Losses pile up for Cebu Pacific operator as pandemic prolongs

MANILA, Philippines — The struggle continued for Cebu Air Inc., operator of budget carrier Cebu Pacific, as pandemic-induced losses widened in the first semester of 2021 while threats from fast-spreading coronavirus variants make recovery outlook murkier.

Cebu Air is still bleeding over a year since the pandemic upended the entire aviation industry, with net losses ballooning 50.9% year-on-year to P13.8 billion in the first six months of the year, the company told the stock exchange Wednesday.

Revenues from January to June fell 66% on-year to P5.9 billion, a decline that started when the pandemic triggered crippling lockdowns and intense contagion fears that smashed global travel demand. Although travel restrictions have eased in some destinations, Cebu Air said flight operations are “still far behind normal activity level”.

Broken down, the overall revenue slump was mainly due to sagging passenger revenues, which plummeted 82.4% year-on-year to P2 billion in the first six months. During the period, passenger volume declined 73.4% from a year ago to 1.2 million. Cebu Pacific tried to attract travelers by offering discounted airline tickets, pushing down average fares by 33.7% year-on-year to P1.7 million and contributing to the revenue fall.

Reduced passenger and flight volumes likewise sent ancillary revenues falling 70.6% on-year to P1 billion in the first six months, figures showed.

Only cargo revenues registered growth in the first half, climbing 26.7% on-year to P2.8 billion “due to higher yield from chartered cargo services and slight increase in kilograms carried”. Cebu Pacific was one of the airlines tapped by the national government to deliver vaccine shipments.

At this point, Cebu Air said it would be difficult to predict when the company would finally take off from a pandemic-led crash. The government recently prohibited tourist activities in some areas and imposed travel ban on different countries after detecting the highly contagious Delta variant in the Philippines.

“Given the volatile nature of this situation and the uncertainty as to when operating and demand conditions will improve, it will be premature to provide any guidance with respect to expected impact in succeeding periods,” Cebu Air said.

The weak operations of Cebu Pacific came with reduced expenses. In the first half, operating costs went down 23.6% annually to P18.6 billion. The company said it had to cut advertising costs and let go 800 of its workers to reduce expenses.

To stay liquid amid hard times, the airline earlier this year raised $500 million, with private investors pitching in half of that amount.  A syndicate of state-run and private sector banks also lent P16 billion to the company.

Shares in Cebu Air inched down 0.44% to end trading at P45.30 apiece on Wednesday.