Cebu Pacific is expected to post a stronger profit in 2016 as its long-haul operation matures, airline think tank Centre for Asia Pacific Aviation said.
“While Cebu Pacific’s long-haul operation has been unprofitable in 2015, the group believes it is tracking well and could become profitable in 2016. Cebu Pacific is confident yields will continue to improve as its long haul routes mature,” Capa said in a report.
The think tank said four of Cebu Pacific’s five long haul routes would reach the 18-month point in 2016, often considered the end of the maturation process for a new long haul route.
International expansion accelerated in late 2013 when Cebu Pacific’s long-haul operation was launched with Dubai the first route.
Three more long haul routes were added in the last four months of 2014 to Sydney, Kuwait and Riyadh. Doha was launched as Cebu Pacific’s fifth long haul route in June 2015.
“While competition will intensify on some of its routes, the Philippines generally is not as fiercely competitive as other markets in Southeast Asia. In particular, there is less competition between LCCs [low cost carriers],” Capa said, adding the airline’s long haul operation survived the initial buildup phase, which came with high risk.
The think tank said Cebu Pacific also survived intensifying competition from Philippine Airlines in both the international and – in more recent months – the domestic market.
Cebu Pacific was the third most profitable Southeast Asian airline in the first three quarters of 2015, behind Malaysia’s AirAsia and Singapore Airlines.
The Gokongwei-led airline recorded a net income of P3.56 billion in the first nine months of the year, up 71 percent from last year’s P2.08 billion.
Revenues amounted to P42.26 billion in the nine-month period, or 9.9 percent higher than P38.45 billion posted in the same period last year.
Cebu Pacific offers flights to a network of over 90 routes on 60 destinations, spanning Sydney, Dubai, Doha, Bali and Tokyo (Narita).