BUDGET carrier Tigerair Philippines posted a net loss of P159.8 million after Cebu Pacific bought the airline in March last year.
The amount was significantly lower versus the P1.69-billion net loss for fiscal year 2013, documents from both airlines showed. However, if the acquisition by Cebu Pacific was made at the onset of 2014, net loss would have been at P1.4 billion. Cebu Pacific said the loss is “a significant improvement from the previous year, as our ongoing cost-reduction program is gradually bearing fruit.”
“Tigerair Philippines generated revenues of P2.8 billion from March to December 2014, driven by the airline’s launch of eight new domestic routes in 2014,” the airline said.
Tigerair Philippines launched in 2014 new destinations out of Manila, Clark and Cebu, making its route network more robust with 15 destinations, 16 routes, and 336 weekly flights, as of end-December.
The entire shareholding in Tigerair Philippines was bought by dominant budget carrier operator Cebu Air Inc. in a $15-million deal which involves a strategic alliance between the two airlines.
Soon, Tigerair Philippines will once again undergo rebranding. The management of Cebu Pacific is planning to change the corporate name of its sister airline to Go Air, thereby letting go of its ties with the Tigerair Group in Singapore.
According to the latest financial statement of Tigerair Singapore, the group decided to forgo its operations in the Philippines because of certain restraints, such as slots, and its relatively small fleet.
“Since the company acquired Tigerair Philippines in 2012, the airline faced hurdles which hampered its expansion plans. Slots were not available at Manila’s Ninoy Aquino International Airport. The airline was unable to gain traction in the Philippine market with a relatively small fleet of five aircraft. The group did not foresee Tigerair Philippines turning profitable quickly with its small scale of operation,” it said. Cebu Air’s net income stood at P853.50 million in 2014, a 66.7-percent rise from P511.95 million the year prior, as revenues increased by 26.8 percent to P52 billion from P41 billion.
Expenses, meanwhile, rose by a slower 23.9 percent to P47.84 billion from P38.6 billion due to the expansion of the airline’s long-haul operations and the overall acquisition of new aircraft.
The pace of the company’s growth last year was faster than the decline in 2013, when foreign-exchange losses weighed on Cebu Air’s bottomline to P512 million from P3.57 billion in 2012. The year 2014’s net income, however, was relatively lower than the P3.62 billion net profit in 2011.
Competition in the airline industry, both here and abroad, has been heating up in the last couple of years due to the proliferation of more budget carriers. So far, there are three local low-cost carriers in the Philippines: Cebu Pacific, Tigerair Philippines and AirAsia Zest.
Budget carriers will likely dominate the aviation market in Asia Pacific, including the Philippines, this year, according to think tank Centre for Asia Pacific Aviation (Capa).
The Gokongwei-led airline company operates an extensive route network, serving 57 domestic routes and 37 international routes, with a total of 2,652 scheduled weekly flights. It operates from seven hubs, including the Ninoy Aquino International Airport (Naia) Terminal 3 and Terminal 4; Mactan-Cebu International Airport; Diosdado Macapagal International Airport in Clark, Pampanga; Davao International Airport; Iloilo International Airport; and Kalibo International Airport in Aklan.
The airline’s 52-strong fleet is comprised of 10 Airbus A319, 29 Airbus A320, five Airbus A330 and eight ATR-72 500 aircraft. Between 2015 and 2021, Cebu Pacific will take delivery of nine more brand-new Airbus A320, 30 Airbus A321neo, and one Airbus A330 aircraft.
Shares of Cebu Air shed 35 centavos or 0.41 percent to close at P84.95 apiece on Friday.