Cebu Pacific operator sees domestic travel recovering soon

With an additional P40.5 billion in its war chest, Gokongwei-led budget carrier Cebu Air expects to emerge out of the COVID-19 pandemic at least 25-30 percent more efficient than it was before the global crisis.

The operator of Cebu Pacific also expects to be one of the airlines with the lowest carbon footprint, Cebu Air chief executive Lance Gokongwei told shareholders of parent conglomerate JG Summit Holdings in a stockholders’ meeting on Friday.

JG Summit posted P122.18 million in first quarter net profit, just a small fraction of the P1.9-billion bottom line in the same period last year, as the prolonged COVID-19 pandemic bludgeoned its airline business.

Despite the much slower business from Cebu Air, group-wide first quarter revenues amounted to P67.6 billion, matching the level seen in the previous year, as the food, real estate and petrochemicals businesses all generated higher revenues.

The group also benefited from favorable foreign exchange and mark-to-market movements as well as from the lower corporate tax regime. The first quarter results also included minimal gains from the sale of a 30-percent stake in Global Business Power Corp.

Excluding the airline business, JG Summit’s first quarter core net income and net income amounted to P5.4 billion and P5.1 billion, respectively up by 18 percent and 88 percent year-on-year.

Despite near-term challenges, Gokongwei expressed optimism that the airline industry would rebound soon, led by domestic travel similar to the recovery now seen in big overseas markets.

“Globally, we have seen that China and US domestic travel have already gone back to 90 percent of their pre-COVID levels, and we’re probably just a few months behind such a recovery,” Gokongwei said.

“This emerging hybrid model where people go on vacation but still work remotely may also help improve demand prospectively,” he said.

Locally, Gokongwei said the government’s efforts to set directions for a unified view on travel restrictions provided a substantial improvement in bookings.