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MANILA - The operator of Cebu Pacific said its second-quarter performance likely fell below last year after Chinese travel agencies suspended tour packages to the Philippines.
"Second quarter will be good, but in general second quarter will be below last year," Lance Gokongwei, Cebu Air Inc. president told reporters on the sidelines of the company’s annual stockholders meeting.
Gokongwei is projecting 10 to 20 percent growth in revenue this year from last year's P11.9 billion. In the first quarter, the airline earned P962 million on revenues of P9.34 billion.
Gokongwei said Cebu Pacific’s load factor dropped because of the suspension of Philippine tour packages by several Chinese travel agencies.
"It's not good. We used to fly Airbus 320 in China, now only 319. But we remain committed to that market," Gokongwei said.
He said the fallout from the Chinese suspension of travel packages would be contained by other bigger markets.
“The biggest market is Singapore, Korea, Hong Kong and Japan," he said, adding that China contributes two to three percent of CEB’s total revenue.
A more pressing challenge is jet fuel prices, the executive said.
"We anticipate 2012 to be another challenging year for us and the entire airline industry as fuel prices have not abated since last year. From an average of $122.987 per barrel in December 2011, jet fuel was already trading at $136.18 per barrel level as of March 2012," Gokongwei said, adding that 50 percent of the company's operating expenses are fuel related.
"Further price increases will affect our margin," he said.
Middle East, Australia for long-haul operations
Gokongwei said CEB will focus on the Middle East and Australia for its long-haul operations, tapping the huge OFW market.
The airline had asked the Civil Aeronautics Board to hold air talks with Saudi Arabia and United Arab Emirates.
Cebu Pacific also filed a petition seeking to reallocate seven of the 14 frequencies to UAE and Saudi Arabia held by Philippine Airlines.
PAL has no direct flights to UAE, but has a code-sharing scheme with Middle Eastern carriers.
"Cebu Pacific can stimulate and expand traffic in many of these new routes as we bring the low cost travel to OFWs," Gokongwei said.
Data from the National Statistics Office showed that 22.6 percent of the 2.2 million OFWs in 2011 worked in Saudi Arabia, while 14.6 percent toiled in the UAE.
"Only two of top 10 medium- to long-haul markets are served by home-based carriers. Several destinations have no direct service," Gokongwei said.
Besides Middle East and Australia, other long-haul flights in the horizon of Cebu Pacific are India, Pakistan, New Zealand, Hawaii and Russia.
Cebu Pacific earlier bared plans to launch long-haul operations in the third quarter of 2013 using leased A330-300 aircraft.
The Centre for Asia Pacific Aviation had said Cebu Pacific's plan to launch long-haul flights in the third quarter next year has a potential to force PAL "out of business."
Gokongwei said Cebu Pacific is scheduled to take delivery of 25 Airbus A320s between 2012 and 2016, and has placed firm orders for 30 Airbus A321 neo aircraft to arrive starting 2017.
He said the company is looking at a combination of export credit agency and commercial bank loans to finance the seven A320s.
In 2011, Cebu Pacific had a fleet of 29 Airbus aircraft and eight ATR 72-500 turboprop planes.
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