No talks: Cebu Pacific not keen on Zest Air

Rappler.com

This is AI generated summarization, which may have errors. For context, always refer to the full article.

The country's largest budget carrier Cebu Pacific Air is not keen on forging a deal with the 4th largest player, Zest Airways Inc.

NO DEAL TALKS. Cebu Pacific president and CEO Lance Gokongwei says they are not keen on Zest Air. Photo by AFP

MANILA, Philippines (UPDATED) – The country’s largest budget carrier Cebu Pacific Air is not keen on forging a deal with the 4th largest player, Zest Airways Inc.

In an interview with reporters on Thursday, October 2, Cebu Pacific president and CEO Lance Gokongwei said there are no talks with the owners of Zest Air, considered the most vulnerable in an industry with strong and growing industry players.

“We are not in any current discussions with Zest Air,” Gokongwei said when asked if the group is keen on taking a stake in Zest Air, which is currently seeking new investors. 

“We would look at any opportunity if it makes sense with the company and our shareholders,” he added. 

In a disclosure to the stock exhange also on October 4, Cebu Pacific admitted that it “has been approached to indicate its interest in this opportunity. However, any interest which the company may have at this point is at best indicative and non-binding.”

“The Company is presently not doing any due diligence on Zest Air,” it added.

Intense competition

He acknowledged that there is currently “intense competition” among players of the liberalized local aviation industry, but this is benefitting consumers. 

“The airline industry is growing very quickly…[There is] just intense competition given that there are 6 commercial carriers. But at the end its beneficial to the consumers. That’s what it’s all about. The government’s liberalization [of the airline industry] has created clear benefits to the consumer,” he said.

Gokongwei added that the airlines’ main challenge remains the cost pressure of jet fuel prices.  

“[Competition] is very difficult because the price of [jet] fuel [has] gone tremendously [high],” he shared.

Photo release by Zest Air

Zest Air investor 

Zest Air has been eyeing to sell up to 40% of the airline to an investor, preferrably a foreign airline, by the end of 2012. Zest Air chairman Ambassador Donald Dee had said nothing has been finalized.

Aside from Cebu Pacific, other airlines reportedly taking a look at possibly investing into Zest Air are Air Asia Berhad and Philippine Airlines (PAL).

When asked about this at the Civil Aeronautics Board’s (CAB) 65th anniversary on October 4, AirAsia Philipines president Maan Hontiveros said that Air Asia has “nothing to say.”

“I haven’t gotten such report . We haven’t done anything. We have nothing to say. I have no comment about the issue. It’s better to ask Zest Air,” she said.

About 3 foreign groups, including a Chinese carrier Hainan Airlines Company Limited, have expressed their interest already, Zest Air president Alfredo Yao had said in July.

The former businessman, who transformed himself to leading a budget airline after his success in Zest-O drinks firm, said their partner should have the financial muscle and the technical expertise amid the rising cost of jet fuel and spare parts. 

Zest Air, formerly Asian Spirit, is in its 4th year of operation. 

That airline has a fleet of 12 Airbus A320 and Yao said they are looking at buying 3 aircraft per year. 

In 2011, Zest Air flew 2.3 million passengers, of which 2.1 million are domestic passengers and 200,000 from its international operations. Its revenues reached P6 billion.

In June, the officials of the Yao-led airline said they have in the works efforts to “refresh” the airline before its re-launch in the 4th quarter this 2012. – Rappler.com

Add a comment

Sort by

There are no comments yet. Add your comment to start the conversation.

Summarize this article with AI

How does this make you feel?

Loading
Download the Rappler App!