Aircraft purchases put pressure on Cebu Pacific

Cebu Pacific saw its nine-month net income drop by 33 percent to P3.4 billion on aircraft-related spending.

The budget carrier, however, saw its total revenues climb by 11 percent to P74.5 billion as passenger volume grew by 13 percent to 17.5 million.

The Gokongwei-led airline, in a statement on Wednesday, explained “margin pressure was driven by increased expenses in relation to the airline’s investment in additional aircraft and engines.”

READ: Cebu Pacific places P1.4-T order for Airbus jets

As of end-September, its fleet has grown to 91 aircraft, or 10 more jets versus the same period last year. The company also invested in 10 additional spare engines to improve operational reliability.

The low-cost airline received two A321neos (new engine option) and a A320ceo (current engine option) in October, bringing total aircraft delivery to 15 so far this year.

Capital expenditures

Cebu Pacific has earmarked P60 billion in capital expenditures for mostly aircraft-related spending this year.

It finalized in September its P1.4-trillion order of up to 152 jets from European aircraft manufacturer Airbus. The airline will start receiving the planes by 2029.

The additional aircraft will allow the low-cost airline to have a bigger foothold outside Metro Manila, such as in Davao, Cebu and Clark.

The Gokongwei-led carrier also purchased the Zobel family’s boutique airline AirSwift Transport Inc. for P1.75 billion last month, allowing it to operate direct flights to El Nido, Palawan.

“Cebu Pacific has a unique opportunity to grow when others cannot. So, despite the short-term impact to margin development, we will be growing rapidly, creating a robust network across the Philippines to expand and strengthen our market presence,” Cebu Pacific chief finance officer Mark Cezar said.

Market share

The airline official said they were expecting to grow their market share to 60 percent in the last quarter of the year to breach prepandemic’s 52 percent.

“Airport and aircraft investments open a significant market potential for Cebu Pacific, and these initiatives allow us to take advantage, as well as contribute to the overall Philippine growth story,” he added.

The Gokongwei-led carrier has also been expanding its routes, as it flew its first Manila-Chiang Mai flight last month. Earlier this year, it also started flights from Manila to Don Mueang in Bangkok and routes from Cebu to Don Mueang, Osaka, Masbate and San Vicente.

This year, the airline targets to fly 24 million passengers, higher than the 20 million registered in 2023. —Tyrone Jasper C. Piad