With a decision that could reshape the Philippine aviation landscape, low-cost carrier Cebu Pacific is meticulously weighing its options before awarding a potential $12 billion contract for 100 to 150 narrow-body aircraft.
This monumental choice, the largest single aircraft purchase in the country’s history, pits aviation titans Airbus and Boeing in a head-to-head battle, each vying for the lucrative deal.
In an interview with local reporters on Tuesday, Cebu Pacific president Alexander Lao said that the low-cost carrier is currently evaluating the proposals from the European and American aircraft manufacturers.
Given the gravity of this decision, Lao said the airline extended the deadline for a decision from the first quarter, as initially planned, to the second quarter of 2024.
Lao was quoted in a Manila Standard article, saying:
The process is ongoing. So, we expect to hopefully come to a decision by the first half. I think what we had initially said was maybe by the first quarter, but the first half was our latest guidance.
The aircraft manufacturers are not the only ones involved in the deals, as the engine suppliers also play a crucial role. The Airbus A320neo and the Boeing 737 MAX use engines from CFM International, but the former has an additional option of Pratty & Whitney (PW) engines.
On that matter, Lao remarked:
The process is really going back and forth with the key suppliers. It’s not just Airbus and Boeing, but it’s also the engine manufacturers; because, clearly, we have to make an engine selection with those aircraft.
Lao added that given Filipinos’ price sensitivity, it is crucial for the low-cost carrier to bag the best deal to pass down savings to the customers.
More aircraft, faster growth
The first batch of ordered jets from this deal is expected to arrive by 2027 or 2028, with the rest being delivered in 2035.
These new aircraft are not replacements but supplements to the airline’s current fleet to support its growth. Cebu Pacific will take advantage of the New Manila International Airport opening by 2027.
For this year alone, Cebu Pacific aims to grow capacity by 5 to 8 percent amid the aircraft shortage it is currently experiencing.
Engine issues taking a toll
The aircraft shortage results from the extended maintenance requirements of its Airbus A320neo family aircraft powered by PW engines. Unlike the CFM engines, the PW1000G Geared Turbofan (GTF) engines required extensive checks much earlier than its rival engine.
As a stop-gap measure, Cebu Pacific has aggressively leased more aircraft to its fleet, even taking up older Airbus A320ceo aircraft in the short term.
The airline damp-leased two Airbus A320ceo from Bulgaria Air from January to March 2024, which would be deployed for flights between Manila, Cebu, and Davao. Bulgaria Air-leased A320 flights began on January 14, 2024.
Outside of its order book with Airbus, the budget airline leased six more Airbus A320neo planes to bolster its fleet last year. In addition, it acquired three Airbus A320ceo planes, which had an average age of 14 years.
Based on the latest data from Planespotters.net, Cebu Pacific operates a fleet of 17 ATR 72 aircraft: 21 Airbus A320ceo, 18 Airbus A320neo, seven Airbus A321ceo, 13 Airbus A321neo, one Airbus A330-300, and seven Airbus A330-900neo.
Sources: The Manila Times, Manila Standard, Daily Tribune
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