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Philippine Carriers Struggling, But New Airport Remains Optimistic

Philippines Airlines has announced plans to cut over 30% of its workforce, amounting to up to 2,000 employees. (Photo: AirlineGeeks | William Derrickson)

Cebu Pacific Air, a no-frills airline in the Philippines, is seeking a $500 million investment to strengthen its balance sheet.

“We need to create a longer runway for CEB so that we can continue providing affordable and accessible air transport services for everyone,” Lance Gokongwei, the airline’s president and chief executive, said.

The Philippines is one of the coronavirus hot spots in South East Asia and the government hasn’t provided financial support to airlines in the country since the pandemic began. Cebu Pacific cut its running cost and transformed itself to become a “more digitalized airline” in the early phase of the pandemic. The carrier slashed its workforce in March and July; the two cuts combined saw 25% of Cebu Pacific’s jobs cut after the onset of the coronavirus pandemic.

As a result of the pandemic, the airline’s revenue has dropped 61% year-over-year. Flight services resumed in June, but only 15 percent of capacity has recovered compared to last August. Cebu Pacific Air owns a fleet of 76 aircraft and provides regional and domestic services.

According to the local media, 44,000 Cebu Pacific flights were cancelled and 2.1 million passengers were affected during the pandemic. Earlier, the airline refunded over $49.6 million to passengers affected by flight cancelations thus far.

In the meantime, the Philippines government has broken its silence on the financial support to the carriers in Philippines.

“We are prepared to participate in assistance to the airline industry. But let me point out that whatever assistance we have or we are going to provide will be part only of the entire process,” Finance Secretary Carlos Dominguez III said, per Philstar. “The private sector banks have to cough up the majority of the assistance.”

Cebu Pacific is not only one airline facing the severe turbulence. Philippine Airlines, the largest carrier airline in the country with 7,000 employees, has announced that it will cut one third of its workforce in response to the COVID-19, per The Sun Daily.

“The collapse in travel demand and persistent travel restrictions on most global and domestic routes have made retrenchment inevitable,” the carrier said. It is operating less than 15% of its previous capacity after months of travel restrictions.

However, there are some positive signs despite the ongoing pandemic. San Miguel Corp, the parent company of the New Manila International Airport, has announced the airport’s construction will be commenced this month. The first phase of the project will comprise two runways and is expected to be completed in five to six years.

“The airline business will be a problem for the next six years. I will get into airlines- mark my word, but six years from now,” Ramon Ang, the president of San Miguel Corp, said.

Pete Ainsley


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