Biggest Aircraft Order To Date
Aircraft delivery begins 2028
3 July 2024
Low cost carrier Cebu Pacific (CEB) has signed a Memorandum of Agreement (MOU) with aircraft manufacturer Airbus for 152 A321neo jets valued at a US$ 24 billion (PHP 1.4 trillion) based on list prices.
The agreement includes firm orders for up to 102 A321neos, along with purchase rights for an additional 50 A320neo family aircraft, all powered by Pratt & Whitney GTF engines.
The CEB order is slated to be firmed in October 2024 with delivery schedule starting 2028 to 2035.
"The order is designed to provide Cebu Pacific with maximum flexibility to adapt fleet growth to market conditions, with the ability to switch between the A321neo and A320neo,” said Cebu Pacific’s Chief Executive Officer Michael Szucs said on Tuesday.
Cebu Pacific Chairman Lance Gokongwei revealed that the European aerospace company offered a better deal than US-based manufacturing firm Boeing.
Gokongwei said they decided to stay with Airbus and engine company Pratt & Whitney, both of which they have worked with for many years now.
“Our partners at Airbus and Pratt and Whitney have worked very closely with us and are giving us choices which will enable us to support the aviation and tourism industry,” he said.
“Pratt & Whitney is beginning to resolve the issues,” Gokongwei said, referring to maintenance issues on its geared turbo fan engines.
“We're confident the problems will be resolved over time. And they have a very long term contract with us to support these engines.” Gokongwei said.
Mr. Gokongwei also discloses that PW jet engines make up around 50% of the sticker price of A320neo family aircraft. For the nominal $129-million tag for an A321neo, that means around $65 million is for the two jet engines that power it.
Other reasons, Gokongwei cited, are the good feedback from passengers on their current planes, as well as Airbus jets being more fuel-efficient.
“We are already a very happy operator of Airbus. Passengers’ satisfaction with the aircraft is very high and also, I guess the most sustainable and fuel-efficient aircraft there is,” he asserted.
He still thanked Boeing as well as engine companies CFM and GE for participating in the talks after the airline issued an RFP or request for proposal.
The airline hinted that its early delivery schedule swayed Cebu Pacific from considering Airbus against Boeing due to the highly publicized troubles besetting the US plane maker preventing it from expanding capacity.
“In the end, planes have been strong performers for us on a cost per available seat kilometer, in terms of passenger comfort and sustainability, aside of course from those hiccups with the Pratt & Whitney engines,” Gokongwei said.
The airline operates a fleet of more than 73 aircraft, consisting of eight Airbus 330s, 37 Airbus 320s, 22 Airbus 321s and 15 ATR turboprop aircraft enabling the widest network coverage in the Philippines.
Cebu Pacific is also expecting to receive 17 more aircraft from 2024 from its orders made in 2018.
“Our current plane orders end in 2027, I think,” he said, before the new batch of planes arrive between 2028 to 2035. “May outstanding [deliveries] pa kami.” Gokongwei explains.
The airline currently serves 35 domestic and 24 international destinations across Asia, Australia, and the Middle East.
Szucs said the new order will replace all the existing narrow-body fleet when their leases expire in about 8 years after delivery, and the excess shall be an expansion fleet that fly from the new airport in Bulacan, as well as Clark, Cebu, Davao, Bohol, Kalibo, and other gateway points across the country.
“Definitely, with more destinations to fly you, you’ll need more planes,” Gokongwei adds.
“Hindi na Manila na lang. There are more alternatives.”
