Gokongwei-led Cebu Air Inc., which operates budget airline Cebu Pacific (CEB), saw its first-half profits slip by roughly about 5 percent to P3.5 billion from P3.7 billion in the same period a year ago as expenses shot up.
The company’s most recent stock exchange report revealed the decline was partially attributed to the second quarter’s earnings performance, which showed a significant decrease of approximately 52 percent, dropping from P2.7 billion in the previous year to P1.3 billion.
In terms of first-half revenues, Cebu Air generated P51.4 billion, up 18 percent from P43.5 billion a year ago. However, expenses surged by 16 percent to P45.9 billion from P39.7 billion last year.
Despite the headwinds, the company said it remains optimistic to chart a better second half, especially after it carried six million passengers in the second quarter — the highest passenger count in a single quarter in its history.
10% up than previous year
Cebu Air said the number was 10 percent higher than the previous year fueled by the summer traffic from April to May, the school break in June, and additional frequencies in high-traffic destinations such as Cebu, Davao and General Santos.
Strong demand for regional destinations such as Hong Kong, Japan, Vietnam and Australia also contributed to the growth, it added.Thus, the passenger business generated almost P18 billion in revenues from April to June, 13 percent higher year on year, while the ancillary business generated close to P7 billion, 16 percent higher year-on-year.
CEB’s cargo business, on the other hand, showed a notable improvement, as it flew close to 36 million kilos of cargo in the second quarter, 39 percent higher than the same period last year. This is on the back of over 38 thousand flights flown for the quarter, 5 percent higher year on year.
With this, CEB’s cargo business generated over P1.4 billion in revenue, up 59 percent from the previous year.
“This has been a very important quarter for our airline, marked by significant achievements and crucial milestones. We’ve set new highs in terms of passengers flown, finalized our quasi-reorganization, and made the historic order of up to 152 aircraft from Airbus,” CEB chief executive officer Michael Szucs said.
“This substantive commitment, through the new aircraft order, aligns CEB’s ability to grow with the robust economic story in the Philippines and its ongoing investment in infrastructure,” he added.
Earlier this week, the Securities and Exchange Commission approved CEB’s quasi-reorganization involving deficit reclassification.
The equity restructuring aims to eliminate CEB’s retained deficit as of the end of 2023 by using its capital surplus.
Combined with improved profitability and capital efficiency, the move is expected to enhance the potential for future shareholder returns and distributions.