Cebu Pacific’s financial losses deepened in the second quarter of this year as the impact of the Covid-19 pandemic began to be felt more severely.
The Philippine airline and its subsidiaries made an operating loss of Ps6.29 billion ($129 million) in the three months ended 30 June, it reports. This compares with a profit of Ps4.96 billion in the corresponding period in 2019.
An operating loss of Ps693 million had been incurred in 2020’s first quarter. The first-half operating loss of Ps6.98 billion compares with an operating profit of Ps8.81 billion in the same period of 2019.
At the net level, a second-quarter loss of Ps7.96 billion compares with a profit of Ps3.79 billion a year ago. The company made a first-half net loss of Ps9.14 billion after a profit of Ps7.14 billion in the six months ended 30 June 2019.
First-half revenue was down 61% at Ps17.3 billion. Second-quarter revenues dwindled to Ps1.42 billion from Rs23.5 billion in the same period of 2019.
“The overall decline in revenues was brought about by the impact of the Covid-19 outbreak which started with cancellation of flights to China, Hong Kong, Macau and South Korea in varying periods due to the imposition of travel restrictions,” says the airline. “With the rapid escalation of the situation surrounding Covid-19, the Philippine government implemented a community quarantine which then prompted the group to suspend all its scheduled flights beginning 19 March 2020.”
It adds: “While some sporadic arrangements for sweeper flights to assist with stranded tourists did occur, for the most part the group’s operations were virtually nil until April when some cargo flights within the Philippines and eventually to countries like Japan, Thailand, China, Hong Kong recommenced. Commercial passenger operations restarted only last 3 June for domestic flights, but in a limited capacity.”
The airline’s cash positioned weakened as the pandemic took hold. It started out the year with cash and cash equivalents of Ps18.2 billion, but that had been reduced to Ps9.71 billion by 30 June.
However, the airline says it is confident in its ability to raise cash for liquidity needs.
“The group remains in a strong balance sheet and equity position at the end of the period. The group believes that it remains a resilient airline despite the adverse impact of the Covid-19 outbreak,” it says.
It adds that it is working to mitigate the impact of Covid-19 on its business operations. These efforts include “negotiations with key suppliers on capital expenditure commitments and related cash flows, as well as with other suppliers and stakeholders as they impact the group’s cash flows”.
As of 30 June, the group operated a fleet of 77 aircraft: 30 Airbus A320s, seven A321s, five A320neos, six A321neos, eight A330s, eight ATR 72-500s and 13 ATR 72-600s, according to a 12 August filing to the Securities and Exchange Commission of the Philippines.
The Airbus aircraft are operated on both domestic and international routes, and the ATR turboprops on domestic routes, including destinations with runway limitations. The average age of aircraft in the group’s fleet was 5.36 years at 30 June.