Flight restart in June offers little reprieve to Cebu Pacific
MANILA, Philippines — Gokongwei-led Cebu Air Inc. took a turn for the worse on the first half of the year as losses mounted due to the coronavirus pandemic that kept most of its fleet grounded. A gradual recovery is seen from reopening routes.
In a disclosure on Wednesday, the budget carrier reported net losses amounting to P9.14 billion from January to June this year, a massive reversal of the P7.15 billion profits same period a year ago.
Losses worsened from the first three months of the year, when during the latter part of the period, the government declared a sweeping community quarantine that closed down airports and enforced travel barriers to contain the virus spread. The shutdown’s impact was so severe, Cebu Pacific slashed its workforce by a quarter.
“While some sporadic arrangements for sweeper flights to assist with stranded tourists did occur, for the most part, the Group’s operations were virtually nil until April when some cargo flights within the Philippines and eventually to countries like Japan, Thailand, China, Hong Kong recommenced,” the company said.
As the Philippines began to ease quarantine controls last June, Cebu Pacific returned flights to 25 of its 78 domestic routes in seven hubs located in areas under general community quarantine, providing relief to the bleeding. “The Group will continue to expand its operations as more local governments welcome flights into their cities,” the airline said.
Shares at Cebu Pacific closed up 2.15% to P41 apiece on Wednesday.
Broken down, revenues for the first six months plummeted 61.2% annually to P17.33 billion. Of that amount, P11.51 billion was generated from passenger flights, down a bigger 65.5% on-year as passenger traffic more than halved to 4.5 million from last year.
Earnings from revenue operations, meanwhile, slipped 21.7% year-on-year to P2.22 billion in the same six-month period, incurred as a result of a 52.4% drop in cargo volumes. Ancillary revenues decreased 57.7% annually to P4.9 billion.
On the flip side, earnings also sank 32.2% from year-ago levels to P35.89 billion “mostly driven by the suspension of the Group’s operations due to the COVID-19 global pandemic,” Cebu Pacific said. The peso appreciation, as well as decline in global oil prices, also helped temper disbursements by lowering imported fuel costs.
Broken down, January-June expenditures from flying dropped 53.6% on-year to P8.15 billion, that from aircraft servicing shrank 48.8% annually to P2.17 billion, maintenance costs by 13.9% to P561.08 million, and costs from foreign exchange swings by 11.5% year-on-year to P8.17 billion.
“The Group’s cash requirements have been mainly sourced through cash flow from operations which was significantly reduced due to the current COVID-19 situation,” Cebu Pacific said, even as the airline assured investors of its “strong” financial position.
The budget carrier, as well as other local airlines, have pleaded to the government for a direct financial rescue to prevent collapse and layoffs. The Duterte administration, however, has rejected cash intervention to salvage firms, opting to let banks lend them money instead.
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