Cebu Pacific buys out Ayala airline for P1.75 billion

MANILA, Philippines — The Gokongweis are making a big bet on the growth potential of domestic travel as their budget carrier Cebu Pacific has bought out boutique airline AirSWIFT Transport Inc. for P1.75 billion.

After placing a massive $24 billion order for 152 aircraft, Cebu Pacific is taking another step to spread its wings in the domestic market, this time acquiring full ownership of AirSWIFT from Ayala Land Inc. (ALI) Capital Corp.

The STAR learned from aviation sources that Cebu Pacific and ALI Capital are scheduled to sign a share purchase agreement today, to formalize the P1.75-billion transaction.

For Cebu Pacific, the acquisition means boosting its fleet with five turboprops from AirSWIFT, three of which are ATR 72s and two are ATR 42s. As a result, Cebu Pacific grows its turboprop fleet to 20, building up its capability to reach island destinations.

The buyout also brings Cebu Pacific to a new route in El Nido, Palawan, cementing its reputation as the carrier with the widest domestic reach. Currently, the carrier covers the paradise province of Palawan through Busuanga (Coron) and Puerto Princesa.

Moreover, AirSWIFT provides Cebu Pacific with another revenue driver, potentially to the tune of billions of pesos.

Prior to the pandemic in 2019, AirSWIFT delivered P1.68 billion in revenue for ALI Capital. It can do that for Cebu Pacific now that the air travel market is flourishing.

Based on figures from the Civil Aeronautics Board, AirSWIFT carried a record 355,458 passengers in 2023, breaching its pre-pandemic peak of 321,523 in 2019.

Further, AirSWIFT has flown 254,667 guests to their respective destinations as of June, putting it on pace to book another all-time high. This upside is what excited Cebu Pacific the most during the negotiations, given that on its own, it is also trying to reach historic numbers.

For ALI Capital, the sale allows it to focus resources on core businesses in line with the broader strategy of the Ayala Group to divest assets. Sources said the Zobels trust the Gokongweis to find a cost-efficient way to make AirSWIFT flights affordable.

The buyout also marks another successful deal between the two families following the merger of Ayala-led Bank of the Philippine Islands (BPI) and Gokongwei-run Robinsons Bank Corp., with BPI as the surviving entity.

Although Cebu Pacific is taking over AirSWIFT, ALI Capital will remain owner and operator of the Lio Airport in El Nido.

Likewise, The STAR learned that Cebu Pacific has no plans to make drastic changes in the flight schedules and services of AirSWIFT for the convenience of passengers.

Given this, travelers booked with AirSWIFT can expect to take their flights without disruption. AirSWIFT operates El Nido flights from Manila and Clark, and also mounts connections to other destinations, particularly Boracay, Cebu, Coron and Panglao, from El Nido.

Sources said AirSWIFT would run as a wholly owned subsidiary of Cebu Pacific for now, as its integration will be gradually done over time to ensure continued service. However, Cebu Pacific would have to eventually reassess the network, as some of AirSWIFT’s routes are already served by regional unit Cebgo Inc.

In July, The STAR broke the story that the Gokongweis are negotiating with the Zobels to buy out AirSWIFT to scale up Cebu Pacific, which is working on fleet and network expansion.

Last week Cebu Pacific signed with Airbus the purchase order for the largest aircraft acquisition in Philippine history, amounting to $24 billion for up to 152 jets.

Cebu Pacific stands in the domestic scene as the biggest airline by passenger volume, and it is eyeing to fly a record 24 million travelers this year.