Cebu Pacific sees lower profit on virus outbreak

MANILA, Philippines — Cebu Air, the country’s largest budget carrier, expects a drop in profit as travelers postpone travel plans as a result of the deadly coronavirus.

Lance Gokongwei, Cebu Air president and chief executive officer, said customers are refunding tickets as they cancel or postpone trips to China where the virus started. 

“Nobody wants to fly to China at this time,” Gokongwei said.

He said the company might see a decline in profit if the situation stays the same for six months.

“If this lasts for six months, there could be a P3 to P4 billion swing on profit,” he said.

However, he believes this will only be temporary because the search for a cure is already underway.

“We don’t think this will take as long to resolve as SARS as authorities are responding resolutely,” Gokongwei said.

He said it would really be difficult to forecast now because the situation is escalating fast.

Gokongwei said these developments are hurting travel prospects for 2020.

“We can’t forecast because the situation is escalating so fast. We just had an update regarding Taal Volcano three weeks ago and then now, there’s a change in forecast. People don’t want to travel. There’s the Australian bushfires for example and then Taal,” he said.

For now, the company is monitoring the impact of the virus as it might have to temporarily reduce flights to China if planes fly at below capacity. 

China destinations account for 13 percent of Cebu Air’s capacity, Gokongwei said.

In the nine months to September 2019, Cebu Air, which carries the Cebu Pacific brand, more than doubled its profit to P6.75 billion on soaring revenue driven by higher passenger volume and ticket prices.

Revenues grew 17.7 percent to P63.6 billion for the three quarters. Of the total, passenger revenues accounted for the bulk or P46.6 billion, which is up 17.9 percent year-on-year.