Cebu Pacific expects to post profit this year

As it reels away from $30 million loss in 2008

Written by Lenie Lectura

22 July 2009

GOKONGWEI-LED Cebu Pacific may post a turnaround this year from a net loss of P3.26 billion last year, despite forecasts of a bleak second-half performance. In a talk with reporters yesterday, Cebu Pacific president and chief executive officer Lance Gokongwei said passenger traffic and revenues both grew from the period January to June this year. But the remaining months of the year could be “tough,” he said. “Our revenues for the first half of the year grew by about 20 percent. We are profitable,” said Gokongwei. The airline is due to report its financial performance next month. He said Cebu Pacific is “very close” to meeting its target of 9 million passengers this year. In fact, passenger traffic grew by 30 percent to 4.4 million since the start of the year until June, registering 4.4 million. Gokongwei said this was aided by the removal of fuel surcharge for both domestic and international flights. Cebu Pacific passengers now pay only for the fare and government taxes. “Consumers are price sensitive. When you reduce the prices, definitely more will avail. The market, in fact, grew by 30 percent,” said Gokongwei. The airline celebrated its first-year anniversary of moving its entire operation to Terminal 3 of the Ninoy Aquino International Airport (Naia) yesterday. The transfer of its domestic and international operations bodes well for the airline as it resulted in a 23-percent passenger growth in 2008. “We expect to increase our passenger numbers from 9 million this year to 15 million in 2013,” he added. Cebu Pacific transported 6.74 million passengers last year. With more planes arriving, coupled with cheaper fares, the airline is confident that it will report a net profit this year. While Gokongwei acknowledged that the remaining months of the years could be challenging to Cebu Pacific, he is nonetheless confident that the airline will post profit this year. “The next six months is going to be tough. We expect that because there’s off-peak season, higher fuel prices and low yields. But we still expect to be profitable,” said Gokongwei. Fuel cost is the single-largest cost for Cebu Pacific. Cebu Pacific currently operates 21 brand-new aircraft from the A320 family with an average fleet age of just 1.9 years. It expects the delivery of two ATRs this year and two Airbus planes next year. “We expect 15 more Airbus to be delivered from 2011 to 2014. But for this year until 2014, 17 Airbus and two ATRs will come in,” said Gokongwei. The airline is also looking at new routes this year, particularly Brunei. “We applied for rights to fly to Brunei. We are also looking at additional routes in Japan and in South Korea,” added Gokongwei.