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Saturday, September 25, 2010

CebuPac eyes more destinations abroad

CEBU AIR Inc., operator of budget carrier Cebu Pacific, plans to aggressively grow its international business over the next five years to match its bread-and-butter domestic operations.

Ahead of its initial public offering (IPO) next month, Cebu Pacific will continue to add more routes and fly more often to high-traffic destinations in the Philippines and abroad as it takes delivery of more aircraft, an airline official said.

Cebu Air senior vice-president and chief strategist BJ Sebastian said the company could grow its international business by 25 percent a year over the next two to three years.

Its domestic business, which contributes 70 percent of total revenue, may grow 15 percent a year over the same period, Sebastian said.

“For Cebu Pacific, that growth, just on the basis of momentum, is very defensible,” he said.

The company has been growing by 25 to 29 percent a year for the last three years, the airline official said.

The company also has plans to follow a “disciplined and profitable” growth path over the next few years, Sebastian added.

The Philippine Stock Exchange has approved Cebu Air’s IPO for Oct. 25, although the national barangay elections, which will likely take place on the same day, may push back the listing by a day.

With a price guidance of between P110 and P135 a share, Cebu Air of the Gokongwei group, expects to raise up to $80 million in fresh funds from the sale of new primary shares from the IPO.

This will make up about 15 percent of the total offering.

The rest of the offering of around $400 million, depending on the price, will come from the sale of secondary shares currently held by JG Summit, Cebu Air’s parent company.

Sebastian said JG Summit plans to retain a 65-percent stake in the airline.

Cebu Pacific is expecting the delivery of 22 new Airbus A320 jets starting next month until 2014.

This will bring the number of planes in the airline’s fleet to 47.

Sebastian said the new planes will be used mainly for the expansion of the company’s international network.

The company currently has 16 international destinations.

Considering the A320’s range, the company may be able to choose from about 180 domestic and international routes within the Asia Pacific region, Sebastian said.

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