Cebu Air to tap capital marts

Lance Gokongwei | CONTRIBUTED

By 2028, Cebu Pacific will receive the first batch of aircraft under its mammoth deal with European plane maker Airbus, in hopes of filling up the runways of upcoming airports across the country and augment fleet capacity amid the travel boom.

Lance Gokongwei, chair of Cebu Air, Inc., told reporters on Wednesday that they intended to tap both debt and equity to fund the P1.4-trillion purchase order, the largest of such deal in Philippine aviation history.

Share price of Cebu Air, operator of Cebu Pacific, climbed by 20 centavos or 0.74 percent to close at P27.40 each on Wednesday following the announcement of the landmark Airbus deal. It traded for as high as P27.90 before shaving off some gains.

“Primarily, most of the funding will be going toward pre-delivery payments, and we’ll fund this from a combination of equity and loans,” Gokongwei said on the sidelines of Gokongwei Brothers Foundation’s partnership launch with Khan Academy.

Airbus bested rival Boeing in bagging the deal involving 151 A321neo (new engine option) planes. These will add to Cebu Pacific’s current fleet consisting of eight Airbus 330s, 37 Airbus 320s, 22 Airbus 321s and 15 ATR turboprop aircraft. More aircraft will allow the carrier to establish new routes or increase frequencies in existing networks.

Neo aircrafts are deemed fuel-efficient because they burn 15 percent less fuel per flight. The airline has a goal of achieving an all-neo fleet by 2027 in line with its sustainability goals.

Airbus was chosen after an “intensive” selection process, as it came forward “with what we feel was the best offer,” according to Gokongwei.

“What are we looking for? We’re looking at the lowest unit cost to operate so that we can continue to provide affordable fares to the public,” he said.

Gokongwei, who also heads conglomerate JG Summit Holdings, said they were still in the process of completing a previous aircraft order that would help meet growing travel demand.

He also pointed out that upcoming airports, including the New Manila International Airport in Bulacan province that’s scheduled for completion in 2027, would need the additional aircraft.

Cebu Pacific has so far received nearly half of its aircraft order for the year.

Another A321neo—the seventh aircraft delivery for the airline this year—has arrived at Ninoy Aquino International Airport from an Airbus facility in Hamburg, Germany, on June 30.

“We look forward to carrying more passengers to their chosen destinations as we continue to expand not only our network, but also our fleet,” Cebu Pacific president and chief commercial officer Xander Lao said in a statement.

In total, Cebu Pacific is expecting delivery of 18 aircraft this year. The budget carrier has allocated P60 billion mostly for aircraft-related spending in 2024.

Cebu Pacific, which services over 35 domestic and 24 international destinations, saw its first-quarter net earnings more than double to P2.24 billion on the back of busier operations. Passenger revenues improved by 25 percent to P18 billion as volume grew by 14 percent to 5.5 million passengers.