As Cebu Air deals with empty seats, costly plane upkeep, losses hit P14.7B
Heavy losses continued for the operator of budget airline Cebu Pacific amid the COVID-19 pandemic.
Cebu Air Inc. disclosed on Wednesday a net loss of P14.7 billion by the end of September this year—a reversal of the P6.8-billion profit in the nine-month period last year—as the air travel sector collapsed due to flight restrictions and lockdowns in the Philippines and overseas.
While regular flights have gradually restarted in recent months despite the challenging environment and rising COVID-19 cases, Cebu Air stated this was “still far behind its normal activity level.”
As the country’s largest budget airline with a controlling share in domestic flights, the group is suffering heavily during the health crisis.
Its filing with the Philippine Stock Exchange showed passenger revenues alone sank 74.5 percent to P11.9 billion versus P46.6 billion last year.
Passenger volume during the period in review stood at 4.7 million, a fraction of the 16.7 million people that flew in last year.
An increase in chartered cargo services helped offset freight revenues although the segment still sank 17.7 percent to P3.55 billion while ancillary revenues fell 69 percent to P3.9 billion.
Cebu Air assured investors it had ample resources to survive the crisis.
“The group believes that it remains a resilient airline despite the adverse impact of the COVID-19 outbreak,” the filing showed.
It also implemented a host of cost-cutting measures, including laying off workers, reducing management pay and slashing capital expenses.
Cebu Air ended the period with a fleet of 75 planes, but nearly 20 percent of these or 14 aircraft were sent overseas to the Asia Pacific Aircraft Storage in Alice Springs, Australia for storage until demand recovers.
Many flyers have also opted to wait out the health crisis. Cebu Air was sitting on a total of P3.1 billion in travel vouchers as of end-Sept. 2020, the filing showed. This, compared to P24.7 million during the same period in 2019.
A travel fund is valid for two years and can be used as payment for future bookings, according to the airline.
The period also ended with P2.4 billion in cash refunds payable to customers. Given the scale of the refunds, Cebu Pacific had apologized to flyers, saying the processing could take up to six months after their application is filed.
The passage of the Bayanihan to Recover as One Act last September allowed airlines to issue travel vouchers instead of refunds to help them preserve cash.
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