition and the higher cost of fuel, for which cost-savings measures are already being implemented.

PAL president Jaime Bautista said during the company’s annual meeting yesterday that revenues would take a hit after President Duterte ordered martial rule in Mindanao, in response to a Muslim extremist attack in Marawi City.

“The present situation in Mindanao will result in some cancellations and rebookings, which we are now experiencing,” Bautista said, adding these were on both domestic and international flights.

He said it was still too early to asses the full impact, given that the situation in Mindanao had yet to be fully resolved.

“We don’t know yet how much more we will expect,” said Bautista, as he noted that cancellations so far had been minimal.

The issues in Mindanao came as PAL was already expecting operating difficulties in 2017, and in the midst of the airline’s negotiations to take in a foreign strategic partner within the year.

“The outlook is that competition will remain stiff, there is still overcapacity in the market,” Bautista said.

He was mainly referring to the Middle East. PAL announced this week it would suspend flights to Abu Dhabi on July 8 this year. A day after, Cebu Pacific Air said it would also suspend flights to Doha, Qatar; Riyadh, Saudi Arabia and Kuwait over the next two months.

Moreover, higher costs were cutting into PAL’s bottomline. Bautista said the carrier had implemented a freeze-hiring policy on certain positions. He added that PAL would study its fuel hedging policy and implement fuel saving measures.

There was also the option to increase ticket prices, should the cost of fuel continue to rise.

“We may impose higher fares for us to be able to recover additional costs,” Bautista said.

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PAL’s listed operator, PAL Holdings Inc., swung to a loss in the first quarter of 2017 as the airline saw the price of fuel jump by over 50 percent.

PAL Holdings Inc. posted a net loss of P1.13 billion from January to March this year, a reversal of the P2.9 billion profit announced in the same period last year.

The carrier, nevertheless, saw better sales during the period. PAL Holdings said total revenue hit P33.32 billion in the first quarter, up 14.4 percent, as it added more flights and served more passengers. However, this was not enough to offset a steep increase in terms of costs.

Inquirer calls for support for the victims in Marawi City

Responding to appeals for help, the Philippine Daily Inquirer is extending its relief to victims of the attacks in Marawi City

Cash donations may be deposited in the Inquirer Foundation Corp. Banco De Oro (BDO) Current Account No: 007960018860.

Inquiries may be addressed to Inquirer’s Corporate Affairs office through Connie Kalagayan at 897-4426, This email address is being protected from spambots. You need JavaScript enabled to view it. and Bianca Kasilag-Macahilig at 897-8808 local 352, This email address is being protected from spambots. You need JavaScript enabled to view it..

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PHL GDP grows slower than expectations at 6.4% in Q1

 

The Philippine economy grew slower than expectations, expanding by 6.4 percent in the first quarter, the Philippine Statistics Authority reported on Thursday.

It was the slowest phase of growth for the gross domestic product (GDP), since it registered at 6.3 percent in the fourth quarter of 2015.

Socioeconomic Planning Secretary Ernesto M. Pernia attributed the deceleration mainly to the absence of election-related spending. "Growth last year was high due to election spending, impact of which has already dissipated," he said.

"Changing of the guards of the government really took time to settle," the Cabinet official noted.

Pernia said government spending also came in at a slower pace in the first three months of the year.

Overall the economy was slower that what was desired ... "and, for this, we are somewhat downcast because we were expecting something around the midpoint of the growth range 6.5 to 7.5 percent," Pernia said.


Financial markets react

The first quarter GDP compares with the revised 6.8 percent in the first quarter of 2016, and 6.6 percent in the fourth quarter of the same year.

Frustrated by the GDP results, financial markets reacted with a negative note. The peso weakened and shares prices faltered during the morning trade.

COL Financial Vice President and head of research April Lyn Tan noted the declines were a direct reaction to the GDP results. "The market is reacting negatively with the lower-than-expected number," Tan said.

The peso opened 8 centavos weaker at P49.840:$1 from Wednesday's close of 49.760. "Essentially, the peso's decline was a reversal of its prior gain, which was due to initial expectations of strong GDP growth in the first quarter," Land Bank of the Philippines market economist Guian Angelo Dumalagan told GMA News Online.

Pernia, who last month said the economy likely grew by 7 percent in the first three months of the year, noted on Thursday the Philippines remains one of the strongest performers among the major emerging economies in Asia.

"For the first quarter, we overtook Vietnam and Indonesia which grew by only 5.1 percent and Thailand by only 3.3 percent. We are only second to China’s growth of 6.9 percent while India’s number hasn’t come out yet," Pernia told reporters during the press briefing on the National Accounts.


Growth momentum

Pernia is adopting an optimistic view to things. "Moving forward, the domestic economy is poised to maintain growth momentum," he said.

"Government has also been busy laying down a strong foundation," he added, noting the administration plans to invest heavily in infrastructure.

The government intends to spend P8.2 trillion to finance the country's "golden age of infrastructure" over the next six years, with P860.7 billion allocated to big-ticket projects this year.

"Among the many reforms and programs are infrastructure spending as well as other government programs including capital development program," Pernia said.

"We expect construction activities and public spending to pick up sharply," he added. — with Ted Cordero/ VDS, GMA News


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US stocks, dollar tumble as investors rethink 'Trump trade'

NEW YORK - Stocks on major markets and the US dollar sold off while bond yields fell on Wednesday as investors fled risky assets amid uncertainty about US President Donald Trump's ability to deliver on his tax and banking reforms and infrastructure spending.

Reports that Trump asked then-Federal Bureau of Investigation Director James Comey to end a probe into the former national security adviser have raised questions over whether Trump tried to interfere with a federal investigation.

 

US stock market declines accelerated in afternoon trading, and major US indexes ended near session lows. The Dow Jones industrial average fell 372 points, and both the Dow and S&P 500 suffered their worst percentage drops since Sept. 9.

The CBOE Volatility index, the most widely followed barometer of expected near-term stock market volatility, ended above the 15 level in its highest close since April 13. The US dollar index has now erased its post-election gains.

A small but growing number of Trump's fellow Republicans called on Wednesday for an independent probe of possible collusion between his 2016 campaign and Russia.

The news came after a tumultuous week at the White House when Trump unexpectedly fired FBI director Comey and reportedly disclosed classified information to Russia's foreign minister about a planned Islamic State operation.

Optimism over pro-growth economic policies under Trump helped drive a sharp rally in US stocks after the Nov. 8 US election. Even with Wednesday's declines, the S&P 500 stock index is up 10.2 percent since last November's US elections though.

"It's certainly a day when the chickens are coming home to roost," said Donald Selkin, chief market strategist at Newbridge Securities in New York.

"The (equity) bull market is not over by any means, but between the political stuff and the fact that the next earnings season is three months away, there's going to be a lack of motivation."

The Dow Jones Industrial Average was down 372.82 points, or 1.78 percent, to end at 20,606.93, the S&P 500 index lost 43.64 points, or 1.82 percent, to 2,357.03 and the Nasdaq Composite dropped 158.63 points, or 2.57 percent, to 6,011.24.

The Nasdaq had its worst day since June 24. Both the Dow and S&P 500 fell below their 50-day moving averages for the first time since April 21.

While previous threats to Trump's plans have rattled investors, they had failed to cause any significant pull back in stocks. The VIX last week closed at 9.77, its lowest close since December 1993.

Bank stocks, which outperformed in the post-election rally, were the worst hit on Wednesday. The S&P 500 financial sector tumbled 3 percent.

At nearly 18 times forward earnings, the S&P 500 trades at a significant premium to its long-term average valuations of 15 times, according to Thomson Reuters data.

MSCI's gauge of stocks across the globe fell 1.2 percent, while European shares ended down 1.4 percent.

"It's registering with more investors that it's going to be hard to get back on track with the latest allegations," Michael O’Rourke, chief market strategist at JonesTrading in Greenwich, Connecticut.

Prices of bonds, seen as safe-haven assets, rallied, while yields were on track for their biggest daily percentage drops since July.

Benchmark 10-year notes gained a full point in price to yield 2.22 percent, the lowest since April 21, and down from 2.33 percent late on Tuesday.

The dollar index, which tracks the US currency against six peers and had scaled a 14-year peak of 103.82 on Jan. 3, fell 0.6 percent to its lowest level since Nov. 9, surrendering all of its "Trump bump" gains. The dollar also fell by nearly 2 percent against the yen.

In commodity markets, safe-haven gold hit a two-week high, while oil prices were higher. Spot gold rose for a fifth day and was up 1.8 percent at $1,258.38 an ounce.

Brent crude gained 1.1 percent to settle at $52.21 per barrel, while US light crude rose 0.8 percent to settle at $49.07.

Caroline Valetkevitch, Reuters
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