CEBU AIR, Inc. swung to a P518.4-million net loss in the third quarter from a P42-million profit a year ago, amid the continued rise in fuel prices and weakness of the Philippine peso against the US dollar.
In a regulatory filing, the operator of budget carrier Cebu Pacific said third quarter expenses grew by 19% to P16.8 billion, outpacing the 10% growth in revenues to P16.2 billion.
The bulk of expenses came from flying operations, which surged 35% in the July-September period to P7.4 billion due to higher jet fuel prices and a weaker peso.
For the first nine months of 2018, Cebu Air said its net income dropped 36% to P2.781 billion. Revenues grew by 7% to P54 billion, but expenses swelled by 16% to P49.9 billion.
Flying operations expenses rose 24% to P22 billion for the nine months ending September, driven by a 28% increase in aviation fuel expenses to P18.721 billion.
Cebu Air said this was due to “the increase in jet fuel prices as referenced by the increase in the average published fuel MOPS price of $85.37 per barrel in the nine months ended September 30, 2018 from $62.89 per barrel in 2017.”
“The increase in fuel cost was further augmented by the weakening of the Philippine peso against the U.S. dollar as referenced by the depreciation of the Philippine peso to an average of P52.51 per US dollar for the nine months ended September 30, 2018 from an average of P50.24 per US dollar last year based on the Philippine Dealing and Exchange Corporation (PDEx) weighted average rates,” the Gokongwei-led company said.
It was only in September when the Civil Aeronautics Board (CAB) approved the implementation of fuel surcharge for airlines to help them recoup losses from the rising world prices of jet fuel.
Cebu Air posted 28% higher net foreign exchange losses of P421.47 million in the third quarter, bringing the nine-month loss to P2.006 billion due to the depreciation of the peso against the dollar.
Rising interest rates also weighed on the company. Cebu Air recorded a 49% increase in interest expenses to a P591 million in the July to September period. This pushed the nine-month interest expense 47% higher to P1.55 billion.
Cebu Air said its average air fares went up by 5% to P2,617 for the January to September period, from P2,483 average fare during the same period a year ago.
Passenger volume inched up 1.6% to 15.106 million in the first nine months of 2018, versus 14.87 million a year ago. — D.A.Valdez