Cebu Pacific sets $1-B plane purchase plan

Posted at 07/19/12 7:55 AM

MANILA, Philippines - Gokongwei-led Cebu Pacific (CEB) is spending close to $1 billion next year to acquire new planes, some of which will be used for its newest move to undertake long-haul flights for the first time.

In an interview with The STAR, CEB president Lance Gokongwei also expressed confidence that they can secure air rights to fly to the United Arab Emirates (UAE) and the Kingdom of Saudi Arabia (KSA).

Gokongwei said CEB will utilize bank financing as well as financing provided by export credit agencies for the acquisition of new aircraft – seven A320s with a list price of $85 million each and two A330s with a cost of $160 million each for a total of $915 million – for delivery next year.

This year, CEB is taking in three new A320s and for 2014, another five planes. A total of 20 A320s are being brought in.

For the A330s, CEB has placed orders for eight, two of which will be delivered in the third quarter of 2013.

In addition, the company is bringing in 30 A321 Neos which will be delivered between 2017 and 2022.

As a budget carrier flying to and from routes not exceeding four hours flying time, CEB is now preparing for long-haul flights.

Gokongwei said of the top 10 long-haul destinations, only San Francisco and Los Angeles are being serviced by Philippine Airlines (PAL).

“We are looking at the Middle East and additional destinations in the United States, the latter of course depending on when we can get back to Category 1 status,” he revealed.

Cebu Air Inc., the operator of the budget carrier, has filed a petition with the Civil Aeronautics Board for designation as the official Philippine carrier and allocation of entitlements to Oman.

However, CEB vice president for marketing and distribution Candice Iyog said the airline has asked for a deferral of the Oman air talks to next year.

“Our priority now is to get air rights for United Arab Emirates (UAE) and Kingdom of Saudi Arabia (KSA),” she said.

The CAB has not yet sought a schedule with UAE and KSA aviation authorities for air talks.

But Gokongwei said air panel negotiations have been scheduled for UAE and Saudi Arabia.

CEB earlier mentioned international destinations such as Australia, Middle East, Hawaii and Guam as potential long-haul routes.

“We are exploring serving cities where large Filipino community resides. Data indicates that more than half of Filipinos deployed in these regions take multiple stops and connecting flights because no home carrier can fly them there non-stop,” Gokongwei earlier said.

CEB earlier signed a $280-million contract with global power systems company Rolls-Royce, which will provide long-term TotalCare service support for the Trent 700 engines on up to eight of CEB’s Airbus A330 aircraft.

“CEB’s fleet expansion will enable us to launch long-haul operations and serve markets outside Asia Pacific, including those in Europe, the Middle East, Oceania and the United States. The level of support offered by Rolls-Royce through the TotalCare package will further enhance our operations,” Gokongwei said.

CEB will use leased A330s to begin long-haul operations in the second half of 2013. These aircraft will represent the first Trent engines in the carrier’s fleet. The Trent 700, the only engine specifically designed for the A330, is the market leader.

CEB currently operates 10 Airbus A319, 20 Airbus A320 and eight ATR-72 500 aircraft.