earnings reports

Cebu Pacific loss deepens to over P9 billion in H1 2020

Aika Rey
Cebu Pacific loss deepens to over P9 billion in H1 2020
This is a 227.94% decline compared to Cebu Pacific's net income of P7.14 billion a year ago

Travel bans pushed budget airline Cebu Pacific to a P9.14-billion net loss in the 1st half of 2020, or a staggering 227.94% decline from the P7.14-billion net income it saw in the same period last year.

In February, the Philippine government banned flights from China, Hong Kong, and Macau as the coronavirus outbreak started spreading. When majority of the country was placed under a lockdown in mid-March, the ban was expanded to cover all domestic routes.

Countries worldwide also implemented their own travel bans, severely affecting the global aviation industry.

Cebu Pacific had suspended all flight operations starting March 19 and resumed in a limited capacity on June 3, hurting its usual profitable months March, April, and May.

“The disruption in the group’s operations due to the repercussions brought about by the COVID-19 crisis had negative impact on its financial condition and results of operations during the period,” Cebu Pacific said in a disclosure on Wednesday, August 12.

The budget airline’s half-year revenues fell to P17.334 billion – a 61.2% decline year-on-year.

Passenger revenues plunged 65% to P21.85 billion for the first 6 months, a stark contrast from the P33.35 billion earned in the same period last year. Average fares declined by 13.6% as well, from last year’s P2,974 to P2,571 per flight.

Save for sweeper flights, Cebu Pacific’s operations were “virtually nil until April” when cargo flights and limited international flights were allowed. Still, cargo revenues dropped more than a fifth to P614.88 million, from P2.22 billion.

During the period, the airline recorded P24.32 billion in operating expenses, lower by a third than last year’s P35.89 billion. Cebu Pacific attributed this to cheaper fuel prices, on top of suspended operations.

The budget airline has laid off over 1,000 employees, so far.

Cebu Pacific, foreseeing a slow recovery from the crisis, said it would be “premature” to predict the total impact of the pandemic on its full-year profits at the moment.

In July, the International Air Transport Association said passenger numbers similar to 2019 levels will not be reached until 2024.

Pre-pandemic, Cebu Pacific operated 78 domestic routes and 25 international routes, for a total of 2,717 weekly flights.

When quarantine restrictions eased in June, its network fell to 25 domestic routes, accounting for a total of 290 weekly flights. – Rappler.com

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Aika Rey

Aika Rey is a business reporter for Rappler. She covered the Senate of the Philippines before fully diving into numbers and companies. Got tips? Find her on Twitter at @reyaika or shoot her an email at aika.rey@rappler.com.