Cebu Pacific is in talks to make a massive aircraft purchase that could be worth up to $12 billion. The airline is considering buying 100-150 narrow-body planes from either Boeing or Airbus. This could be the biggest jet purchase in the history of the Philippines. The airline has set a deadline for the end of the year for both companies to submit their proposals.
Aiming for Long-Term Growth
The airline’s ambitious plan aims to more than double its current fleet by 2035. This is part of a strategy to capitalize on the expected travel boom across Southeast Asia in the post-pandemic era. “To service the Filipino market over the next 20 years, Philippine carriers will need to quadruple in size,” said Michael Szucs, the CEO of Cebu Pacific. The airline sees a bright future for travel in the Philippines, fueled by high economic growth, a young population, and the country’s closeness to major regional hubs.
Financials and Fleet Details
Cebu Pacific has already made a strong financial recovery. The airline reported a net profit of 3.75 billion pesos ($66.1 million) for the first half of this year. This is a significant turnaround from the 9.5 billion peso net loss it reported for the same period last year. Currently, the airline operates a fleet of 73 Airbus and ATR aircraft, and this number is expected to rise to 91 by the end of 2024.
The $12 billion price tag for the new aircraft is based on list prices, according to Alexander Lao, the airline’s president. However, airlines often receive significant discounts on large orders, sometimes up to half the list price. If Cebu Pacific decides to go with Boeing, it would be a significant change since the airline currently operates an all-Airbus fleet.
Operational Resilience and Challenges
Before announcing its financial results, Cebu Pacific revealed plans to increase its aircraft deliveries from 15 to 21 in 2023. The airline also plans to phase out its A320ceo aircraft and replace them with A320neo models by 2028. However, the airline has faced challenges with its Pratt & Whitney engines, specifically issues related to the PW1100G engine. These issues have led to changes in the airline’s maintenance plans, as disclosed in a Philippine Stock Exchange filing on September 15, 2023.
Cebu Pacific is ready for significant expansion, with plans to purchase up to 150 new aircraft. The airline is well-positioned for this ambitious growth, thanks to a strong financial recovery and a strategic focus on long-term travel trends in Southeast Asia. The airline has until the end of the year to receive proposals from Boeing and Airbus, and it’s clear that this major purchase could be a game-changer for both the airline and the Filipino travel market.
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