Good day, everyone. We are thrilled to have you with us as we share our performance highlights, strategic progress, and vision for the future. We are happy to report strong fourth quarter and full year results, marked by continued network expansion, fleet growth, and increased capacity. Beyond our financial results and business updates, we will also provide early insight into key commercial and economic trends that will shape our outlook for 2025 and beyond. To kick things off, I will hand it over to Xander, who will walk us through the latest commercial and operational developments.
Thanks, Trina. The fourth quarter of 2024 showed remarkable growth, reflecting a strong demand for air travel. We carried 7 million passengers during the quarter, marking a 32% increase from the fourth quarter of 2023 and surpassing our seat capacity growth of 31%. This led to an improved seat load factor of 83.1%, up from 82.8% in the previous year. Domestically, we carried 5.3 million passengers, marking a 32% growth over the same period in 2023. Internationally, we saw a 30% increase with 1.7 million passengers flown. These figures clearly demonstrate that demand for air travel remains robust across all market segments, especially during the holiday season. Our strategic expansion outside Manila played a key role in our accelerated growth. Last quarter, we expanded our Clark hub with flights to Davao, General Santos, Iloilo, Puerto Princesa, and Bohol.
Cebu also grew its network with the launch of new flights to Masbate, Osaka, and Don Mueang in Bangkok, enhancing connectivity for both domestic and international travelers. Additionally, Iloilo saw the addition of flights to Tacloban, Zamboanga, Singapore, and Hong Kong, followed by further expansion in December with new routes to Bohol, Dumaguete, and Legazpi. We also expanded operations in Davao with additional flights to Puerto Princesa, Tacloban, and Boracay, as well as international flights to Bangkok and Hong Kong. Beyond growing our hubs and flights, we introduced new destinations, including San Vicente via Cebu and Chiang Mai via Manila. Additionally, with the acquisition of AirSWIFT in the fourth quarter, we also added El Nido to our network. Looking at the year as a whole, it is clear that Cebu Pacific concluded 2024 on a high note.
We successfully added 27 routes and carried 24.5 million passengers, reflecting an 18% year-on-year growth. This contributed to a solid seat load factor of 84.4%, slightly up from our 84% average in 2023. Domestically, we served 18.5 million passengers, a 15% increase compared to the previous year. Internationally, we carried over 6 million passengers, marking a 25% year-on-year surge. By year-end, Cebu Pacific had the widest network in the Philippines, serving 123 routes with over 3,800 weekly flights. CEB has been the leader and the driver of aviation industry growth in the Philippines. By the fourth quarter of 2024, our seat capacity had surpassed 2019 levels by 27%, while the combined seat capacity of other Philippine carriers remained 16% below pre-pandemic levels. With this, our domestic market share for the year strengthened to 54%, up from pre-pandemic levels of 52%.
In the fourth quarter, with the growth of our operations throughout the year, this rose further to 58%. We also outperformed competitors in the international market. In 2024, we captured 20.6% of the total international market, an increase of 1.1 percentage points from our 2019 share. In the fourth quarter, our international market share had risen to 22.5%, making us the leading international carrier in the Philippines. I am happy to report that Cebu Pacific has secured its position at the forefront of both the domestic and international markets, solidifying its position as the leader in Philippine aviation. Cebu Pacific triumphed over the complexities and challenges of 2024. We have kept you informed about the evolving landscape of the aviation industry. Factors such as global supply chain constraints, delivery and maintenance schedules, and engine reliability have required us to adapt and innovate.
In response, we have taken decisive steps, investing in additional aircraft and engines to enhance our operational resilience and ensure a more reliable and efficient service for our passengers. These efforts position us well for sustained growth and continued leadership in the industry. I am pleased to report that these initiatives have delivered positive results. Our on-time performance, or OTP, has improved, averaging 73.6%, an improvement from our 2023 OTP of 71.4%. Even in December, despite the busy peak and rapid growth of our operations, our OTP kept resilient at 72.6%, still better than December 2023. We also saw notable improvements in customer sentiment across all touch points, even as our passenger numbers and overall operations grew. We ended the year with an average Net Promoter Score, or NPS, of 28, a significant jump from 14 in 2023.
In the fourth quarter, our NPS reached 32, reflecting steady progress from +31 in the previous year. Additionally, we saw higher customer satisfaction scores for airport experience, agent service, and cabin crew service. Looking ahead, we will continue to optimize our capacity to meet the growing demand for travel. Our focus will remain on providing the best value to our passengers while ensuring affordability, safety, and reliability, along with our commitment to exceptional service. I will now turn you back to Trina, who will provide an update on CEB's financial performance.
Thank you, Xander. I am pleased to present Cebu Pacific's financial results for fourth quarter and full year 2024. The fourth quarter was Cebu Pacific's strongest for the year in terms of revenue, as we generated PHP 30.4 billion, 28% higher year-on-year. Revenue from passenger business grew 23% to PHP 20.2 billion, while ancillary revenues grew 36% to PHP 8.6 billion. Average fares softened by 6% to PHP 2,866, while ancillary yields improved by 2% to over PHP 1,047 per passenger. Cargo revenue grew 51% year-on-year to PHP 1.6 billion. We carried 53.2 million kilos, 28% higher at 18% higher yield per kilo. This growth can be attributed to the increase in our wide-body aircraft, which allows for greater capacity in both weight and size.
With PHP 30.4 billion in revenue, Cebu Pacific generated an operating income of PHP 3.5 billion for the quarter, a 43% increase versus the same period in 2023. This also delivered an operating margin of 11%. After financing costs, we generated a pre-tax core income of PHP 1.7 billion. This is a 119% improvement year-on-year, giving us a pre-tax core margin of 5.5%. With PHP 244 million in non-core gains, Cebu Pacific's net income for the quarter closed at PHP 2 billion. This was lower than same period 2023, mainly from last year's recognition of tax benefits from net operating losses carried over. Allow me now to summarize our full-year financial performance for 2024. Cebu Pacific generated total revenue of PHP 104.9 billion, a 16% increase from 2023. Passenger business grew 14% to PHP 71.3 billion, while ancillary grew 16% to PHP 28 billion.
To support passenger growth, average fares softened by 3% to PHP 2,905, while ancillary yields remained steady at PHP 1,013 per passenger. Cargo generated over PHP 5.6 billion in revenue, 39% higher than 2023. We carried close to 169 million kilos, 32% higher than 2023, with yields improving by 5% to PHP 33.5 per kilo. With a bigger fleet, we faced higher repairs, maintenance, and crew expenses, as well as higher airport costs. Despite these, operating income for the year improved to PHP 9.2 billion, 7% higher than 2023, yielding a steady operating margin of 9%. Higher financing costs, on the other hand, reduced our pre-tax core income to PHP 3.1 billion, lower than the PHP 4.2 billion earned in 2023. With additional gains of PHP 2.2 billion, Cebu Pacific generated net income of PHP 5.4 billion for 2024, yielding a stable 5% net income margin.
While this is lower than our 2023 net income, this marks our strategic investments in aircraft and engines to sustain our growth while ensuring reliable and efficient services to our passengers. As Xander mentioned, these efforts have already positioned CEB for stronger and continued leadership in the industry. With a fleet of 98 aircraft, we ended 2024 with total assets of over PHP 238.2 billion and total liabilities of PHP 228.1 billion. Net debt was PHP 156.2 billion, 31% higher than 2023. The current ratio was 0.5, while average net debt to EBITDA was 5.4 times. Our equity position ended at PHP 10 billion, up from PHP 4.8 billion at the end of 2023. Through the quasi-reorganization we undertook last year, our retained earnings improved to PHP 5.4 billion, a turnaround from PHP 16.3 billion deficit at the end of 2023.
Cash from operations amounted to PHP 23.8 billion, as cash income of PHP 30.9 billion was reduced by working capital requirements, interest, and tax payments. Cash outflow for investment totaled PHP 15.6 billion. CapEx for property and equipment amounted to PHP 36.5 billion. This excludes the asset values of right-of-use aircraft and engines, which are funded via operating leases. But if we include these, CapEx for 2024 was PHP 64.7 billion. These were partially offset by PHP 21.7 billion in proceeds from sale and sale and leaseback transactions. Net cash outflow for financing reached PHP 5.9 billion, as proceeds from new borrowings were offset by PHP 31.5 billion in debt and lease payments. These combined provide CEB with a net cash inflow of PHP 3.1 billion, ending 2024 with a net cash balance of over PHP 19.9 billion.
Before I end, I would like to share some economic indicators affecting our financial outlook. Fuel prices trend in our favor. Prices as of first half of March this year were about 7% below February, and forward prices have declined as well. Similarly, the dollar-peso exchange rate has slipped. As of mid-March 2025, the peso has hit its strongest value versus the USD since the past five months. This is favorable for Cebu Pacific, since 60%-70% of our costs are pegged to the USD. Lower fuel prices, a stronger peso, and steady interest rates bring optimism to our financial outlook. I now turn you over to Mike to share Cebu Pacific's outlook for 2025 and beyond.
Thanks, Trina. Let me say everyone at Cebu Pacific is proud of what the company achieved in 2024. Turning various obstacles faced by the industry into strategic opportunities to embrace change and accelerate our growth, whilst much of the competition was unable. While our investments in fleet expansion, operational improvements, and the development of new routes have an impact on our 2024 margins, these efforts and investments are now beginning to pay off. We have seen noticeable improvements in our reliability, resiliency, and overall customer experience in the face of continuing challenges in our industry. Just as important, these investments have laid a strong foundation that we can further build on to sustain and enhance our market-leading position. We have always been optimistic about the potential of Philippine aviation, driven by the country's strong economic, geographic, and demographic advantages.
Strategic investments in our hubs and aircraft fleet have been key catalysts for Cebu Pacific's growth. By seizing these opportunities early, we have not only outpaced the competition but also further solidified our position as the industry leader. This gives us great confidence as we look into 2025, where we expect to continue our rapid growth. Our seat capacity is projected to increase by as much as 25% year-on-year. Our traffic performance reports for January and February already show a 30% year-on-year increase in passenger traffic with higher load factors than last year. These indicate that the additional capacity added in the second half of last year has already been absorbed by the market in the first quarter.
Furthermore, we will leverage the aircraft investment made in the second half of last year, and our CAPEX will reduce by half to about PHP 30 billion-PHP 35 billion. This will improve our returns, enhance our financial leverage, and strengthen our overall financial position. I would also like to highlight our commitment to sustainability. Cebu Pacific has reached a new milestone with an environment, social, and governance, or ESG, rating of 46 in the 2024 S&P Global ESG score. This reflects the airline's progress in strengthening its climate strategy, enhancing risk management, and deepening its commitment to responsible business practices. We also established our digital office in the fourth quarter of last year. This team is dedicated to leveraging technology to drive innovation, streamline processes, and create more seamless and convenient journeys for our passengers, ensuring Cebu Pacific continues to thrive in an increasingly digital world.
We look to the future of Cebu Pacific with great optimism. In 2024, we made a historic investment with the largest aircraft order in Philippine aviation history, securing our position well into the next decade. This milestone reinforces our commitment to supporting the Philippines' continued growth and development. Thank you for your continued trust and support. Let's continue flying high, everyone.
Good afternoon, this is Rhobee Pilares from Cebu Pacific's Corporate Communications Department. Thank you for joining us this afternoon for CEB's fourth quarter and 2024 full-year investor briefing. Joining us this afternoon to help answer any questions you may have are Cebu Pacific's Chief Executive Officer, Mr. Michael Szücs, CEB's President and Chief Commercial Officer, Xander Lao, CEB's Chief Financial Officer, Mr. Mark Cezar, and CEB's Vice President for Controllership, Financial Analytics, and Investor Relations, Trina Asuncion. Before you begin, we would like to remind everyone of our house rules. Use the chat function if there are any issues or concerns on your end. Raise your hand if you have a question. Kindly state your full name and company before asking your question. We will call on you and unmute you when it is your turn.
If your microphone or raise hand function is not working, you may type your question in the Q&A box. Okay, we'll begin with a question which was sent earlier. How do the yields look so far in the first quarter considering the new capacities and routes launched by CEB?
Thanks, Rhobee. Let me take that. I think we've published already the traffic report for January and February. Right now we continue to see that traffic has remained strong, and we've flown roughly 4.7 million passengers for the first two months of the year. This marked a 30% increase compared to 2024, and this was on the back of 28% more seats, which showed an improvement of our seat load factor on both our domestic and international network. You could see domestic passengers grew to around 3.5 million, or close to 32%. International passengers, on the other hand, grew by around 1.2 million to around 25%. On the other hand, we do see some yield trade-offs, part of which was, I think Mike had mentioned earlier, we're making some investments in some of the new hubs. But also this has something to do with seasonality.
Easter of this year falls in the second quarter; as compared to last year, it was in the first quarter. We will see some shifts in average fares. We do think this is okay, and we do think overall revenue growth will continue to be strong in the first quarter.
Thank you, Xander. We will take our first question now from the room. Mr. Danbryan Go, please go ahead.
Hello. I just wanted to check if I am audible. Good afternoon, everyone.
Yes.
Yes. Okay. Thank you. I am actually from BPI Securities Corporation, and I have just four questions here. Firstly, I wanted to tackle on your CAPEX. You mentioned that for 2025, it will be much lower, around PHP 30 billion to PHP 35 billion. I just wanted to know, going into 2029, will it be constantly at PHP 30 billion to PHP 35 billion, or are you planning to increase it when the newer planes arrive at the latter part of the decade, around 2029 to 2030?
Would you like to finish your four questions or let me just answer? I can answer that one.
I'll take one by one.
All right. Sure. I think over the course of the next to 2028, I think the CAPEX will be about these levels, PHP 30 billion. It's no surprise. The vast majority of our CAPEX is for aircraft. We're in a period now where we're just going through the remainder of the older purchase agreements with Airbus and the residual aircraft there. We don't really have another ramp-up of deliveries up until 2029. Just as a reminder, 2023, we took 18 aircraft. 2024, we took 17. So you saw the spike in the CAPEX. Then years going forward, we're in the more five to seven aircraft per year range. So you can do the maths in terms of what the CAPEX will look like. Yeah, I mean, 2029 is where we expect the next spike in CAPEX, probably similar to what we saw in 2024.
Does that answer your question?
Yes, it does. Thank you for that. For my second question, I wanted to ask, with regards to the CAPEX of PHP 30 billion to PHP 35 billion, how many percent of it is actual cash expense? I just wanted to get a picture of CAPEX excluding right-of-use assets and leased assets.
How much of CAPEX is cash, being cash based or non-right-of-use?
All of it is.
Technically financing lease versus—
All of it's cash. But of course, you know, substantially 95% of it is financeable. We're able to raise financing on the back of new aircraft delivery.
Okay.
Okay. Thanks for that. For my third question, I just wanted to ask. I understand you have convertible bonds. I just wanted to recap: when is it maturing and how many shares will be added to your float once it's matured?
The maturity is in 2027. We have the exact numbers for that.
We have it. We're adding 318 million shares should include the full conversion.
Okay. This is excluding the preferred shares, which are also convertible.
Correct. The preferred shares would be roughly the same. Same number. We'll add roughly the same.
Okay. Thank you. For my last question, I just wanted to ask. It's actually an administrative question. I just wanted to ask where your investor relations office is. Because actually when I saw your disclosure, it mentioned Cebu, and I actually visited the site, but I found the office empty. So I just wanted to ask.
The investor relations office is here in the Cebu Pacific building airline operations center here in Manila. The principal office remains to be in Cebu, where the company was originated. But since most of the operations are already held in Manila, the corporate office is also here. Most investor calls or meetings, you may have it here at the AOC along the Domestic Road in Pasay City.
Okay. Thanks for that. That's all from my end. Thank you so much.
Luisa, if you're happy to—
Yes.
See you here in the office.
Thank you, Mr. Go. We will go to the next person in line. Julian Cook, you may ask your question.
Yes. Good afternoon to you all. Three from me. The first one is on the CASK ex-fuel, which increased 7%. I saw the different items you mentioned, which contributed to that increase. Can you just maybe help me understand the first one, which is higher airport and crew cost is obviously something that is going to remain, whereas the other three are really one-offs? Can you maybe give me a sense of what is the proportion of the higher airport and crew cost? Therefore, where do you see CASK ex-fuel for 2025? That is the first question. Second one is on the SLBs. Do you run SLB gains through the P&L? If so, what is the amount? What does it amount to? The final one is just on China traffic.
I do not know if you can comment on if you are seeing some kind of recovery in China demand or if it is still kind of weak. Thank you very much.
You want to go first on the CASK?
Sure. This is Trina. I'll take the question on the CASK. You're right. If it was the fourth quarter, a big portion of that would be airport costs, which we started to feel the fourth quarter alone. We estimate that the amount of that in the fourth quarter would probably be anywhere from PHP 400 million to PHP 500 million, which affected our cost for ASK, as these are rate increases. FX also is a key driver in overall cost ex-fuel. That's about two-thirds of our expenses are pegged to the dollar. We did a sensitivity. If we remove the airport cost alone and the FX impact as well, our CASK ex-fuel will be about 10% up year-on-year. The remainder of that—most of that really is fleet-related costs.
It would be repairs and maintenance, as we have 13 more aircraft and 13 engines and some of the additional costs as well, crew to support the flying, and other flying-related costs already.
It's worth saying, Julian, just on that, if we go forward, so last year we were having to manage as well, obviously, the uncertainty in terms of the amount of capacity that we've got. So we've got crew costs that are in excess of what they would normally be, because we're kind of effectively carrying some unproductive crew because we've got some aircraft that are grounded. Now, we're better able to manage things like that going forward. We've still got, obviously, uncertainty with Pratt & Whitney engine situations, but better able to manage. So we anticipate our ability to manage CASK ex-fuel with the exception of FX, which is obviously something that's beyond our control. CASK ex-fuel, we would expect to manage that much more prudently through this year.
Okay, thanks.
Thank you, Mr. Cook.
I've only a couple of questions. There are seven leasebacks.
SLB and then China.
SLB, so we use IFRS. It means we cannot recognize the full gain. I don't have the exact numbers. There's an amount that we can recognize outright, but most of it is deferred.
Yeah.
We can just pick that up as a follow-up item, just the exact amount of what was recognized in the P&L. But I can tell you most of it was deferred. Deferred what it was.
Just on China and whether we are seeing a recovery, we have taken a look at some of the Department of Tourism statistics. Comparing to, say, 2019, we are seeing better recovery from the other countries in terms of those visiting the Philippines. China continues to remain one of those countries that have a very poor recovery ratio. I think it is still -83% compared to 2019 levels. We are not yet seeing any recovery at this point for China. And from our perspective, we have already redeployed some of the assets that were initially intended for China to other places within network.
Great. Thank you very much.
Okay. Thank you. Our next question will come from the Q&A box. This is from Alfred Chua from FlightGlobal. He has two questions. The first is, you have mentioned that the AOG situation is improving. What is the number of aircraft on ground currently? And the second question is, on the expansion of hubs outside Manila, what is the capacity mix now, Manila versus non-Manila? Are we on track to meet the 40% non-Manila seat capacity that was previously mentioned?
I will take the first one. AOGs were 12 aircraft at the moment, but I think the engagement with Pratt & Whitney is consistent. And there is a cautious expectation that the situation will improve towards the end of the year. What has happened now, that having the 12 AOGs was a conscious decision that we took. We were putting more engines through the full shop visit, just to give us more consistency in operations going forward, rather than what we went through last year, where it was a lot of return shop visits. We got more aircraft in the air, but then the engines are short built and would therefore have to come up again after a short period of time. What we are doing now is more sustainable, gives us a full run on the engines at the very least.
Also, a number of them are spending more time in the shop, and thus we're sitting on 12 AOGs at the moment. But the expectation is there will be a rapid improvement towards the second half of the year.
Yeah. So in terms of capacity contribution, what we're currently seeing in terms of hubs, Manila is roughly 70% of our total capacity, and non-Manila is the balance of that.
Okay.
Did that answer the question, Alfred?
Yep.
Okay. Thank you.
Can we go back to the live room for the next question from Clyne Resular? Clyne, go ahead.
Hi, good afternoon. I have a few questions. First is, I appreciate the guidance on aircraft deliveries and exits for this year. Would you be able to give us guidance as well for 2026? How many will be delivered, and how many will exit?
Keep going with the questions, Clyne. We'll just come up with that. What's the next question?
My other question is on your average fares. Can you just give some, I guess, more detail on the fare performance for the fourth quarter? I guess I understand it declined year-on-year. But I was just wondering, was this because of the new routes that you added? Or were the organic routes the fares for the existing routes were also affected? And lastly, maybe you could comment on the competitive dynamics.
Let me take that first one while Mark's putting together some of the data. We saw average fares, for example, the fourth quarter down by roughly 6%. One of which is average stage length is also down by 6%. I think part of that average fare reduction has been driven by a lot of the new capacity that we've invested in. A lot of it is shorter sectors, new flights. There still are some competitive dynamics still with some of our low-cost competition here in the Philippines. Having said that, it is a lot of expansion. We are growing quite a lot in terms of our overall capacity, and it is new routes as well. On the deliveries' decline, next year it's seven deliveries. That's five narrow bodies and two wide bodies, and we're exiting five aircraft, five narrow bodies.
Thank you. Sorry, just a follow-up question. For 2025, for the exits, the five exits—what are these? Are these narrow bodies, or are these mostly the turboprops?
These are narrow bodies.
Thank you.
20s.
Yeah. I have my last question. Could you also provide, I guess, an update on the balance of your unappropriated RE for dividends?
RE for dividends.
Right now, we are still negative, meaning while we have the retained earnings already on the consolidated balance sheet, it is not yet sufficient on the regulatory perspective to give out because of the constraints on what portion of your retained earnings are available already for dividend distribution. Hopefully, given the outlook, especially that it is a positive outlook, we will be in that position within the later part of the year.
Thank you.
Right. Thank you, Clyne, for that. We go to the Q&A box again for the next question from Johan Jimchan. I would just like to ask about the impact or potential impact of a depreciating peso against the company's foreign currency-denominated debt, interest expense, demand for international travel, and CAPEX.
Maybe I can take that. On the debt side, yes, FX hits us in several ways. On the debt, including interest side, we have about $700 million outstanding debt.
That's gross.
Sorry?
That's gross.
The gross debt, yeah. Which gets translated on a mark-to-market basis, every change in USD to the peso. One peso appreciation or depreciation would retranslate that amount of USD debt every period end, no? Also, of course, on the cost side, about two-thirds of our total costs are actually pegged to the USD. If we do the math, that would account to anywhere from $140 million to $160 million a month requirement. Any appreciation or depreciation of the peso, one peso would be $140 million to $160 million a month impact.
Pesos.
Yes, a million pesos a month impact. That is one. Also, yes, the CAPEX. A significant portion of our CAPEX is in USD.
Very well.
Very little of that would be in peso, as both aircraft and aircraft parts are really costed in USD.
Probably also worth mentioning, just as an adjunct to the debt. We hold most of our cash in dollars, so the net debt position, so net of the cash in dollar, of the net dollar debt position, is, I think, roughly about $450 million. If you're looking for a translation number, that's the number I would use.
Okay. Before we continue, we would like to remind everyone, raise your hand if you have any questions. Kindly state your full name and company. We will call on you and unmute you when it is your turn. If your microphone or raise hand function, or if you just wish to type in your question, you may do so in the Q&A box. Okay, we have a question from the floor from Brendan Sobie. Brendan, go ahead.
Yes. Hi, good afternoon. I was wondering about AirSWIFT. It seems like you incorporated them for the first time in this last quarter. The turboprop numbers I see jump up to 22, but they still go back down to 20, like your previous plan. Are you phasing out their aircraft or phasing out other ATRs? What is the plan there fleet-wise? Also, I was wondering what kind of impact AirSWIFT has had on your traffic. Obviously 30% growth is good, but there might be 1% or 2% there that's AirSWIFT, which you did not have a year ago, right?
No, Brendan. AirSWIFT: all the five aircraft are still there. We do have two of our turboprops, which are still the ATR 72-500s, still on our fleet, but it is not accounted for, meaning it is held for sale. So we have already rebooked it as other assets. That is not included in the fleet count anymore.
Those are the two freighter conversions, Brendan.
Okay. So the reduction is the two freighters that are out of service. So the AirSWIFT planes, actually, and the AirSWIFT traffic is not included in the figures yet then?
No. They are.
They are.
They are. In 2024, they are already part of the 98 aircraft.
As of the fourth quarter, right?
Yes, as of the fourth quarter. Yes. At the end of the year, yes. They are already there.
What kind of impact do they have on the traffic then?
Minimal on the traffic. It is quite small.
Five ATRs is the biggest movement, Brendan. Small.
Okay. Also, I was wondering about slots. Are they still operating out of Manila at all, and are those slots going to be transferred to larger aircraft under the Cebu Pacific family?
They continue to operate out of Manila. There is a slot ruling here in Manila, but AirSWIFT will not be impacted until March of 2026, until summer 2026, unless the regulation changes. We will just have to keep an eye on that.
Okay. Cebgo still operates out of Manila as well until summer 2026, or is that a different scenario?
That is covered by a different scenario. The turboprop operators with five or more turboprops, which Cebgo is a part of, 30% of their operations will have to move out of Manila by summer 2025. The balance of them will have to move out by winter of 2025. Unless the regulation changes, that is what we are planning to do.
Do you get to keep your slots? Do you transfer them to—
Yes
Yes. We will be able to do that, Brendan, and in fact, we have transferred the turboprop operations that we have transferred out of Manila, we have upgauged those into jet services already. Different routes, obviously, but we've been able to keep those slots.
So change of AOC, but within the group, basically. Yeah. Okay.
Yes.
Okay. Thank you.
Welcome.
Thank you, Brendan. We have a couple of questions from the chat box. Rainier Yu is asking, "Is it safe to assume that profitability will be the company's target for 2025 to 2027? Do we expect average fares to grow at least single digits this year?
I think average fares. We are in a growth mode now, so we are making the investment. What we have seen, if anything, over the last six months has been a positive trend in terms of our unit revenues. So that's what we would look at, not necessarily average fares or load factors per se, but we have seen improvement in the last six months in terms of our unit revenues. So that's what I would say about average fares. Whether we do that through the base fares or through the ancillary revenues, we are seeing positive unit revenue growth.
Okay. Another question from the chat box from Klein. What is your market share in Manila today? Did this increase, and do you plan to increase your market share in Manila further over the next few years?
I think today, Klein, based on our estimates as of January, this is the unofficial. This is our internal estimates, obviously. But our Manila domestic market share, for example, was at around 53% for the month of January. Maybe if you look in 2019, that was probably at around 50, 51%, or thereabouts. We do expect that to grow, but that's primarily because of the upgauge that we've done. And clearly, as Brendan noted, we will be able to upgauge some of our aircraft from turboprops into narrow-body aircraft, and that should give us additional capacity share. So it is dependent on somewhat if the airport capacity can grow and if we're able to get our fair share of slots. We're hopeful that we can continue to grow that, but again, Manila is, as you know, a very constrained airport.
That's something we'll have to take on an opportunistic basis.
To add to that, we still have six wide bodies on order. The way we have been able to grow our share in Manila has been through upgauges, putting in bigger and bigger aircraft. We still have a number of those coming that will certainly help our portion increase our share in Manila.
Yeah.
Follow-on question from Klein again. Also given current market conditions, when do you think you can revert back to pre-COVID margins?
That's one question. I think probably it's fair to say, Klein, that for 2025, we expect to be closer to pre-COVID margins than to last year's margins. I think let's give that as a broad guidance.
Johan Jimchan once again asks, can the management tell us more how the company plans to reduce or manage costs?
Sure. Certainly, a large part of it has to be in the fleet. Structurally, the unit cost and the cost-based benefits from bringing in a lot more of the A321neos, the A330neos. Of course, replacing an older generation aircraft with a new generation aircraft yields something like a 15%-18% reduction in unit cost immediately. I think also a lot of it will have to be on benefits from economies of scale. We are in a high expansionary phase. We made investments in the past, which have, of course, added to the OPEX base. We will start seeing, number one, as the investments in digitalization, in infrastructure, those will slow down at some point. Actually they're starting to slow down, and we will start to reap the benefits of it.
Generally, I think as a low-cost carrier, cost control, cost discipline is the very fiber of our DNA. Of course, best operational practices, high utilization, best flight operations practices. Those are embedded in our operation, and we continue to look for ways to further enhance our efficiency. There's another question, you said?
There's another question.
Okay.
Another question from the chat box. John Liam Limbo is asking, is your overall SLF determining your average fares? If so, how are these dynamics being projected in the future years? Given that you are in growth mode, how long will this last? Is your SLF a part of the benchmark?
I think the seat load factor is one of the metrics we look at. As a low-cost carrier, it is quite important for us to have a high seat load factor. I think Mark mentioned earlier as part of our low cost, I guess, genes, it is quite important for us to make sure the aircraft is full. If you take a look at other LCCs throughout the world, it is quite consistent for them to have load factors of 85%, 90% on a consistent basis. Our seat load factor is an important metric for us. We do think because we are in the expansionary mode as we are seeing, fares are going to be soft at the start as we build awareness and we build traffic and we expand into some of these new routes and build some of these new markets.
Clearly, average fares should improve over time, but we continue to expect high seat load factors regardless of how the route is, whether it is in its beginning phase or it is in a mature phase already. A high seat load factor is important from an LCC perspective.
If I may just add something here just in terms of how we have started this year. Because, as Trina and Xander and Mark have explained, we went through a high growth phase towards the second half, and particularly in Q4 last year. We now publish our traffic stats on a monthly basis. For those that follow our monthly publication, you will see February year-to-date; our load factor is at 86.7%, whereas in the previous year it was 85.2%. This is with a seat growth of 27.8% over those first two months of the year. So despite a very high seat growth, we are growing passenger volumes in excess of that. Hence, we are getting the load factor increase. That is particularly true on the international segments.
If I look at year to date, February for international in 2024 was 78.6%. In year-to-date, February 2025 was 84.3%. So a substantial uplift in international load factor and the international capacity grew by close to 17% over that same time. We've in many ways gone through the growth phase. We've seen that step-up in growth, and it does take some time for the market to come and fill it. But we're now, we believe, into a situation which Xander's describing, where, on a unit revenue basis, we can start to see growth because we've got the demand. The demand is coming, it's filling the seats, and we can now optimize the unit revenue on those flights.
That's what we're starting to see in the first quarter, and we're seeing a continuation of it into the second quarter, which should be a very healthy quarter, due to seasonality and especially because it's got Easter in.
We have one more question from Renz Alvarado. What is the minimum amount of retained earnings before the company pays out dividends to CEB, CB or CEBCP convertible preferred shareholders?
Like I say, there's several. You're not allowed to give out any unrealized income, like unrealized FX, unrealized. There's a lot of regulatory conditions. But those are the two main things. Any unrealized income or benefit has to be reduced from the retained earnings. So that would include any deferred tax assets, because that would have to be realized in the future. So the retained earnings has to be reduced before that, and then also any retained earnings from subsidiaries. That's the second one. So it can only be the parent company. So any earnings from AirSWIFT, from Cebgo, are not distributable as dividends. So it can be volatile because FX can change differently. Those are some of the factors. Any unrealized benefits or gains, including tax benefits, cannot be distributable as dividends. I hope that answers the question.
Great. With that question, I think that there being no other questions in the chat or from the floor, we will be ending our call. Once again, thank you everyone for joining us for this quarter's and the full year investor briefing. Have a pleasant day, everyone.
Well, thank you.