Low-cost carrier Cebu Pacific recorded a net loss of P1.183 billion for the first quarter of 2020, a reversal from the P3.356 billion net income posted year-on-year as revenues took a hit due to the coronavirus disease (COVID-19) outbreak.
Revenues for January to March 2020 amounted to P15.914 billion, 24.9% less than the P21.177 billion generated in the same period last year, according to a disclosure by parent company Cebu Air, Inc., which includes subsidiary Cebgo and 12 special purpose entities.
Cebu Pacific said the decline in revenues was caused by travel restrictions—with cancellation of flights to China, Hong Kong, Macau and South Korea during varying periods in the quarter—arising from the COVID-19 outbreak.
With the rapid escalation of the situation, the Philippine government March implemented in mid-March an enhanced community quarantine over the entire Luzon, which then prompted the Cebu Pacific group to suspend all flights beginning March 19, 2020. The ECQ has since been extended twice, the most recent until May 15. Cebu Pacific flights are cancelled until then.
Revenues from passengers decreased 27.4% to P11.388 billion in the first quarter of the year from P15.679 billion in the comparable period last year. Cebu Pacific said the decline was due to the 16.5% drop in passenger traffic from 5.3 million to 4.4 million, driven by 14.7% fewer flights coupled with a 2.9 percentage points decrease in seat load factor to 81.3%.
Lower average fares by 13% also contributed to the reduction of revenues.
Cargo revenues likewise dropped 29.7% to P1.013 billion from P1.442 billion following the 20% decrease in cargo volume transported in the first three months of 2020 consequent to reduced flight operations plus the effect of a lower cargo yield of about 12.2%.
Ancillary revenues slipped 13.4% to P3.512 billion from P4.056 billion mainly attributable to lesser passenger volume and flight activity during the quarter, slightly offset by the increase in average ancillary revenue per passenger by 3.7%.
The group incurred operating expenses of P16.607 billion for the first three months of 2020, 4.2% less than the P17.332 billion operating expenses reported for the same period last year.
Cebu Pacific said the decline was primarily driven by suspension of the group’s operations due to COVID-19 with a large portion of expenses based on flights and flight hours.
The appreciation of the Philippine peso to the US dollar for the three months of 2020 and lower fuel prices contributed to the decrease in operating expenses.
As of March 31, 2020, the group operates a route network serving 78 domestic routes and 25 international routes. Prior to the suspension of all scheduled flights on March 19, the group operated 2,717 scheduled weekly flights with a fleet of 76 aircraft.