Cebu Air Inc., operating as Cebu Pacific, is considering a significant order of narrow-body planes from either Airbus or Boeing (NYSE:BA), according to an announcement made by the airline's Chief Executive, Mike Szucs, on Thursday. The move is part of a strategic plan to diversify risk amid ongoing engine issues with Pratt and Whitney (P&W).
Szucs revealed the potential order during the 2023 Aviation Summit, describing it as "extremely large" and possibly the largest ever placed by a Philippine airline. "In the coming week or two we will formally launch the request for proposal and may the best man win. It will be one or the other, we're not gonna split it between the two," he said.
The CEO estimated that the entire process, from proposal to decision, would take three to six months. He emphasized that the decision would be based on financial and operational outcomes. "Frankly, we will look at the right outcome financially and operationally, but both products are really good. The Boeing 737 Max is an excellent product and we know because we fly around at the moment," Szucs added.
Cebu Pacific is no stranger to Boeing's aircraft. The airline operated Boeing 757 narrow-body planes for international flights from 2001 to 2006. On Thursday, Szucs had told reporters that Cebu Pacific was looking at Boeing aircraft to diversify risk "because we're facing issues at the moment," referring to the ongoing engine issues with P&W.
This strategic move comes as Cebu Pacific anticipates its fleet to grow from 76 aircraft at the end of 2023 to 91 aircraft in 2024. However, it has revised its growth forecast for 2024 downward due to P&W engine issues. While there's no immediate impact on its operations, the company expects these issues to affect fleet availability in 2024.
Despite the engine issues, the airline has shown strong financial performance. In the first half of 2023, Cebu Pacific carried 7.69 million domestic and international passengers, posting a net income of P3.74 billion, a significant turnaround from the P9.5-billion net loss recorded in the same period last year. Its revenues for the period reached P43.55 billion, more than double the P20.68 billion recorded in the same period last year.
Cebu Air shares closed up 45 centavos, or 1.35 percent, at P33.80 (USD 1 = PHP56.701) each on Thursday, reflecting investor confidence amidst these developments.
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