March 14, 2014

Cebu Pacific Air reports FY2013 income of P512m -85% YoY

In a disclosure to the Exchange, Cebu Pacific reported net income of P512m for FY2013 down 85% from the previous year. This is primarily due to FX losses of P2.06b versus a P1.2b FX gain in the previous year. Fuel, aircraft acquisition costs, aircraft repairs and maintenance which comprise a majority of its expenses are primarily dollar denominated.

Our take: Aside from the FX losses, we believe that CEB was likewise affected by the pre-operating losses from its recently launched long haul service as well as the numerous natural disasters last year which resulted in a lot of cancelled flights as well as competitive pressures from other low cost carriers.

A stabilizing peso should provide some relief for CEB in 2014. Moreover, the recent consolidation in the industry, CEB’s buyout of TigerAir Philippines and AirAsia Philippines’ buyout of Zest air, should provide some respite. – WealthSec