Cebu Pacific set to take off higher in 2019

MANILA, Philippines — Budget carrier Cebu Pacific is embarking on a major expansion program this year that will put the company on the recovery track.

Cebu Pacific president and chief executive officer Lance Gokongwei said the company has earmarked up to $700 million in capital expenditures this year.

“It will be funded from internally generated funds, plus some borrowings,” Gokongwei said.

Gokongwei said the company also expects its profitability to recover this year.

Cebu Air Inc., operator of Cebu Pacific, reported a P518.4 million net loss in the third quarter of 2018 from a P42-million profit in the same period a year ago. The decline was attributed mainly to fuel prices coupled with the weakness of the peso against the dollar.

“Definitely we see some recovery because previous year was challenging for airlines. I think 2019 looks significantly brighter because first and foremost, fuel prices are stable, the peso is strengthening, but equally important is we haven’t been growing as fast the last two years. This year we’ll be adding 11 percent to 12 percent more seats,” he said.

Cebu Pacific is also set to receive 12 brand new aircraft within the year to support the carrier’s expansion plans.

The aircraft deliveries include six Airbus A321neo, five A320neo, and an ATR 72-600.

“2019 is the year we accelerate growth. On average, we will be receiving one brand-new aircraft per month which we can use to increase capacity in key markets or even launch new routes. For 2019, we expect capacity to grow from low to mid-teens,” Gokongwei said.

With the A321neo boasting of 236 seats, 31 percent more than the capacity of the A320, Cebu Pacific will be able to offer more seats and maximize airport slots.

The aircraft is capable of operating routes in excess of 5,000 kilometers or fly up to seven hours, allowing the carrier to explore new destinations like India, Russia, northern Japan and other cities in Australia.

At present, Cebu Pacific boasts of one of the youngest fleets in the world, with an average fleet age of five years.

Its fleet is currently comprised of an Airbus A321neo, 36 Airbus A320, seven Airbus A321ceo, eight Airbus A330, eight ATR 72-500, and 12 ATR 72-600 aircraft.

By 2022, Gokongwei said Cebu Pacific intends to grow its fleet to 83, 27 of which are A321neos, from 71 as of end-2018.

“Cebu Pacific is expanding rapidly and plays an important part in the transformation of the Philippines’ aviation sector and has played a key role in supporting tourism, trade and business links between the Philippines, the Asia-Pacific and the Middle East,” said Jean Francois Laval, Airbus executive vice president for sales in Asia.

Cebu Pacific is aiming to fly 200 million passengers by 2020 as it expands its route network and upgrades its fleet to bigger and more fuel-efficient aircraft.

Cebu Pacific and subsidiary Cebgo currently fly to 36 domestic and 26 international destinations, with over 107 routes spanning Asia, Australia, the Middle East and the US.