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In a media briefing, the chief of the Gokongwei family-controlled budget airline also lauded PAL for executing a successful bankruptcy exit and restructuring during the pandemic which saw the balance sheet of the Lucio Tan-owned firm unburdened of $2 billion in debt.
Szucs (a Hungarian surname pronounced ‘sootch’, as his father emigrated to the UK in the wake of Hungary’s 1956 revolution that was crushed by Soviet troops) contrasted the pandemic response of Cebu Pacific with PAL’s approach, highlighting how differing financial positions shaped their decisions.
“[Cebu Pacific] went into the pandemic with an incredibly strong balance sheet. We were one of the most profitable airlines in the world,” he said.
This enabled Cebu Pacific to rely on its own internal restructuring and raise capital independently, preserving strong relationships with partners and creditors.
In contrast, Szucs said, “If you look at PAL, I think they didn’t have that option… it was a very successful Chapter 11 restructuring. Basically $2 billion off the balance sheet… it probably worked well for all parties."
Cebu Pacific’s big ‘what if?’
His comments reflect lingering discussions among Cebu Pacific’s shareholders who, at the height of the pandemic, were said to have weighed the possibility of delaying payments to creditors by invoking force majeure clauses.
“What if, in 2020, Cebu Pacific had just asked its creditors for forbearance since no planes were flying at the height of the pandemic?” said once source familiar with the issue.
“It was a choice of preserving cash while all the planes were grounded, or protecting the good name and reputation of the Gokongwei family as one that never defaults on debt,” he explained.
“Ultimately, Lance [Gokongwei] decided that always honoring one’s obligations is more important, especially for future generations of the family,” the source said.
More focused, more rational PAL
Szucs noted that PAL has since emerged from bankruptcy with a more defined strategy: “I think it’s, in some ways, a more rational player. I think it knows what its markets are. I think it’s clearly focused on the long haul.”
Cebu Pacific is now the country’s largest airline with a fleet of 100 aircraft, having flown 24.5 million passengers last year.
Meanwhile, PAL flew 15.6 million passengers last year and currently operates 78 aircraft.
But PAL records higher revenues and income than Cebu Pacific, in general, because it prices its services higher and flies longer routes.
Szucs welcomed the appointment of Richard Nuttall as PAL’s president, calling him “a really smart guy” who knows the business well.
“I think there is a very good future for PAL,” he said, while emphasizing that the path forward for both airlines lies in playing to their strengths—not copying each other.
“Cebu Pacific will not go to the West Coast of the USA… it’s outside our model,” Szucs said.
He reaffirmed the airline’s low-cost carrier (LCC) strategy focused on the domestic and short-haul international markets, saying “We’re here to serve the short haul market. We’re the safe, affordable, reliable bus service in the sky.”
Szucs also credited the Philippine market’s growth fundamentals as favorable for Cebu Pacific’s LCC model: a large population, a growing economy, and archipelagic geography requiring air travel.
Senior Reporter
