Cebu Pacific cuts losses in Q3

MANILA, Philippines — Cebu Air Inc., the operator of budget carrier Cebu Pacific, slashed its net loss to below P3 billion in the third quarter although it is struggling to deal with the peso’s decline that is pushing up its debts in foreign currency.

In its financial statement, Cebu Air said that its net loss dropped by 69 percent to P2.54 billion in the third quarter from P8.2 billion a year ago, driven by a triple digit jump in its revenue with the surge in demand for air travel.

Between July and September, revenue generated by Cebu Air rose five-fold to P16.85 billion, outpacing the more than double growth in expenses to P19.89 billion.

Likewise, Cebu Air has trimmed its net loss for the year to P12.05 billion as of September from P21.99 billion during the comparable period in 2021. The Gokongwei-led airline saw its revenue pick up four-fold to P37.53 billion, with expenses spiking 74 percent to P48.73 billion, attributed to the restoration of flights both here and abroad.

Cebu Air said that revenue has taken an upward trend after mobility restrictions were lifted in March. As a result, Cebu Pacific managed to expand not only passenger travel, but also cargo volume, with the removal of border limits across the Philippines.

“The group has restored almost the same level of pre-pandemic system-wide capacity following the continuous ramp-up of its domestic and international routes,” Cebu Air said.

“Currently, the group is expecting the level of demand to increase further for airline services not just within the Philippines, but even abroad,” it added.

However, Cebu Air said the peso’s weakening against the US dollar is dragging efforts to return to profitability, especially as it increases the value of debts denominated in foreign currency.

Based on records, foreign exchange losses incurred by Cebu Air doubled to P3.86 billion in the nine months to September from P1.83 billion a year ago. On top of this, the airline said that it is taking a beating from elevated cost of jet fuel and rising interest rates worldwide.

“The group’s equity position has declined due to the net loss recognized during the period. The net loss recognized was mostly attributable to significantly higher fuel prices, foreign exchange losses, and interest costs,” Cebu Air said.

In spite of this, Cebu Pacific chief financial officer Mark Cezar said the budget carrier would rely on the recovery in passenger traffic to improve its finances moving forward.

“We remain cautiously optimistic that through our ongoing initiatives, coupled with the sustained increase in passenger traffic, we will soon see better days ahead,” Cezar said.