Philippines airline Cebu Pacific has cut its full year capacity guidance amid challenges with securing on-time aircraft deliveries as well as engine issues.
The company noted that 13 of its narrowbody fleet were grounded in the first quarter as a result of the continued Pratt & Whitney GTF engine issue. The company had originally anticipated around seven to nine aircraft on ground (AOG) for the year. As of the end of the quarter, Cebu had 99 aircraft in its fleet.
Additionally, the company said it is expecting seven new aircraft deliveries in 2025, consisting four A330neos, two A320neos, and one A321neo. The company said it expects up to three month delays in aircraft deliveries for 2025.
Furthermore, Cebu said the operational burden of engine changes for its widebody fleet in the second half will be “significant”. Cebu said it had received commitment on life cycle extensions and spare engines from Rolls-Royce. The airline's A330neos are powered by the Trent 7000 engines.
As a result of these operational challenges, the company has trimmed its capacity guidance of around 26% increase on last year, down to a 15 to 20% growth for the year. Cebu said it is “carefully monitoring” capacity in line with the challenges while “ensuring operational reliability”. The airline said the capacity growth remains “robust". Capacity had grown 23% in the first quarter of the year compared to a year prior.
“We remain optimistic on our financial outlook,” said Cebu Pacific CFO Mark Cezar. “Underlying demand for affordable air travel remains strong, and we've made earlier strategic investments to ensure resilient operations.”
Additionally, the airline said tailwinds provided a “favourable" cost outlook for the year. The stronger Philippine peso, lower interest rates, and lower fuel prices were all noted as key tailwinds. However, the increase in US inflation may result in less favourable aircraft and materials pricing.
“A full-blown trade war has far-reaching implications, including a possible US, or even global recession, and this may affect businesses in the Philippines,” the airline read in its report.
The company reported revenues of 30.4bn pesos ($545.6 million), up 20%, while operating expenses had climbed 26% to 28.5bn pesos ($511.5 million. The company's operating income fell 26% to 1.96bn pesos ($35.2 million), and net income fell 81% to 0.47bn pesos ($8.4 million).
Cebu had noted that lower fares and higher costs had impacted its results despite passenger numbers increasing 26% to nearly 7 million in the quarter, as well as load factor up one percentage point to 84.9%.