Net profit of Cebu Pacific down on big forex losses

Cebu Air Inc., which operates budget carrier Cebu Pacific Air, saw a steep profit decline in the second quarter of the year despite higher revenues as foreign exchange losses ballooned due to the weakening peso.

Cebu Air said net income during the quarter declined 66.7 percent to P257.34 million from the same period in 2012, pulling down profits in the first half to P1.41 billion, a decline of 18.5 percent.

The company posted foreign exchange losses of P1.43 billion in the second quarter. For the first half, foreign exchange losses stood at P1.35 billion.

The peso ended the first half at 43.20 against the dollar from 41.05 at the end of 2012. The company’s exposure to currency volatility was through its long-term foreign-denominated debt, which it used to buy new planes.

Those losses weighed on higher revenues, which were propped up by an increase in passengers using Cebu Pacific as well as higher average ticket prices.

Revenues in the first half hit P21.73 billion, up 10.1 percent, while expenses grew 3.2 percent to P18.89 billion.

The biggest revenue contributor was still its passenger business, which contributed P16.98 billion, up 8.5 percent as volumes hit 7.5 million passengers, an increase of almost 8 percent. Cebu Air said average rates increased 0.6 percent to P2,270.

For the second quarter, the company’s revenues hit P11.18 billion, up 7.67 percent. These gains came even as one of the company’s aircraft in June 2 veered off the runway upon landing at the Davao International Airport, causing the facility to halt operations for two days. None of the passengers were hurt and pilot error was later determined to be the cause of the accident.

Meanwhile, the airline’s cargo business also grew 8.7 percent to P1.23 billion in the first half.

Cebu Pacific had a fleet of 44 planes at the end of June. This was mainly comprised of 10 Airbus A319s and 25 Airbus A320s, both medium-range models. The airline also operates eight short-range ATR 72-500s and has obtained its first long-range Airbus A330.

Cebu Air shares gained 1.51 percent to P67.05 on Wednesday.