Cebu Pacific buys more planes from Airbus SAS

Budget airline Cebu Pacific is  ramping up capacity in the long-haul segment via a new aircraft order from France’s Airbus SAS.

Operator Cebu Air Inc. said in a stock exchange filing Friday that the company had signed a purchase agreement with Airbus for two additional A330-300 planes.

Cebu Pacific said the order was valued at $512.8 million, based on the plane’s list price.

The carrier did not say when the planes would be delivered.

A company spokesperson also did not immediately respond to a request for comment on Friday.

Cebu Pacific already operates six Airbus A330 planes, which are mainly used for long-haul routes like Sydney, Australia and the Middle East, home to a large number of Filipino workers.

That still forms a small part of its fleet of 57 planes, comprised of seven Airbus A319s, 36 A320s and eight ATR 72-500 planes.

The new Airbus deal would add long-range planes to those already on order.

The airline unit of the Gokongwei family’s JG Summit Holdings Inc. said earlier that it was expecting delivery of 32 Airbus A321neo and 16 ATR 72-600 aircraft between 2016 and 2021.

Cebu Pacific also did not detail where it would deploy the planes, although Cebu Pacific CEO Lance Gokongwei had said the carrier was keen on expanding its long-haul business.

Those plans, he said, include their second Australian destination, which would be Melbourne, as well as Honolulu, Hawaii, in the United States.

The aircraft order was in line with the company’s so-called fleet renewal program.

Last May, it sealed a forward sale agreement, or a contract where a price is set to sell an asset at a future date, involving four A319 planes to Allegiant Air, a Las Vegas-based budget airline.

Cebu Pacific earlier agreed to sell six Airbus A319 planes to Allegiant, bringing to 10 the total number of planes sold to the US-based carrier.

Replacing older planes with newer, more fuel-efficient aircraft is an important aspect of a budget carrier’s business model in keeping costs low in an environment where price competition is fierce.

Cebu Pacific’s expansion moves have helped it post continued growth this year, with January to June passenger traffic at over 10 million passengers, up 9 percent compared to the same period in 2015.

The carrier earlier said it was planning to carry 20 million passengers for the whole of 2016, about a tenth higher than the previous year.

Higher passenger volume and lower fuel prices helped the company’s bottom line in the first quarter of 2016. Cebu Air saw its net income during the period jump 81 percent to P4 billion.

Revenues during the period surged to P16 billion, up 13 percent year-on-year. Passenger revenues alone rose by 11 percent to P12 billion, after it carried 4.8 million passengers during the first quarter.