Manila: Cebu Pacific, the largest budget carrier in the Philippines, is planning to purchase between 100 and 150 aircraft, in a deal valued at an estimated $12 billion, it was announced on Tuesday.
The announcement was made by the airline's president, Alexander Lao, local media reported. The $12 billion figure is based on list prices, but it's worth noting that airlines typically receive significant discounts on large aircraft orders, often at least half off the headline price.
Cebu Pacific is reportedly considering offers from both Boeing and Airbus and will seek out the best proposal from one of these aircraft manufacturers. The final decision may come down to the most favourable terms offered by either Boeing or Airbus.
The decision to purchase new aircraft is part of Cebu Pacific's strategy to expand its fleet and take advantage of the increased travel demand expected as the world recovers from the pandemic travel restrictions.
Cebu Pacific has already accepted 12 new aircraft in the current year and is scheduled to receive seven more by the end of 2023.
The low-cost airline booked a net income of 3.75 billion pesos (approximately $66.1 million) in the first half of the year. This marks a significant improvement compared to the 9.5 billion pesos net loss reported in the same period the previous year, Reuters reported.
Michael Szucs, the CEO of Cebu Pacific, revealed to the Philippine Daily Inquirer that the airline will officially issue a request for proposals to both Boeing in the United States and Airbus in Europe by the end of the current week. This move allows these competing aircraft manufacturers to present their best offers for consideration.
In a decisive approach, Szucs indicated that it's unlikely Cebu Pacific will split the order between the two manufacturers. Instead, he characterised it as a "winner-take-all deal," with the manufacturer that offers the most favourable package being awarded the entire contract.
Szucs highlighted several factors that make the Philippines an appealing market, including its demographic dividend, strategic location, consistent economic growth, and rising tourism potential.
He also noted that the country's aviation infrastructure is anticipated to see significant improvements when San Miguel Corp's Bulacan airport becomes operational between 2026 and 2028.
The move reflects the airline's commitment to substantial, long-term growth in the aviation industry.
700,000 additional seats
Cebu Pacific is poised to conclude 2023 with an additional 700,000 seats available for its international flights, thanks to its expansion in both fleet size and route offerings.
This strategic growth is paying dividends, with the airline anticipating a 63 per cent jump in its global reach compared to its pre-pandemic capacity.
Currently, the carrier flies to 25 international destinations, including Duba. As the airline continues to expand its international connections, the national flag carrier, Philippine Airlines (PAL), is also making moves to revive its domestic routes outside of Manila. PAL will be reintroducing its flights from Cebu to Bicol and Mindanao in December to cater to the increased holiday travel demand.