CEBU AIR, Inc. reported a 39% drop in net profit to P1.87 billion in the second quarter, weighed down by rising fuel prices and weakening of the peso.
In a regulatory filing, the listed operator of Cebu Pacific said its net income for the first six months fell 24% to P3.309 billion, from P4.334 billion recorded in the same period last year.
Second quarter revenues went up 4% to P19.57 billion, while the first-half tally increased 6% to P35.65 billion. Passenger revenues rose by 2% to P14.6 billion in the April to June, and by 6% to P28.3 billion in the six-month period.
“This increase was mainly due to the 3.7% increase in average fares to P2,734 for the six months ended June 30, 2018 from P2,637 for the same period last year,” Cebu Air said, adding passenger volume rose by 3% to 10.354 million in the first half.
However, expenses grew at a faster clip, jumping by 16% to P17.06 billion in the second quarter, and by 14% to P33.06 billion in the first half.
“The increase was mostly attributable to the rise in fuel prices in 2018 coupled with the weakening of the Philippine peso against the US dollar as referenced by the depreciation of the Philippine peso to an average of P51.98 per US dollar for the six months ended June 30, 2018 from an average of P49.93 per US dollar last year based on the Philippine Dealing and Exchange Corporation weighted average rates,” Cebu Air said.
An increase in the budget carrier’s seat capacity as a result of new aircraft also contributed to the higher expenses.
The bulk of expenses came from flying operations, which soared by 21% to P7.61 billion in the second quarter, and by 18% to P14.53 billion in the six months ending June.
Aviation fuel expenses surged 23% to P12.337 billion for the first half, as average jet fuel prices reached $84 per barrel during the period versus $63 per barrel in 2017.
In May, Cebu Pacific President and CEO Lance Y. Gokongwei said the budget carrier applied for a fuel surcharge of between P70 to P250 for domestic flights, adding the rising fuel prices is costing the company a P700-million increase in expenses every month. — D.A. Valdez