Gokongwei-led Cebu Pacific has signed a wet-lease agreement with Flyadeal, the low-cost unit of the Saudia Group, which will see the country’s leading budget carrier lease out its aircraft during the anticipated weak period in the third quarter.

Shaping up to be the beginning of a landmark agreement, Cebu Pacific and Flyadeal formalized their collaboration in a signing of a memorandum of understanding (MOU) on Wednesday, May 28.

The agreement will push the two low-cost carriers to explore joint strategic initiatives, spanning cooperations in commercial operations to maintenance and engineering.

One of these collaborations is Flyadeal’s upcoming utilization of two of Cebu Pacific’s Airbus A320 aircraft on a wet-lease arrangement during the peak flying season in Saudi Arabia.

Cebu Pacific Chief Executive Officer (CEO) Mike Szucs said the Saudi carrier will operate the aircraft for two months, beginning June 20, coinciding with the lean flying season of the Philippines.

As a highly seasonal market, the Philippines routinely sees a low period every third quarter of the year, during which the rainy season typically begins alongside the opening of classes.

Cebu Pacific reported that its earnings before interest and taxes (EBIT) margin fell to a mere one percent in the third quarter of 2024, way below the 11-percent average in the other quarters.

The wet-lease deal with Flyadeal will mark the first time Cebu Pacific leases out its planes to a foreign airline for commercial operations.

Typically, local airlines lease aircraft from foreign operators to address capacity needs. Last year, Cebu Pacific brought in two aircraft from Bulgaria Air for the first quarter.

The new deal will see Cebu Pacific’s aircraft, crew, and maintenance operate the two leased aircraft. An Arabic employee is expected to be on board to supplement customer engagement during a flight.

Both aircraft are expected to bolster Flyadeal’s domestic reach to the bustling cities of Jeddah, Riyadh, Dammam, and Abha.

Szucs said the agreement with Flyadeal is currently one-off, with the potential to increase the number of aircraft in future agreements.

Since this will be the first foray of Cebu Pacific into the Middle Eastern country, Flyadeal is already deep into the regulatory process to get the deal and the airline certified by the kingdom’s authorities.

Reciprocally, Cebu Pacific is examining wet-leasing A320s from Flyadeal during the busy winter period in Southeast Asia, which aligns with the holiday period over the fourth quarter of the year.

Its fleet of aircraft performing at strong capacity year-round is part of the airline’s strategy to significantly grow passenger volume in 2025 by 15 to 20 percent.

Last year, Cebu Pacific carried an all-time high 24.5 million passengers, up 17 percent from 20.9 million in 2023.

With 98 aircraft already under its arsenal, the carrier is set to increase it to 100 by the year-end.

Flyadeal, which was only launched in 2017, currently has a fleet of 38 aircraft, connecting passengers to over 40 destinations domestically and in nearby countries.

Flyadeal CEO Steven Greenway said agreements such as the wet-lease deal with Cebu Pacific will help the airline play a crucial role in Saudi Arabia’s Vision 2030 program.

By 2030, the kingdom is looking to be the Middle East’s top aviation hub, welcoming over 150 million tourists annually.

Aside from the lease agreement, Greenway said the two airlines could also consider code-sharing in the future.

“We'll probably work our way around through that and see what we can do,” he said.