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How Cebu Pac Doubled Its Profit in 2016 After Quadrupling It in 2015

Timely fleet expansion is helping PH's biggest domestic airline boost passenger volumes amid lower fuel prices
By Entrepreneur Staff |


When Cebu Air, operator of the country's biggest domestic airline, Cebu Pacific, reported its 2016 financial results last week, most reports noted it more than doubled its net income to Php9.8 billion last year from Php4.4 billion in 2015.


But what was largely left unmentioned was that this came just a year after Cebu Air more than quadrupled net income from Php0.9 billion in 2014 to Php4.4 billion in 2015. Over a two-year period from 2014 to 2016, Cebu Air's net income surged 11 times from less than a billion pesos to almost Php10 billion.



Globally, airlines are benefitting from record-low crude oil prices in recent years, and Cebu Air is no exception. In 2015, the airline founded by John Gokongwei Jr., the country's second richest billionaire, saw its aviation fuel expenses drop by almost a fourth. Fuel expenses fell by another tenth last year. These helped keep both regular and extraordinary expenses low. (See infographic)


But timely addition to its fleet, which grew from 48 aircraft in 2013 to 57 last year, allowed it to mount more flights that boosted passenger volume which climbed 4.1 percent last year. A fare increase last year and improvement in seat load factor from 82.6 percent to 86 percent also helped push up overall revenues by almost a tenth to Php61.9 billion.


The combination of declining or modest increases in expenses as well as steady growth in passenger volumes and overall revenues helped Cebu Air grow its net income several fold in the last two years.



Cebu Air is majority-owned by a subsidiary of Gokongwei-family controlled JG Summit Holdings. Members of the family also own the company that publishes the Entrepreneur Philippines website.




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