Cebu Pacific Signs Deal With Avolon For 4 New Airbus A330neos

Cebu Pacific Air, a Philippines-based low-cost carrier, has signed a sale-and-leaseback (SLB) agreement with the aircraft leasing company Avolon, covering four Airbus A330neo aircraft that will be delivered between 2024 and 2026.

Transitioning to a more fuel-efficient fleet

According to the announcement, the two sides agreed that Cebu Pacific Air will sell and lease back four Airbus A330-900 aircraft from the aircraft lessor Avolon, which Airbus is scheduled to deliver between 2024 and 2026. The airline has a further four A330-900 aircraft in its backlog.

The A330neos will support the low-cost carrier’s route expansion in Asia and the Middle East, supporting its goal to transition to a fuel-efficient, new technology fleet with lower emissions. Alex Reyes, the chief strategy officer (CSO) of Cebu Pacific, reiterated the airline’s goal to introduce more fuel-efficient aircraft that would support the addition of new routes within its network.

Meanwhile, Paul Geaney, the president and chief commercial officer (CCO) of Avolon, remarked that the team behind Cebu Pacific has been doing a great job expanding the airline’s operations. As such, the lessor was happy to use its balance sheet to support the Philippine carrier’s fleet growth.

“With the continuing recovery of air travel in Asia we look forward to further opportunities to support customers on sale and leaseback transactions, or through our order book, as the availability of widebodies out to 2030 continues to tighten.”

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Cebu Pacific’s 459-seat cabins

One of the unique things about Cebu Pacific’s operations is that it has configured its Airbus A330neo aircraft with 459 seats, which is just shy of Airbus’ advertised maximum one-class seat number of 460. Currently, the Philippine low-cost carrier has eight aircraft of the type.

Photo: Airbus

Other than the eight A330-900s, the airline also operates 22 Airbus A320ceo, 16 A320neo, six of which are inactive, seven A321ceo, and 14 A321neo, five of which are inactive. To note, all of Cebu Pacific’s A320neo and A321neo aircraft are powered by the Pratt & Whitney PW1100G engines that have to be inspected and potentially repaired due to a powdered metal issue during the production process.

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Recovering after a loss

2023 had been a year of recovery for Cebu Pacific, which ended 2022 with a PHP14 billion ($248 million) net loss, recovering to a PHP7.9 billion ($139.9 million) net income at the end of last year. The profit was largely driven by a massive surge in revenue, with the airline improving from PHP56.8 billion ($1 billion) to PHP90.6 billion ($1.6 billion) of income by the end of 2023.

However, most importantly, it managed to recover its negative equity of PHP2.8 billion ($49.6 million) to a positive PHP4.8 billion ($85.1 million), even if its cash reserves were reduced by 15.5%. Cebu Pacific ended 2023 with cash and cash equivalents of PHP16.9 billion ($299.7 million).

Photo: Johann Kirby Datoy | Shutterstock

In the past two years, the airline had entered into SLB transactions worth up to PHP2.7 billion ($47.8 million), strengthening its liquidity position with cash gained from these agreements. According to ch-aviation data, out of 86 aircraft the airline owns, 34 are on its balance sheet, while 50 are leased. The ownership status of two Airbus A320neo aircraft remains unclear, the site showed.

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