Home Economy Cebu Pacific eyeing sale-leaseback deals for Airbus fleet

Cebu Pacific eyeing sale-leaseback deals for Airbus fleet

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BUDGET CARRIER Cebu Pacific, operated by Cebu Air, Inc. (CEB), is confident in securing financing for its P1.4-trillion Airbus aircraft order through a combination of equity injections and loans, its top official said on Wednesday.

“We’ll fund this from a combination of equity and loans; most of the lending for airplanes are generally done through sale and leaseback arrangements or through financing leases,”  Cebu Air Chairman Lance Y. Gokongwei told reporters on the sidelines of a launch event in Pasig City.

“Given Cebu Pacific’s strong track record, we’re the only privately owned carrier that did not default on its loans during the pandemic, we have a very strong credibility with the capital markets community. We’re sure that we can get financing from either the bank market or the sale and leaseback market,” he added.

The airline is buying up to 152 A321 new engine option (NEO) aircraft from European aircraft manufacturer Airbus, marking the largest aircraft order in the Philippines.

The agreement is expected to be finalized in the third quarter.

“The deliveries will be from 2028 forward. We’re still completing our previous deal, which will bring us all the way to 2027,” Mr. Gokongwei said.

The budget carrier chose Pratt & Whitney GTF engines to power the aircraft, despite previously reported issues with the engine manufacturer.

“Airbus and Pratt & Whitney came forward with what we feel was the best offer. We’re looking at the lowest unit cost to operate so that we can continue to provide affordable fares to the public.”

Mr. Gokongwei added that the aircraft order is “premised on continuing Philippine growth.”

“The main trigger we saw was President Ferdinand R. Marcos, Jr.’s really sincere efforts and strong efforts to really expand infrastructure, including privatization. We now see that Manila (Ninoy Aquino International Airport) has been privatized. Bulacan (airport) is a reality. That needs aircraft, and so we made this aircraft order,” he said.

The airline’s fleet currently consists of 73 Airbus and ATR aircraft.

On the budget carrier’s plans for new routes, Mr. Gokongwei said the airline is considering destinations within the operational range of the new aircraft.

Cebu Pacific currently operates flights to 35 domestic and 24 international destinations spanning Asia, Australia, and the Middle East.

“Anything that is within our flying radius, about five hours. Both domestic and international. We’ve been adding a lot of flights lately. It is a function also of which airports are going to be privatized and are going to be opened up right away,” he said.

“When we get the longer range Airbus 321s, which are available from early 2026, then we can go up to a seven, eight-hour range on a narrow body,” he added.

NEW AIRCRAFT DELIVERYThe company also announced on Wednesday that it had received its new Airbus A321NEO, progressing to almost half of the 17 aircraft delivery expected this year. 

“We look forward to carrying more passengers to their chosen destinations as we continue to expand not only our network, but also our fleet,” Cebu Pacific Chief Commercial Officer Alexander G. Lao said in a media release.

The brand-new aircraft arrived at the Ninoy Aquino International Airport on June 30 from Airbus’ facility in Germany, Cebu Pacific said. 

Airbus’ NEO aircraft is known for its enhanced fuel efficiency, representing the latest generation of Airbus planes designed to be highly compatible with sustainable aviation fuel (SAF).

Currently, all Airbus aircraft are certified to operate with up to a 50% SAF blend, aligning with Cebu Pacific’s goal of integrating green fuel across its network.  — R.M.D. Ochave and A.E.O.J.

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