Wednesday, 21 April 2010

Cebu Pacific to spend $1.4B for 22 new Airbus A320 planes

Emilia Narni J. David
BusinessWorld
http://www.bworldonline.com/main/content.php?id=9461

CEBU PACIFIC will expand its fleet over a five-year period to meet growing demand for low-cost air travel, its top executive said yesterday.

Lance Y. Gokongwei, president of Cebu Pacific operator Cebu Air, Inc., said in a press briefing yesterday the airline would purchase 22 brand-new Airbus A320 until 2014.

“We are buying 22 more new aircraft and by 2014 we will have a fleet of 51 aircraft and the largest A320 fleet in the Philippines. The aircraft will start arriving between 2010 and 2014. The reason is that the demand for our services has been very good so we want to increase our capacity,” Mr. Gokongwei said in a press briefing.

Cebu Pacific will spend $1.4 billion for the new aircraft. The company also has the option to buy seven more airplanes, he said.

Cebu Pacific has a fleet of 33 aircraft ranging from A320s to propeller planes.

Mr. Gokongwei said the new aircraft would be deployed to existing routes of Cebu Pacific as well as to new domestic and international routes being planned.

The airline will be flying to Pagadian soon and is awaiting official notice for more flights in the Asia-Pacific region, executives said.

Cebu Pacific said the purchase of new aircraft would be covered by internally generated funds and export credit.

Proceeds from a planned initial public offer (IPO) may also be tapped but the aircraft purchase won’t depend on stock exchange listing.

“The purchase doesn’t depend on the IPO. It’s actually a combination of funding strategies. We will reconsider the IPO after the elections but there really isn’t a definite timeline on that,” said Mr. Gokongwei.

When Cebu Pacific receives all 22 new aircraft, the airline will become one of the largest low-cost fleets in the region.

Cebu Pacific carried 8.7 million passengers in 2009 with a load factor of 79%, or an increase of 30% from 6.7 million passengers carried in 2008. For the first quarter of the year, the carrier was able to fly 2.4 million passengers.

The firm earned P3.26 billion in profits last year, wiping out P3.25 billion in losses the previous year.

“We are well on our way to exceed our target of 10 million passengers for this year with the strong demand we are seeing for both domestic and international flights and we are also expecting an increase in revenues,” said Mr. Gokongwei.

Last month, Cebu Air decided to delay its P12-billion IPO to after the May 10 national and local elections, to assuage nervous investors.

Cebu Pacific is eyeing almost P12 billion in net proceeds by listing 235.562 million shares at a maximum price of P95 each.

Documents showed the carrier needed to make P9 billion in advanced payments to increase its fleet to 49 by 2014.

Cebu Pacific’s press conference came a day after Lucio C. Tan-led Philippine Airlines, Inc. announced the retrenchment of 3,000 ground workers under a plan to outsource three “non-core” units to cut burgeoning losses.

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