Cebu Pacific sees long-haul business picking up

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Cebu Pacific says it has seen an improvement in the load factors of its long-haul operations, and will add two more widebodies to its fleet this year.

In a conference call with reporters, chief executive Lance Gokongwei says load factor for its long-haul arm was 36% when it launched last October. That figure has since grown to about 60% in the first two months of 2014.

The carrier adds that about 22% of its available seats in the next three months on the Manila-Dubai route have been sold as forward bookings.

This year, the carrier, which already has three Airbus A330s in its fleet, will take delivery of another two widebodies – one in May and the other in September. The last of six widebodies it has signed up for is scheduled to arrive in 2015.

The airline plans to put the incoming aircraft on routes to Saudi Arabia and Australia.

Asked how satisfied he is with with the performance of its long-haul arm, Gokongwei says: “Long-haul has been an education for us, and we’re also very fast learners.”

He explains that when the carrier first decided to enter the long-haul market, there was only Emirates flying twice daily on the Manila-Dubai route. Capacity on the route has since tripled with PAL Express and Cebu launching new services and Emirates adding frequencies.

“The business proposition when we looked at this three years ago is that 70% of the flights are indirect. Clearly the capacity into it has changed and become much more competitive than expected,” says Gokongwei.

“But I think we doing quite well and [are] now the leading Philippine carrier into Dubai.”

Cebu Pacific swung to a net loss of Ps152million ($3.4 million) for its 2013 fourth quarter, a sharp reversal from the Ps1.3 billion profit recorded the previous corresponding quarter. This also impacted its full year performance, which saw net profit plunge 85.6% to Ps512 million.

Gokongwei says he also expects the carrier’s 2014 first half performance to be weak because of losses from its long-haul operations as well as the acquisition of Tigerair Philippines.