Cebu Pacific locks in record P1.4 trillion Airbus plane order

MANILA, Philippines — Low-cost carrier Cebu Pacific will purchase as many as 152 aircraft from aviation giant Airbus for $24 billion, or roughly P1.4 trillion, to mark the largest plane order in Philippine history.

Cebu Pacific yesterday signed a binding memorandum of understanding with Airbus, placing an order for 152 narrow-body planes in the make of A321neos for $24 billion, based on list prices.

The memorandum signed with Airbus covers firm orders for 102 A321neos, including 50 purchase rights, reinforcing the strength of Cebu Pacific’s fleet for future demand.

Likewise, Cebu Pacific selected aviation supplier Pratt & Whitney to provide the jet engines for the new aircraft to be delivered by Airbus. The airline owned by the Gokongweis chose Pratt & Whitney as its engine supplier despite production issues it faced with the company.

Cebu Pacific CEO Michael Szucs said the airline chose to fly with Airbus in the long run given the flexibility the supplier can provide. Currently, Cebu Pacific manages a fleet made up of Airbus aircraft, with the exception of a few turboprops from ATR.

“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,” Szucs said.

“When finalized, the deal will be a significant milestone for the local airline industry and will be a testament to Cebu Pacific’s unwavering commitment to support the Philippines’ growth story,” he added.

Cebu Pacific will negotiate with Airbus over the next few weeks to finalize the transaction, targeting to firm up a purchase agreement within the third quarter.

Prior to reaching a decision, Cebu Pacific was also considering buying from Boeing even though the aircraft maker known for the 777s is facing a safety crisis in the US. Last January, a Boeing 737 Max flown by Alaska Airlines saw its door panel blow out in the middle of a flight.

The model in concern, the 737 Max, competes with the A320neo family, one of the most popular aircraft owned by Philippine carriers like Cebu Pacific.

As a result of the 737 Max issue, Boeing had to bid goodbye to some of its executives, leading to a management shakeup.

For Cebu Pacific, choosing Airbus as its supplier makes sense given its longstanding background of transacting with the manufacturer based in Toulouse, France.

Cebu Pacific currently operates one of the youngest fleets in the world, managing eight A330s, 39 A320s and 21 A321s, on top of 15 turboprops, allowing it to fly to 35 domestic routes and 25 international cities.