Expenses, forex losses weigh on Cebu Pacific profit

MANILA, Philippines – Higher expenses and foreign exchange losses stemming from dollar-denominated loans weighed on the first-half earnings of budget carrier Cebu Pacific.

In a financial report filed with the Philippine Stock Exchange on Wednesday, August 14, Cebu Air Inc., parent of the Gokongwei-owned carrier, said its January-June earnings fell 18.5% to P1.414 billion from P1.736 billion in the same months of 2012.

The carrier booked a 10% increase in revenues to P21.726 billion, but gains were eroded by expenses worth P18.89 billion and foreign exchange losses worth P1.35 billion.

The carrier’s biggest expense remained to be fuel.

“Aviation fuel expenses grew 2.2% to P9.422 billion in the first 6 months… as a result of the increased number of flights year on year,” it said in its report.

Cebu Pacific also booked forex losses due to the weakening of the peso against the US dollar. Cebu Pacific has a long-term, dollar-denominated debt in connection with aircraft acquisitions.

Cebu Pacific flies to 22 international destinations including Bali, Bangkok, Beijing, Brunei, Busan, Dubai, Guangzhou, Hanoi, Ho Chi Minh, Hong Kong, Incheon (Seoul), Jakarta, Kota Kinabalu, Kuala Lumpur, Macau, Osaka, Phuket, Shanghai, Siem Reap, Singapore, Taipei and Xiamen.

It also operates the most extensive network in the Philippines with 34 domestic destinations and hubs in Manila, Cebu, Clark, Kalibo, Iloilo and Davao.

In the first half, it flew 7.5 million passengers, up 7.9% year-on-year.

Cebu Pacific has an existing fleet of 46 aircraft consisting of 27 Airbus A320s, 10 A319s, 8 ATR 72-500s, and an A330 aircraft. By 2015, the low-cost carrier would operate 6 brand new Airbus A330s.

Cebu Pacific is implementing an action plan to enhance safety following two runway mishaps involving its planes in June. – Rappler.com