Cebu Pacific sees less profit in first quarter due to high fuel costs

MANILA, Philippines -  Gokongwei-controlled Cebu Air Inc., the operator of the Cebu Pacific (CEB) airline fleet, expects to be less profitable during the first quarter of 2011 compared with the same period last year, mainly due to higher fuel prices.

CEB president and CEO Lance Gokongwei told The STAR that while passenger growth during the January-March 2011 period will be at double-digit level, the growth in revenues will be lower as average ticket prices are lower this year compared to last year.

The lower average ticket prices this year, he explained, are in response to promos launched by CEB’s competitors.

“We will be profitable during the first quarter but less profitable than last year,” he said.

The publicly-listed air carrier is targeting a 12 million passenger count this year, of which nine million will be domestic and three million, international.

CEB currently has a fleet count of 33, of which 24 aircraft are owned and nine are leased. With the delivery of four more aircraft this year, the fleet size will increase to 37. The four will be financed internally and through export credit agency financing, Gokongwei said.

Gokongwei earlier said it will be spending $1 billion in the next four years for the acquisition of 19 Airbus aircraft and domestic expansion, as well as the hiring of 2,000 more employees.

He also said that the company will spend P300 million this year “to promote the Philippines abroad.”

“Cebu Pacific’s main focus in the next few years will be in rapidly growing our international presence, particularly in creating better linkages between the fast-growing North Asian markets of Korea, Japan and Greater China, and the various resorts and tourist destinations here in the Philippines,” he said.

Last year, the airline carried 10.5 million passengers. “This year, we expect that figure to go up to 12 million, of which 10 million would be using the Ninoy Aquino International Airport Terminal 3, nearing the terminal’s rated capacity of 13 million,” he said.

The Gokongwei-led airline will get 16 more Airbus planes from 2012 to 2014. “By the end of 2011, [Cebu Pacific] will be operating a fleet of 37 aircraft, with an average age of less than 2.5 years,” he said. Cebu Pacific operates more than 260 flights daily to 16 international and 33 domestic destinations from four hubs.

Last year, the company posted revenues of P29.09 billion, 24.8 percent higher than the P23.31 billion revenues generated in 2009. Passenger revenues increased 26.4 percent to P24.66 billion during the same period from P19.5 billion, primarily due to the 19.5 percent increase in passenger volume to 10.5 million from 8.8 million in 2009.

The growth in passenger volume was driven by the increase in number of flights year on year and higher seat load factor in 2010.

Total number of flights in 2010 was up by 8.2 percent year-on-year was attributed to the increase in the average fares which moved up 5.8 percent to P2,357 in 2010 from P2,227.

Meanwhile, cargo revenues increased 24.4 percent to P2.096 billion from P1.68 billion.

Operating income last year reached P6.45 billion, 103.9 percent more than the P3.164 billion posted in 2009.