Cebu Pacific to invest $1.4 billion on 22 new planes

MANILA, Philippines - Gokongwei-owned Cebu Pacific (CEB) is investing at least $1.4 billion over a five-year period, including this year for the acquisition of 22 new aircraft, in anticipation of a 50 percent growth in the number of its passengers by 2013.

The 22 brand-new Airbus 320 aircraft will be delivered from 2010 until 2014. On top of an existing order of 15 A320s, CEB president Lance Gokongwei said they have an additional firm order of seven A320s.

The new aircraft will be financed from internally generated funds, loans, and export credit agencies. A planned initial public offering by IPO, proceeds of which were partly intended to finance the pre-delivery payments, has been deferred until after the May elections.

“Our aircraft expansion does not depend on the IPO,” Gokongwei pointed out.

But aside from the seven additional firm orders for A320s, he disclosed that they received seven more options for additional aircraft.

From an expected 10 million total passengers flown this year, CEB expects to fly 13 million passengers by 2012, growing further to 15.1 million by 2013. “We are expecting 28 percent more passengers for us in 2010 compared with 2009 in an industry that is growing at a rate of 15 to 20 percent,” he said.

Gokongwei also said that they expect first quarter 2010 revenues for CEB to grow 35 percent to P7.2 billion compared to the same period last year.

Meanwhile, for the whole of 2009, CEB’s top official said revenues grew 30 percent compared to last year. “Operating earnings are expected to growth faster than that. We expect CEB to show very strong earnings and operating cash flow,” he added.

The first of the 180-seat aircraft will be arriving in October and will be used to add routes and frequencies on CEB’s network of 33 domestic and 14 international destinations.

 “This will enable us to have the largest fleet of Airbus 320 family in the Philippines, and the second largest in Southeast Asia, allowing us to offer our trademark low fares to even more Filipinos,” Gokongwei emphasized.

He added that by 2014, CEB will more than double its seat capacity in the next five years. From a fleet size of 29 today (10 A319, 11 A320s and eight ATRs), this is expected to grow to 51 by end of 2014. The 51 will include the 22 new A320s that will be acquired from 2010 to 2014.

If CEB decides to avail of the option for seven more aircraft, this will bring the company’s total fleet size by 2015 to 58.

In 2009, CEB posted a 30 percent growth in the number of its domestic and international passengers to 8.73 million compared to 6.74 million in 2008. 

The number of domestic passengers for CEB last year increased 34 percent to 7.23 million from 5.37 million the previous year while those of international passengers rose eight percent to 1.49 million from 1.37 million.

The compounded annual growth rate for total passengers for CEB from 2006 to 2009 is at 36 percent, while that of domestic and international passengers is at 34 percent and 52 percent, respectively.