Cebu Air swings to losses on halted flights

CEBU Air, Inc. (Cebu Air) registered a net loss of P1.18 billion in the first quarter of the year, reversing its multi-billion profit last year as the coronavirus disease 2019 (COVID-19) crisis prompted a lockdown that suspended air travel.

The budget carrier, which operates Cebu Pacific, recorded a 24.9% decline in revenues to P15.91 billion from P21.18 billion in the same period last year. In the first quarter last year, it posted a net profit of P3.36 billion.

In a regulatory filing, the Gokongwei-led company said: “With the rapid escalation of the situation surrounding COVID-19, the Philippine government implemented an enhanced community quarantine over the entire Luzon, which then prompted the Group to suspend all its scheduled flights beginning March 19, 2020.”

Passenger revenues were down 27.4% to P11.39 billion in the first quarter from P15.68 billion in the same period last year. The group said the decrease was largely because of the nearly 17% drop in passenger volume to 4.4 million from 5.3 million.

It also reported a decrease of 29.7% to P1.01 billion in cargo revenues in the first quarter from P1.44 billion posted in the same period last year.

The company’s operating expenses were down 4.2% at P16.61 billion compared with last year’s P17.33 billion.

Cebu Air previously reported a net income of P9.12 billion for 2019, or more than double its net income a year ago of P3.92 billion. The growth was mainly driven by the airline operator’s passenger business segment, which contributed P61.68 billion to the total revenues, 13.7% higher than the previous year’s P54.26 billion.

The listed company said it had expected the COVID-19 pandemic to “adversely affect” its financial health.

“While it is difficult to predict when operating conditions will improve, the Group believes that [the COVID-19] remains a going concern, given the measures undertaken, its liquidity position, its access to short and long term funding, and the strong relationships it has with major suppliers,” it said in a statement last month.

On Wednesday, shares in the company rose by 0.82% at the Philippine Stock Exchange to close at P49.40 each. — Arjay L. Balinbin