The Philippines’ leading airline, Cebu Pacific, has burst out of COVID by adding new aircraft and doubling first-quarter profits.
Given the severity and extended nature of pandemic-era travel restrictions throughout Southeast Asia, it is welcome news to see the region roaring back to life, partly driven by opening borders in major markets such as China, Hong Kong, Japan, South Korea and Taiwan. The magic ingredient is having the capacity available to meet the growing demand, and Cebu Pacific has managed that exceptionally well, adding 17 more aircraft to its fleet over the last twelve months.
2024 is off to a solid start
On Wednesday, the Philippines’ leading airline, Cebu Pacific, released details of its performance for the three months ending March 31, 2024 (1Q2024), highlighting how that extra capacity has set the airline up for a successful year ahead. In the first quarter, Cebu Pacific increased revenue by 21% year-on-year (YoY) and more than doubled its quarterly net income, with gains from passenger traffic, ancillary revenue and cargo services adding to the result.
In a filing to the Securities and Exchange Commission on May 8, the airline said it had generated P25.3 billion ($441.8m) in revenue in the first quarter of 2024, a 21% increase from the same period in 2023. That increase came from strong growth in the passenger business, which generated almost P18 billion ($314m) in revenue, which was 25% higher YoY.
With 14% more flights in 1Q2024 and 17 more aircraft in its fleet, there was a corresponding 15% increase in operating costs to almost P23 billion ($401.6m). However, Cebu Pacific earned an operating income of P2.6 billion ($45.4m) and a net income of more than P2.2 billion ($38.4m) for the quarter, with YoY increases of 114% and 108%, respectively. Commenting on the result, Chief Financial Officer Mark Cezar said:
“As Cebu Pacific steps into 2024, the airline is committed to sustaining the positive momentum it has started in the past year. Given its widest network in the Philippines, with over 35 domestic and 24 international destinations, we will continue our mission to provide safe, reliable and affordable flights to every Juan.”
From January to March, Cebu Pacific (CEB) carried more than 5.5 million passengers, a YoY increase of 14% and a 3% increase from the preceding quarter. The first-quarter growth came from returning passengers over the Christmas holidays and Easter break and demand from other Philippine festivals and events, combined with higher frequencies on popular destinations and the expansion of the international footprint through the launch of the Manila – Danang (Vietnam) route.
A modern fleet of reliable aircraft
With a continuing fleet renewal program and new aircraft arrivals, Cebu Pacific has the most modern jet fleet in the Philippines, which increases passenger satisfaction and aircraft reliability and reduces fuel burn and carbon emissions. Today, the airline confirmed its fleet contains 81 aircraft, including 19 Airbus A320ceo, 19 A320neo, seven A321ceo, 14 A321neo, and eight A330neo, as well as 14 ATR 72-600 turboprops.
As a low-cost carrier, the airline aims to earn significant revenue from the sales of ancillary items, such as checked bags, preferred seating, onboard food and beverages and so on. In 1Q, ancillary business generated more than P6.2 billion ($108.3m), with a 14% growth YoY, which was helped by the increase in passenger numbers. Cargo revenue increased by 11% YoY to P1.3 billion ($22.7m) as the airline carried 35 million kilos of freight (38,600 tons), a 16% increase over the first quarter of 2023.
Cebu Pacific also announced recently it is expanding operations in Thailand by launching direct flights from Manila to Bangkok’s Don Mueang International Airport (DMK) commencing July 16, 2024. CEB will fly between Ninoy Aquino International Airport (MNL) Terminal 3 and DMK on Tuesdays, Thursdays, and Sundays. This will bring the number of weekly flights between Manilla and Bangkok to 17, adding to the twice-daily flights to Bangkok Suvarnabhumi Airport (BKK).
Bangkok was one of the airline’s first international destinations when it launched the route in 2006, and CEB also operates daily nonstop flights between Clark and Bangkok. With its growing fleet, Cebu Pacific flies to 35 domestic and 24 international destinations across Asia, Australia and the Middle East, providing accessible and affordable travel.