Cebu Air capex set at $280M

Cebu Air Inc., which operates the country’s biggest budget airline Cebu Pacific and its sister-firm Cebgo, has budgeted about $280 million for capital spending this year, mainly to buy new planes, company CEO Lance Gokongwei said.

The amount is higher than the $250 million it spent last year, and will be used for the payment of four new mid-range Airbus A320s and “pre-delivery” payments of ATR aircraft.

Cebu Pacific needs new planes as it expands its routes in the Philippines, where it controls about 60 percent of the market, apart from reaching more destinations abroad.

Recently, the carrier said it would at least double its fleet of short-range ATR72-600 planes, which were ordered during the Paris Air Show. Cebu Pacific ordered 16 ATR planes while sealing an option for 10 aircraft more.

The 26 planes have a list price of $673 million. Deliveries will start in the third quarter of 2016 and will run through 2020.

“There are a lot of islands and communities that cannot be reached by jet and second, there’s a limitation on slots in Manila,” Gokongwei said on the carrier’s decision to buy more ATRs.

On the long-haul business, the company has launched direct flights to Sydney, Australia as well as to the Middle East, most recently to Doha, Qatar.

New planes will also help the group hit its target of over 18 million passengers in 2015.

Cebu Air, a subsidiary of Gokongwei-led JG Summit Holdings, earlier reported that net income in the three months ending March jumped 1,255 percent to P2.23 billion as revenues rose and jet fuel prices fell.