MANILA, Philippines - Aviation think tank Centre for Asia Pacific Aviation (CAPA) reported that budget airline Cebu Pacific and national flag carrier Philippine Airlines emerged among the top three most profitable airlines in Southeast Asia, surviving the extremely challenging market conditions in the region.
CAPA ranked Cebu Pacific as the second most profitable airline with profit of $69 million in the first half of the year while PAL placed third with $13 million.
“The fact two of the four publicly traded profitable airlines from Southeast Asia in first half of 2014 hail from the Philippines would surprise most industry observers,” CAPA said.
It explained that the Philippine market experienced significant capacity adjustments and consolidation in 2013 and in the first quarter of 2014 putting it in a much better position in the second quarter compared to the other Southeast Asian markets.
“The second quarter 2014 marked a turning point with Cebu Pacific recording a record profit and Philippine Airlines swinging back in the black. Both had operating and net profits which were enough to easily offset the net losses from the first quarter,” the think tank said.
CAPA said only Philippine AirAsia that merged with Zest Airways in 2013 remained unprofitable but managed to narrow its losses in the first half of the year.
Malaysia Airlines, despite the series of accidents including the mysterious disappearance of MH370 as well as the shooting down of Flight MH17 over the Ukranian airspace, emerged as the most profitable airline in Southeast Asia with $122 million.
SilkAir booked a net profit of $7 million while Thai AirAsia just broke even.
In its latest Aviation Analysis entitled “Southeast Asian airlines: 80 percent were unprofitable in H1 but conditions are starting to improve,” CAPA said only five of the 17 publicly listed airlines in the region recorded a net profit in the first half of the year.
CAPA said losses are likely to continue through at least the third quarter this year but there are indications market conditions would start to improve by the fourth quarter or the first quarter of next year.
It added that several Southeast Asian airlines have responded to overcapacity by cutting capacity or slowing their expansion.
The Southeast Asian market has suffered from overcapacity since the second half of last year. The overcapacity problems peaked in the first half of the year as new aircraft continued to be added at a rapid pace.
Just like the Philippines, CAPA said some of the other markets in Southeast Asia also are now starting to see consolidation and more rational behavior in the form of capacity cuts and slower expansion rates.