Travel limits keep Cebu Pacific wallowing in the red
MANILA, Philippines — Financial losses of Cebu Pacific ballooned over six times from last year in the first quarter, demonstrating the severe impact of pandemic travel restrictions that continued to prevent planes from taking off.
Cebu Air Inc., the Gokongwei-led carrier operator, incurred P7.3 billion in net losses from January to March, a significant jump from just P1.18 billion same period a year ago, a disclosure said on Monday.
Listed shares in the company sold at P48.80 each, up 1.14% at the close of Monday trading.
A big reason for the larger losses was timing: last year, Cebu Pacific and other airlines had around one and a half months of normal operations before the pandemic came into picture. In the Philippines, it was not until March 9 last year that lockdowns were enforced, resulting from flight cancellations and billions of pesos spent for refunds.
Vaccinations have been counted on to boost travel appetites this year, although many agree full tourism recovery would take years, especially with the slow pace of inoculations. On Monday, Megawide Construction Corp. that operates the Mactan-Cebu International Airport won up to 6 years of extension on its debt payments or until 2029, by which point it believes “full recovery” on travel would have been attained.
For now however, the financial pain continues. Muted air travel pushed down Cebu Pacific’s revenues 83% year-on-year to P2.71 billion as of March. That was despite non-essential travel getting allowed since October 2020 and promos that brought down the carrier’s average plane fares to P1,612, down 37.5% on-year.
The outlook is bleak for this quarter after government tightened restrictions and prohibited leisure travel to and from Metro Manila, where the main gateway Ninoy Aquino International Airport is located.
Broken down, passenger revenues dropped 92.2% from year-ago levels to P887.45 million. Pandemic-related disruptions caused 5.8% more passengers this quarter to convert their cancelled flights into credits to their Cebu Pacific’s virtual wallet that they can use to buy flights at a later time.
Ancillary revenues, or non-ticket sale earnings, likewise shrank to P501.72 million from P3.5 billion a year ago. Revenues from chartered cargo services were a lone bright spot, growing 30.3% year-on-year to P1.32 billion as the delivery and logistics business get a boost from people stuck at home.
On the flip side, limited operations also mean less expenses on everything from fuel to advertising, pushing down operating expenses 42.8% year-on-year. Under this segment, disbursements from reservation and sales department decreased by half.
As a result, Cebu Pacific posted an operating loss of.78 billion in the first quarter. The firm's EBITDAR or earnings before interest, taxes, depreciation, amortization, and rent, another gauge of financial standing, stood in negative territory at P1.9 billion.
In recent months, Cebu Pacific has scrambled to raise cash after a massive 75% downscaling of its workforce last year proved insufficient for the airline to weather the lingering crisis. Apart from a P16-billion bank loan secured in March, the airline also recently completed raising $500 million in fresh cash, half of which came from proceeds of share sale while the balance was made through a private placement of a group of investors.
For all of 2020, the airline recorded a net loss of P22.2 billion.
- Latest
- Trending
