Source: Malaya Business Insight, 25 January 2012

 

CLARK FREEPORT — Cebu Pacific Air (CEB), a subsidiary of JG Summit Holdings Inc., yesterday said it will borrow $150 million to $160 million this year to finance the acquisition of four new aircraft.

In an interview at the CEB and CAE groundbreaking ceremonies of Philippine Academy Aviation Training Inc. (PAAT), Lance Gokongwei, CEB president, said that the company had started talks with banks.

“We will borrow because we’re taking four aircraft (this year)…. We will not borrow the entire (cost of the four aircraft), we are borrowing only 85 percent, probably $150 million to $160 million,” Gokongwei said.

He added that CEB is “very well regarded in the financial community.”

“We expect to receive continuous support from credit export agencies and foreign banks,” he said.

As of today, Gokongwei said CEB is the largest carrier in the Philippines in terms of number of aircraft and passenger volume.

He added CEB has not considered buying its closest competitor, Philippine Airlines (PAL).

“Honestly, I’ve never looked at it. I’ve never been in any discussions [for PAL]” he said.

Meanwhile, CEB parent firm, JG Summit, said that it is looking at all infrastructure projects under the public private partnership (PPP).

Gokongwei said that they have interest to invest in the airport side.

“It’s an area we are familiar with, we have to look at the terms of reference,” Gokongwei said, adding that the areas the company is looking at are Puerto Princesa, Cagayan de Oro , Bohol, and Mactan.

For this year, Gokongwei said his company expects “more passengers and healthier profit.”

CEB targets 14 million passengers this year. But its financial outcome will depend on the price of fuel.

“We expect growth to be faster than last year … We ensure healthy profit this year,” Gokongwei said.

This year, the company will have a total of 33 Airbus and eight ATR aircraft.

On the other hand, CEB through its joint venture with CAE, yesterday broke ground for the new aviation training center in the Clark Freeport Zone that is expected to be operational in the third quarter of the year.

The two companies have a joint investment of $50 million for the facility, with PAAT to train over 2,500 pilots and other aviation professionals annually.

Gokongwei said the training school will help the company address the expected growth in demand for pilots in the coming years.

He said Asia Pacific will need about 70,000 pilots from 2011 to 2030 (based on 12 pilots per plane for approximately 5,800 planes). Given this requirement, not only new pilots will need to undergo training; all licensed pilots as well will be required to undergo recurrent training every six months.

“We estimate that the Philippines alone will have approximately 100 A320s in the next six years, from about 60 as of end-2011,” Gokongwei said.

The PAAT training offerings include simulator-based flight training; type rating training (standard initial/transition training course); upgrade course and recurrent course.

Last year, CEB ordered 37 new aircraft worth about $3.8 billion that will double its fleet by 2021.

The seven A320 and 30 A321neo planes will be delivered between 2015 and 2021. These are on top of firm orders for 18 Airbus A320 aircraft whose delivery began in the second half of 2011 will be completed in 2014.

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