Cebu Pacific says the month-long “community quarantine” imposed on metropolitan Manila and the main Luzon island group recently will free up 90% of its total seat capacity, even as it maintains services from its hubs outside of Manila and the region.
The 90% capacity figure is based on the suspension of domestic flights departing Manila, and previously suspended services to China, Hong Kong, Macau and South Korea, says Cebu Pacific in a Philippines Stock Exchange disclosure.
During this period, the airline continues to operate flights from its other hubs that have not been affected by the quarantine order such as Cebu, and is maintaining connectivity “where operationally feasible”.
Cirium schedules data show that in February, domestic routes accounted for 83% of Cebu Pacific and subsidiary Cebgo’s seat capacity.
Although it expects a “significant revenue impact” during the quarantine period, operating expenses will fall in tandem, while lower fuel prices provide an additional cost benefit to its reduced fuel consumption.
Cebu Pacific was unable to provide any earnings guidance for 2020, due to uncertainties caused by the coronavirus pandemic. However, it stressed that it has a strong balance sheet with “over Ps18 billion ($353 million) in cash and cash equivalents” at the end of 2019, and that a net debt to equity level of around 1.25x with a long maturity profile gives the airline room to seek short-term or long-term funding.
It is also conserving cash and reducing expenses by freezing recruitment and consultancy work, implementing pay cuts for its top management, and suspending salary increases.
Earlier in February, the carrier estimated that the outbreak will see a “Ps3-4 billion swing on profit” should the outbreak remain unabated over the next six months. The estimate was based on 2003’s Severe Acute Respiratory Syndrome outbreak, which curtailed demand for air travel for six months.
Cebu Pacific is expected to release its 2019 financial results in the coming weeks.
