CebuPac sees earnings picking up in 2nd qtr
MANILA, Philippines - Gokongwei-led budget airline Cebu Air Inc. (Cebu Pacific) expects earnings to pick up after plunging in the first quarter of the year amid the integration of newly acquired Tiger Airways Philippines as well as the continued weakening of the peso against the greenback.
Cebu Pacific president and chief operating officer Lance Gokongwei said the low cost carrier sees earnings improving starting the second quarter of the year until the fourth quarter after a poor performance in the first quarter.
“At the start of the year we said the first quarter comparison would be tough and indeed our earnings went down significantly in the first quarter primarily because of the weak peso and fairly elevated price of fuel. But we expect the back half of this year to be stronger than the back half of last year,†he said.
The net income of Cebu Pacific plunged 86 percent to P164.16 million in the first quarter of the year from P1.16 billion in the same quarter last year as it booked a net foreign exchange loss of P193.65 million.
Revenues grew by 11.6 percent to P11.76 billion in the first quarter of the year from P10.54 billion in the same period last year while expenses surged 22 percent to P11.25 billion from P9.22 billion as a result of Cebu Pacific’s expanded operations with the launch of its long haul services last October and growth in seat capacity from the acquisition of new aircraft.
He pointed out the months of April, May, and June are seasonally strong months for the airline industry.
“Seasonal peak in the Philippines is April to June so that is the best quarter as a whole in terms of financial performance. Progressively for Q2, Q3, and Q4 we expect to be better than the same Q2, Q3, Q4 last year,†Gokongwei stressed.
However, he pointed out that it is difficult to predict whether Cebu Pacific would book higher earnings this year compared to last year.
“It is hard to predict. I don’t know what the exchange rate will be. In general on an operating basis, we expect earlier in the year with the integration of Tigerair Philippines and strengthening of the peso we expect basically the back nine months to be better than the back nine months of last year,†he added.
The airline spent $15 million to acquire 100 percent of Tigerair Philippines in a deal that was closed last March 20.
“We said we expect to lose money at Tigerair Philippines for the year because there is a lot of integration efforts required,†he said.
The deal has been approved by the Civil Aeronautics Board (CAB) and is now just awaiting the green light from Congress for the transfer of the franchise of Tigerair Philippines to Cebu Pacific.
Gokongwei said both Cebu Pacific and Tigerair Philippines expect to fly about 17 million passengers this year.
Cebu Pacific is in the middle of a $4 billion refleeting program aimed at acquiring close to 50 brandnew Airbus aircraft to beef up its existing fleet of about 52 aircraft. It expects the delivery of 12 A320, 30 A321neo, and three A330 between 2014 and 2021.
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