Cebu Pacific anticipates ₱3-₱4-billion profit hit from coronavirus outbreak

Published February 4, 2020, 12:00 AM

by manilabulletin_admin


The coronavirus outbreak in China can lop off ₱3 Billion to ₱4 Billion off the earnings of the country’s biggest budget carrier, Cebu Air (CEB), after the airline suspended flights to Hong Kong and Macau till end of this month and cancelled all flights to the Chinese mainland – Beijing, Shanghai, Shenzen, Guangzhou and Xiamen, altogether until March 29, 2020.

Before the end of last month, China has already locked down over ten cities in the epicenter of the outbreak. Many countries are also refusing entry to non-citizens coming in from China by air, land and sea and imposing quarantine on its citizens who do. Travelers are postponing and canceling trips to China.

“If this (the coronavirus situation) lasts for six months, there could be a ₱3 to ₱4 billion swing on profit,’” confirmed Lance Y. Gokongwei, Cebu Air president and chief executive officer.

However, the precise impact of the coronavirus outbreak on CEB would be” difficult to forecast because the situation continues to evolve”, he conceded.
The outbreak of Severe Acute Respiratory Syndrome (SARS) – a disease caused by pathogens in the same family as coronavirus in 2003 dampened demand for travel for half a year.

Gokongwei’s estimate of ₱3-4 billion loss was based on a six-month reduction of travel demand.

Nevertheless, he labeled it a profit “swing” inasmuch as the impact of the corona virus is considered to be time bound as the search for its cure is underway. While medical experts reckon that it will take about a year to develop a vaccine, “CEB remains confident on the recovery of travel demand upon resolution of this issue”.

Already, the airline’s operating profit for the 1st half of 2019 was at ₱8.9 billion. “CEB’s balance sheet is very solid,” he stressed.