In This Article:
Release Date: November 13, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Cebu Air Inc (CEBUY) announced a historic aircraft order with Airbus for up to 152 A321neo aircraft, valued at $24 billion, marking the largest in Philippine aviation history.
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The acquisition of AirSWIFT from the Ayala Group expands Cebu Air Inc (CEBUY)'s network to include El Nido, enhancing travel opportunities for passengers.
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Cebu Air Inc (CEBUY) plans to increase its fleet from 100 aircraft in 2025 to between 126 and 208 by 2035, with an annual growth rate of 2% to 15%.
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The company reported a 14% increase in passengers flown year-on-year, resulting in an 84.2% seat load factor, up by 0.5 percentage points.
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Cebu Air Inc (CEBUY) achieved a significant 40% growth in cargo revenue, supported by expanded capacity from new wide-body aircraft.
Negative Points
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Cebu Air Inc (CEBUY) experienced a 1% decline in total revenues for Q3 2024 compared to the same period last year, with passenger revenues down by 3%.
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Operational challenges included Typhoon Carina and a global software update disruption, leading to over 350 flight cancellations.
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The extended lean season due to the earlier start of the school year impacted travel demand more significantly than anticipated.
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EBITDA for the quarter declined by 24% year-on-year, with operating income reaching only PHP200 million.
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Increased fleet and operational costs, along with new route openings, have pressured margins this year.
Q & A Highlights
Q: Can you provide more details on the strategic importance of the recent aircraft order with Airbus? A: Mark Julius Cezar, Chief Financial Officer, explained that the order for up to 152 A321neo aircraft, valued at $24 billion, is the largest in Philippine aviation history. It includes a firm order for 70 aircraft and options for 82 more, with deliveries starting in 2029. This order is part of Cebu Air's fleet modernization strategy, offering flexibility to match demand and replace older aircraft, potentially growing the fleet to between 126 and 208 aircraft by 2035.
Q: How is Cebu Air addressing operational challenges such as engine reliability issues? A: Mark Julius Cezar noted that despite reliability issues with Pratt & Whitney PW1100 engines, Cebu Air believes they are superior to alternatives. The upcoming Advantage Engine model promises improvements. The company is also managing operational resilience amid challenges, with a focus on maintaining growth and reducing aircraft on ground (AOG) numbers.