Everyone who’s fond of traveling knows Cebu Pacific—the top budget friendly carrier in the Philippines. This company has been providing budget services not only to Filipinos but also to foreign visitors in the country. And because of the increasing number of passengers each year, Cebu Pacific is expanding its capacity to meet up with the demand. Now that more and more domestic and international travellers are choosing Cebu Pacific as their carrier, what do you think the company will do to address the demands?
In this article, I am going to talk about Cebu Pacific’s expansion plans. This is for investors seeking to find out what will happen next to CEB and its stock price.
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This year, CebuPac is allocating $650-$700 Million as part of their CAPEX to buy more airplanes. Gokongwei said that this a strategy to recoup their lost market share as the past 2 years have been critical for them—critical in a way that their existing resources were not enough to cater all the passengers buying their services. About 12 deliverables are expected to be received by Cebu Pacific—7 or 8 of them are already financially secured and the rest are still being organized.
There are brighter days ahead for Cebu Pacific this year. Other than the 12 deliverables expected, the company will also increase its capacity in key markets and aim for new routes specifically in India, Australia, Northern Japan, and Russia. By the end of 2020, there will be 83 planes expected in total. This will lead to an additional 11-12% seats that can benefit the unit costs of the CebuPac. The company is looking for properity in the next three years to recover from the opportunity they lost because of lack of aircrafts. And since the price of fuels is stabilizing and the peso is strengthening, the company is optimistic about their capacity this year.
The year 2018 was a success for the company, though half of the year was rough because of the 6-month closure of Boracay, one of the top destinations in the country. Because of this, the company’s income dropped to P2.781 Billion, which was 36% lower. Last year, the company’s target was to accommodate 22 Million passengers and was able to achieve over 20 Million as said by its CEO. This was 12% higher than the 2017 target. The 20% increase in fuel prices in 2018 was also a factor for the year’s tough times but it was eventually offset by the increasing number of foreign passengers from Sydney, Dubai, Hong Kong, Narita, Taipei and Inchon. The growing number of international passengers was 8% higher than 2017.
For position traders, the stock is currently moving in its uptrend and bullish reversal. No sell signal yet is shown if you own the stock and you are a position trader. The next short term resistances can be found at 90 and 100.