MANILA, Philippines -  Philippine Airlines expects to post losses for a third year, as the impact of a slow global economic recovery, lower passenger traffic and internal problems beset the country's flag carrier.

"For our fiscal year ending March this year, it will still be a loss, "PAL President Jaime Bautista said on Wednesday.

The airline said previously that it posted better-than-expected revenue for January and February this year.

The ailing airline sustained over $350 million or about P15 billion in losses during the last two fiscal years, while its equity has also dropped significantly to a little over $1.1 million as of February.

Adding to its woes, PAL is still uncertain how to repay $46 million worth of debts maturing in June 7. The debt is part of the airline's outstanding $2.3 billion debt, which has already been pared down to $1billion.

Bautista said the $46 million due next month is a principal payment which is scheduled to be paid once a year.
 
He did not disclose  how the carrier will come up with the payment.  "We will try our best. It's really a challenge."
 
On top of the yearly $46 million repayment, PAL is also paying $10 million monthly to its creditors.

PAL said its efforts to find new investors are being stymied by the impasse between management and PAL employees, currently locking horns over the airline's plans to restructure and lay off 3,000 workers effective June 1. The case is now under the jurisdiction of the Department of Labor and Employment.

PAL wants to push through with the next  phase of its restructuring program, starting with the spin-off of its in-flight catering services; airport services, including ground handling, cargo terminal/cargo handling and ramp handling; and call center reservations.
 
Bautista said restructuring these operations are crucial to the company's survival amid increasing competition.

He said PAL has also been struggling with the unabated liberalization of the commercial aviation industry;  the global crisis that significantly reduced passenger traffic; the continuing increase in the price of aviation fuel, which account for nearly half of PAL's operating expenses.

Bautista said PAL is also affected by the  the downgrade of the Philippine aviation sector to Category II by the United States. This prevents PAL from using brand new long-range aircraft and  increasing its flights to the U.S. It is also reeling from the subsequent blacklisting of Philippine carriers by the European Union, which put into question even those airlines with outstanding safety records like PAL.