Cebu Pacific bleeds to P5.9 billion loss in H1

MANILA, Philippines — Low-cost carrier Cebu Pacific is feeling the pain of price hikes, especially in jet fuel, as it saw its net loss worsen to nearly P6 billion in the first half.

Based on its financial report, Cebu Pacific’s parent Cebu Air Inc. incurred a net loss of P5.89 billion in the six months to June, a reversal of its P8.97-billion profit a year ago.

Cebu Pacific grew its revenue by eight percent to P68.56 billion, buoyed by an across-the-board growth in passenger, cargo and ancillary segments.

Cebu Pacific’s passenger revenues went up by seven percent to P47.24 billion, as it flew close to 14.5 million guests during the period. The airline’s ancillary earnings also went up by 11 percent to P17.36 billion, while cargo revenues rose by 13 percent to P3.97 billion.

However, these gains were offset by a 23-percent jump in expenses to P68.28 billion. The airline saw its flying operations go up by half to P30.88 billion due to higher jet fuel prices.

It also did not help that Cebu Pacific booked foreign exchange losses of P2.46 billion and higher financing costs of P4 billion for aircraft deliveries and engine purchases.

The bright spot for Cebu Pacific is that it has strengthened its market leadership on local flights, powered by an industry-leading fleet of 102 aircraft.

Based on internal estimates, Cebu Pacific has brought up its domestic market share to 60 percent as of June, from 55 percent a year ago.

Cebu Pacific CEO Michael Szucs said the second quarter has proven to be the most challenging period in post-pandemic years. The period was marked by jet fuel breaching $200 per barrel due to the Middle East conflict.

“The second quarter was one of the most challenging operating environments that we have faced post-pandemic, driven by the unprecedented spike in fuel prices. Despite these external pressures, the demand for affordable air travel remained resilient, revenue continued to grow and we further strengthened our market leadership,” Szucs said.

To expand revenue sources, Cebu Pacific has capitalized on its fleet capacity by lending aircraft to flag carrier Vietnam Airlines from July to September, a lean season for Philippine air travel.

Cebu Pacific is the country’s biggest airline by fleet and passenger size, operating direct flights to 35 domestic destinations and 26 foreign cities.