Cebu Pacific sets 2022 capex at nearly P33 billion

BUDGET carrier Cebu Pacific, operated by Cebu Air, Inc., said on Wednesday that it had set a capital expenditure (capex) budget of P32.8 billion for 2022, mainly for fleet replacement.

“This year, Cebu Pacific will have seven NEO (new-engine-option plane) deliveries, replacing eight CEOs (current-engine-option planes), which will exit the fleet. Capex for the year totaled P32.8 billion, which was 100% financed via sale and leaseback,” Cebu Pacific Chief Executive Officer Lance Y. Gokongwei said during the company’s annual stockholders’ meeting on Wednesday.

The company ended 2021 with 74 aircraft, the same as in 2020. It received six new aircraft last year.

“While we remain conservative in our 2022 fleet growth, over the next five years, we will have 48 deliveries and 35 exits, ending 2026 with 87 aircraft,” Mr. Gokongwei said.

In its audited financial statement for 2021, Cebu Air said that its capex commitments, related primarily to the acquisition of aircraft fleet, were at P183.85 billion as of end-2021 and P154.14 billion as of end-2020.

At the same time, the airline expects its share in the domestic market to rise further to 62.4% in May due to increased demand and “resilience” of its financial position amid the pandemic.

“The resilience of our financial position throughout 2021 has enabled us not only to maintain our leadership in the domestic market, but also to grow well ahead of our competitors,” Mr. Gokongwei said.

“As of mid-April of 2022, our domestic market share posted at 60%, which is already well ahead of our full-year 2019 and 2021 domestic market shares, which were both at 53%. We continue to boost our domestic capacity and estimate that by the end of May, our capacity share will increase further to 62%,” he added.

Domestic bookings and flight frequencies to Cebu Pacific’s key destinations have “breached pre-pandemic level,” he noted.

“As of April 20, 2022, seven-day average bookings were at plus 29% versus the same period in 2019. Removing Holy Week seasonality, booking velocity was at plus 15% versus 2019.”

Mr. Gokongwei also said that the Alert Level 1 status paved the way for relaxed travel restrictions such as 100% passenger capacity, while doing away with health declaration and the S-PaSS travel management system, making contact tracing optional, and recommending coronavirus testing only for priority groups.

The budget carrier recently reported a net loss of P24.9 billion for 2021, widening from a loss of P22.2 billion a year earlier. It generated P15.7 billion in revenues in 2021, 30% below the 2020 level.

The decline in revenues was mostly driven by the 50% drop in passenger revenue to P6.3 billion last year from P12.6 billion in 2020, the airline said.

Cebu Air shares closed 6.05% lower at P45 apiece on Wednesday. — Arjay L. Balinbin