The operator of Cebu Pacific Air, the country’s largest budget airline, saw earnings fall in 2018 on higher fuel costs and wider foreign exchange losses.
Cebu Air Inc. disclosed to the Philippine Stock Exchange that net income for the year dropped 50 percent to P3.9 billion.
Surging costs during the period offset revenue gains for the airline, which is owned by the Gokongwei family’s JG Summit Holdings.
Passenger revenues for the year rose 8.7 percent to P54.26 billion.
Cebu Air said the gain came as fares increased 5.8 percent to an average ticket price of P2,676 and as passenger volume grew 2.7 percent to 20.3 million in 2018.
Cargo revenues went up 19.3 percent to P5.5 billion while ancillary revenues were also up 6.4 percent to P14.36 billion.
Overall expenses were up 15.8 percent to P67.1 billion.
“The increase was mostly due to the rise in fuel prices in 2018 coupled with the weakening of the Philippine peso against the US dollar,” Cebu Air said.
It noted that flying expenses alone went up 25.4 percent to almost P30 billion as jet fuel costs shot up by 29.8 percent.
The depreciation of the local currency amplified those effects, the budget airline said.
Similarly, foreign exchange losses hit P1.63 billion while interest expenses rose almost 48 percent to P2.1 billion.
With oil prices easing from recent highs in 2018, analysts and industry executives expect better earnings prospects for the commercial aviation industry this year.
Cebu Air ended 2018 with a fleet of 71 planes, comprised of 36 Airbus A320, seven Airbus A321 CEO, eight ATR 72-500, 12 ATR 72-600 and eight Airbus A330 aircraft.
It served 70 local and 38 intentional destinations at the end of 2018 via its hubs in Manila, Cebu, Davao, Clark, Iloilo, Kalibo and Laguindingan.