High fuel cost, weak peso pull down Cebu Air profit
The operator of budget airline Cebu Pacific Air saw its profit fall in the first nine months of the year, citing a combination of higher fuel prices and the weakening of the peso.
Cebu Air Inc., which operates Cebu Pacific Air and Cebgo, yesterday disclosed that net income from January to September fell by over 38 percent to P4.38 billion from year-ago level.
The decline came even as Cebu Air’s revenue rose 7.8 percent to P50.33 billion. This was led by a 4.5-percent rise in passenger revenue to P36.9 billion.
Cebu Air said revenue growth was driven by a 2.7-percent increase in passenger volume. For the nine-month period, it carried 14.87 million passengers. Cebu Air said average fares were also up 1.7 percent to P2,483.
Adding to its topline figure were cargo and ancillary revenues, or those referring to nonticket sales like checked-in luggage and onboard meals. Cebu Air said cargo revenue rose 29 percent to P3.29 billion while ancillary revenue jumped 15.1 percent to P10.1 billion.
“Improved online bookings, pricing adjustments and a wider range of ancillary revenue products and services, also contributed to the increase,” Cebu Air said.
Expenses came in 16.7 percent higher at P43.1 billion mainly due to the rise in fuel prices, a major operating cost, along with the weakening of the peso.
Cebu Pacific’s flying expenses jumped 21.2 percent to P17.8 billion.
“This is primarily attributable to the 23.4-percent increase in aviation fuel expenses to P14.59 billion for the nine months to Sept. 30, 2017 from P11.82 billion in the same period last year consequent to the increase in jet fuel prices,” it said.
“The increase in fuel cost was further influenced by the weakening of the peso against the dollar,” it added.
Business expansion also played a role. Cebu Air said its fleet size increased from 56 planes to 62 during the period.
For the rest of the year, the airline aims to carry as many as 20 million passengers. Cebu Air is a subsidiary of Gokongwei-led JG Summit Holdings Inc.
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