Cebu Pacific, or CEB, the low-cost airline led by the Gokongwei Family, has rescheduled the completion of its major aircraft purchase from global manufacturers — a move that will help the company sustainably meet the anticipated surge in travel demand in the long run.
During a press chat on Tuesday, CEB president and chief commercial officer Xander G. Lao said the company is carefully deciding whether to take European industrial giant Airbus and US planemaker Boeing for the order, known in the industry as a request for proposal or RFP.
Lao said the deadline for the decision was extended until the end of the first half instead of the planned deadline at the end of the first quarter.
Going back and forth
“We had initially said we would come up with a decision in the first quarter, but then now, the first half was our latest guidance. The process is going back and forth with the key suppliers. It’s not just Airbus and Boeing, but it’s also the engine manufacturers,” Lao told reporters.
“The process is ongoing. You’re talking about a 100 to 150 aircraft deal. It’s not like buying ice cream. It’s complicated,” he added.
According to Lao, the earliest that the new fleet will arrive would be around 2027 or 2028.
CEB plans to spend about P50 billion this year, the bulk of which will be earmarked for the acquisition of 16 aircraft — bringing its current fleet of 76 to 92.
Of the total fleet, Lao said the company expects anywhere between 10 and 20 aircraft to be parked because of Pratt & Whitney throughout the year, which it will mitigate by short-term leases.
Growth target doable
Meanwhile, Lao reaffirmed that the air carrier is on track to hit its annual growth target due to the improved passenger and travel demands.
“I think we’ll continue to grow by around.. I think our guidance to the market was around 5 to 8 percent for 2024. We are pretty confident in reaching the higher end of that growth projection in terms of overall capacity,” Lao said.
CEB has yet to release its 2023 full-year financial report but latest data showed that the company has generated P1.3-billion net income in the third quarter of last year.
Rosy bottom line
The rosy bottom line profit was a turnaround from a P2.5-billion net loss in 2022 and P384 million in 2019.
CEB also saw a notable increase in travel demand in the third quarter, attributable to the change in school calendars, which shifted graduation and school breaks from June to August.
From July to September 2023, CEB flew 5.3 million passengers onboard 35,000 flights, which were 27 percent and 18 percent higher year-on-year, respectively.