Thursday, 23 July 2009

Cebu Pacific to invest $1B

Airline to get 17 more planes
By Doris Dumlao
Philippine Daily Inquirer
http://business.inquirer.net/money/topstories/view/20090722-216755/Cebu-Pacific-to-invest-1B

MANILA, Philippines - The Gokongweis' Cebu Pacific Air will pursue a $1-billion expansion program, which calls for the purchase of 17 new aircraft over the next five years in anticipation of robust growth in passenger traffic.

CEB president Lance Gokongwei said yesterday in a briefing that the airline carried about 4.4 million passengers in the first half of the year, up 30 percent from the same period last year.

By the end of the year, the number is expected to hit nine million and further increase to 15 million by 2013.

Gokongwei said CEB, which operates 21 brand-new aircraft from the A320 family with an average fleet age of only 1.9 years, remained one of the fastest-growing carriers in Asia Pacific.

In 2008, passenger growth was at 23 percent.

“The markets continue to be strong. There continues to be strong demand from domestic tourism. There are some international destinations affected by A(H1N1) scare, primarily North Asia, although we feel [the effect] has diminished a little bit,” he said yesterday on the sidelines of the first anniversary celebration of CEB’s operations at Ninoy Aquino International Airport terminal 3.

“On the domestic side, profit growth has been good but there’s still a price war, so absolute price yields are down substantially,” he said.

The increase in passenger traffic in the first semester resulted in at least a 20-percent growth in revenue, Gokongwei estimated. He said the airline thus remained profitable in the first half and would likely remain profitable until the end of the year.

However, Gokongwei said business would likely be tougher in the second half because of three reasons: The onset of rainy season (which reduces appetite to travel), the dampening impact of rising oil prices on the cost side and the decline in fares (due to excess capacity).

About 85 percent of the 14-year-old airline’s refleeting cost would come from new borrowings.

On the international side, Gokongwei said CEB has a pending application to fly to Brunei and was considering other destinations, like Australia as well as new routes in Japan.

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