Cebu Pacific says fuel shock made Q2 toughest since pandemic, slips to loss

 Michael Szucs

Cebu Pacific CEO 

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• A surge in fuel prices turned the second quarter into Cebu Pacific’s toughest operating period since the pandemic, pushing the airline to a P5.9 billion first-half loss.
• Despite the earnings hit, revenue reached a record P68.6 billion while passenger traffic climbed to nearly 14.5 million.
• Cebu Pacific widened its estimated domestic market share to 60 percent and expects a more rational capacity environment to support a recovery.

 One of Cebu Pacific’s toughest quarters since the pandemic pushed the airline back into the red, as soaring fuel prices overwhelmed resilient travel demand and stronger revenues.

The Philippines’ largest carrier by fleet size and passengers swung to a P5.9 billion first-half net loss, even as revenue climbed 8 percent to P68.6 billion and passenger traffic grew 4 percent to nearly 14.5 million. Fuel costs more than doubled during the second quarter, dragging operating income down to P300 million.

“The second quarter was one of the most challenging operating environments we have faced post-pandemic, driven by an unprecedented spike in fuel prices,” Cebu Pacific CEO Michael Szucs said. 

“Despite these external pressures, demand for affordable air travel remained resilient, revenue continued to grow, and we further strengthened our market leadership," he added. 

Fuel overwhelms growth

Second-quarter revenue rose 7 percent to P35.2 billion as resilient travel demand and calibrated fare adjustments lifted passenger, ancillary and cargo revenues.

But surging fuel costs and foreign exchange losses pushed Cebu Pacific to a P2.7 billion operating loss and a P5.5 billion net loss for the quarter.

Market leadership

Despite the earnings setback, Cebu Pacific expanded its estimated domestic market share to 60 percent in the second quarter from 55 percent a year earlier.

The airline also improved on-time performance to 84.2 percent, placing it among the Asia-Pacific’s most punctual carriers, according to aviation analytics firm Cirium.

“As industry capacity becomes more rational and market conditions improve, we remain confident in Cebu Pacific’s long-term growth opportunity and our ability to deliver sustainable value for our shareholders,” Szucs said.

—Edited by Miguel R. Camus