Cebu Pacific reports P1.18 billion net loss in Q1

Aviation Updates Philippines – For the first quarter of 2020, Cebu Pacific reported a net loss of about P1.18 billion attributed to the loss of travel appetite, flight suspensions of COVID-19, and the unprecedented cancellations caused by the Taal volcano eruption. The first quarter of the year proved to be a setback from Cebu Pacific's whopping 133-percent jump in net profits for 2019.
IN THE RED. A bad start in the year 2020 with the cancellation of flights due to the Taal eruption resulted to a net loss for Cebu Pacific, something that hasn't been experienced by the carrier for a considerable amount of time already. Photo from Nek Aberia, AUP Contributor.
The first-quarter reports ran from January 2020 until March 2020. During that period, the biggest factor of the low-cost airline's losses, aside from the Taal flight disruptions, was the early suspension of flights to China and Hong Kong, a prelude to the economic implications of the pandemic in the Philippines.

“The overall decline in revenues was brought about by the impact of the COVID-19 outbreak which started with the cancellation of flights to China, Hong Kong, Macau, and South Korea in varying periods during the quarter due to the imposition of travel restrictions,” the airline said.

According to its late-April filing to the Philippine Stock Exchange (PSE), Cebu Pacific incurred losses of up to P1.18 billion for the first three months of 2020 alone. This is 135-percent lower than the P3.36 billion net profit it gained over the same period last year.

At the same time, passenger revenues decreased by over 27-percent to only P11.4 billion from P15.7 billion in the first quarter last year. The cancellation of flights, which resulted in plentiful rebookings and refunds, significantly reduced the airline's revenues for this period.

The Cebu Pacific Group, which includes regional airline Cebgo, flew over 4,414,925 passengers in the first quarter. These numbers are down from 5,288,536 in 2019, a 16-percent difference. The average load factor on all flights also decreased by almost three-percent to only about 81.3-percent in 2020.

Notably, the group operated more than 5,000 fewer flights in 2020, a decrease of 14.7-percent. The quarterly operating statistics from the group showed that Cebu Pacific and Cebgo dispatched 35,027 flights in 2019, compared to only 29,879 in 2020. Previously, AUP reported about the reduction of flights of the group due to the enhanced community quarantine in Luzon.

It is important to note that the suspension of all domestic and international operations for the group started mid-March. Therefore, the operating statistics and financial statements during this period are only minimally affected by the flight suspension because of the COVID-19 pandemic in the Philippines.

After the enhanced community quarantine ends hopefully around mid-May, airlines may now resume operations from their domestic hubs. The crucial airports for Cebu Pacific to focus on are Manila, Cebu, and Davao, which serve as the entry points for the three main islands in the country. Domestic travel, with the reopening of these air links, is expected to gradually pick-up over time. However, international travel may need a longer time to recover.