CebuPac allots P14.1B for capex

MANILA, Philippines - Budget airline Cebu Air Inc. (Cebu Pacific) has earmarked P14.1 billion for its capital expenditures this year as it is gearing up for long haul flights to the US and Europe.

Cebu Pacific president and chief operating officer Lance Gokongwei said during the company’s stockholders’ meeting Thursday that the low cost carrier is now undertaking feasibility studies for the acquisition of larger planes for direct flights to the US and Europe.

“Still in feasibility studies, we are getting the basic data from manufacturers and assessing whether there is a business case to fly there. We are in constant contact with all manufacturers, even smaller ones,” Gokongwei said.

The P14.1-billion capital expenditures of Cebu Pacific forms part of the P44.2 billion budget earmarked by JG Summit Holdings Inc. for its expansion this year.

Cebu Pacific is in the middle of a $4 billion refleeting program involving the acquisition of around 50 Airbus aircraft. It has a current fleet of 50 Airbus aircraft and expects the delivery of 11 A320 aircraft, 30 A321 NEO and two A330 between this year and 2021.

Between 2014 and 2021, Cebu Pacific is scheduled to return the lease of eight A320.

The budget airline expects the delivery of 11 A320 aircraft, two A320, three A321 NEO aircraft and at the same time return four leased aircraft until 2017 bringing its fleet to 62.

Gokongwei said positive developments for the country’s aviation industry include the lifting of the ban on Cebu Pacific and Philippine Airlines Inc. (PAL) from entering the European airspace implemented by the European Union (EU) in 2010.

Another positive development is the decision of the US Federal Aviation Administration (US-FAA) last April 9 to upgrade the aviation safety rating of the Philippines back to Category 1 after being downgraded to Category 2 in 2008.

The Gokongwei-led airline is looking at flying to Guam within the year and Hawaii next year and is also considering London, Paris, Amsterdam, among others in Europe.

Cebu Pacific is set to mount four weekly flights to Sydney in Australia starting Sept. 9 and three weekly flights to Kuwait in the Middle East starting Sept. 2.

The budget airline operates an extensive route network serving 60 domestic routes and 34 international routes with a total of 2,231 scheduled weekly flights. It operates from six hubs including the Ninoy Aquino International Airport (NAIA) Terminal 3; Mactan-Cebu International Airport ; Diosdado Macapagal International Airport (DMIA) in Clark, Pampanga; Davao International Airport; Iloilo International Airport ; and the Kalibo International Airport .

It expects earnings to pick up after plunging in the first quarter of the year amid the integration of newly acquired Tiger Airways Philippines as well as the continued weakening of the peso against the greenback.