Philippines carrier to buy 12 Airbus

Philippines carrier to buy 12 Airbus

Agence France-Presse, Manila

Budget Philippines carrier Cebu Pacific said on Wednesday it is to buy 12 A319 aircraft from Airbus and lease two A320s in a US$670 million refleeting program.

This would extend the range of the regional operations of the country's number two carrier and help it gun for the leadership of the domestic market, where it now holds a 38 percent market share, airline president Lance Gokongwei told a news conference.

The refleeting costs $670 million, he added. Internally generated funds, export credit agencies and sale-leasebacks would cover the acquisition price, he said without elaborating, citing confidentiality agreements.

Cebu Air Inc., which began operations in 1996, would take delivery of two 168-seater A320s in April and May 2005. The leases are understood to be for five years.

The first of the 150-seater A319s, would be delivered in September next year, one a month later, and two in December 2005.

Airbus would deliver six aircraft in 2006 and the other two not later than February 2007.

"Once our re-fleeting is completed by early 2007, we shall have the youngest fleet in Asia," Gokongwei said.

Cebu Pacific would gradually phase out its current fleet of McDonnell Douglas DC-9 aircraft, used for domestic destinations, and its regional workhorse of Boeing 757s, over the next 18 months, general manager Bong Mojica said.

Cebu Pacific, which runs 85 flights daily to 19 destinations including Hong Kong, Seoul, Canton and Xiamen, carried 1.88 million revenue passengers last year and expects 16 percent growth in 2005, Mojica said.

The new aircraft should boost the no-frills airline's efficiency and cut operating costs, giving it the opportunity to consider an "even more competitive" fare structure in future, Mojica said.

"We estimate that the Airbus 319s would provide us at least 20 percent savings in operating costs per trip versus the DC-9s," Gokongwei said.

"The expanded range of the aircraft gives us the opportunity to review our regional operations" as well as to "compete more effectively internationally," he added.

He listed China, Japan and South Korea as growth markets but would not elaborate further on possible expansion plans.

For the domestic network, "part of our operational plan is to try to target domestically to have a leadership position in the Philippines," Mojica said. That position is now held by local rival and fellow flag carrier Philippine Airlines.

Gokongwei said Cebu Pacific's turnover reached four billion pesos ($71.24 million) in the six months to June, leading to an interim net profit of 480 million pesos. However, he said soaring oil prices were a cause for concern.

"The price of fuel has really been very unpredictable," he said.

"I have to caution you that April to June is the best airline months and we expect that the profit for the balance of the year will not be as great," he said without giving specific figures.

Mojica said Cebu Pacific has imposed a fuel surcharge of 6.50 dollars on its international flights, but have not increased fares for the domestic routes.