CebuPac Q1 profit plunges

MANILA, Philippines—The country’s largest budget carrier, Cebu Pacific, saw a drastic 86-percent decline in profit during the first quarter due to higher expenses from its long-haul service to Dubai, while foreign exchange losses offset revenue gains.

Cebu Pacific said in its disclosure to the stock exchange that net income during the period went down to P164.16 million, from the P1.16 billion registered in the same period last year.

Still, Cebu Pacific saw its revenues rise by 11.6 percent to P11.76 billion during the period. Passenger revenues alone reached P8.85 billion—8.3 percent higher year-on-year.

The rise was brought on by the 7.1 percent increase in passengers flying Cebu Pacific. The airline also managed to increase ticket prices by 1.1 percent to P2,337 on the average.

Cebu Pacific said it added more planes, including wide-body Airbus A330 aircraft, which it uses for its Manila-Dubai route.

That increase also contributed to operating expenses, which came in at P11.25 billion—up 22 percent during the quarter. The increase was due to Cebu Pacific’s “expanded operations with the launch of its long haul services last October 2013, and growth in seat capacity from the acquisition of new aircraft.”

Cebu Pacific said operating income was thus lower by 61.2 percent to P512.38 million. The weakened peso during the period also brought foreign exchange losses to P193.65 million.

Cebu Pacific CEO Lance Gokongwei said in March that earnings in the first half of 2014 would be weighed down by higher costs on foreign exchange volatility. The company, nevertheless, said it would continue its strategy to expand long-haul routes despite the tough competition. It started this segment with flights to Dubai last October. It is now eyeing flights to Saudi Arabia and Australia.

Gokongwei also said the airline was studying flights to Guam and Hawaii, as well as European cities, due to the lifting of flight restrictions last month.