Higher passenger revenues boost Cebu Air profit in 1st quarter

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CEBU AIR, Inc., the listed operator of Cebu Pacific, reported its net income increased by 12% to P1.437 billion, driven by higher passenger revenues from a 10% increase in average fares.

In a regulatory filing, the Gokongwei-led company said revenues went up 8.3% to P18.261 billion for the three month period. The bulk came from passenger revenues, which rose 11.4% to P13.676 billion.

“This increase (in passenger revenues) was largely due to the 10.0% increase in average fares to P2,805 for the three months ended March 31, 2018 from P2,551 for the same period last year,” it said.

Cebu Air reported passenger volume grew to 4.876 million from 4.813 million last year. The budget carrier is currently has 2,622 flights a week.

The company saw a 26% increase in cargo revenues to P1.279 billion in the first quarter, while ancillary revenues fell 7.5% to P3.3 billion due to lower baggage and pre-ordered meals with the suspension of Middle East operations in 2017.

Higher fuel prices, weak Philippine peso and the airline’s purchase of new aircraft drove the company’s operating expenses 11.8% up to P15.997 billion.

“The increase was primarily attributable to the rise in fuel prices in 2018 coupled with the weakening of the Philippine peso against the US dollar…. The growth in the airline’s seat capacity from the acquisition of new aircraft also contributed to the increase in expenses,” Cebu Air said.

Expenses from flying operations increased 15% to P6.91 billion, mainly due to a 18.9% increase in aviation fuel expenses to P5.853 billion.

Cebu Air also recorded net foreign exchange losses of P838.619 million for the three months, as the Philippine peso weakened against the US dollar. The Philippine peso averaged P52.16 per US dollar for the three months ended March 31, from P49.93 per US dollar for the 12 months ended Dec. 31, 2017. — D.A. Valdez