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Cebu Pacific Airline (CEB)

Cebu Pacific Airline (CEB)

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Published by J Zaid Ladja

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Categories:Types, Business/Law
Published by: J Zaid Ladja on Jul 27, 2012
Copyright:Attribution Non-commercial

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05/13/2014

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CEBU PACIFIC AIR (CEB

)

Outline
• • • • Philippine Airline Industry (SHLA/JONI?) CEB: Company Profile (JONI) Major Risks (JONG; ZED; MAUI) Recommendation (SHLA)

Philippine Airline Industry
MARKET PLAYERS 1. Cebu Pacific – the Philippines market leader 2. AirPhil Express – growing fast after an LCC transformation 3. Zest Air – another adopter of the LCC model 4. PAL – increased focus on international routes 5. SEAir – big LCC plans following Tiger investment

Philippine Airline Industry
• Philippines domestic capacity (seats) share by carrier (as of Feb 2010)

Philippine Airline Industry
• Philippines international capacity (seats) share by carrier (as of Feb 2010)

Company Profile

Major Risks
Risk Operational risk Description • Fuel cost • Reliance on third party • Operational efficiency • Training and retention of employees • CEB human resource is not unionized • NAIA3 legal dispute • Aviation safety ranking • Open skies policy Low High Frequency Severity Low to High

Personnel risk

Political and legal risk

Major Risks
Risk Financial risk Description • Economic downturn • Availability of debt financing • Foreign exchange and interest rates fluctuation • CEB under ITH • Seasonality of demand • Implementation of expansion plan Frequency Severity

Business risk

Recommendation
• Stick to pure LCC model for long-haul operation
(All economy seats; target OFWs; cite what happened to Air Asia X)

• Enter to long term contracts for fuel derivatives • Increase customer loyalty through improved customer relations • Require training for all staff especially pilots to increase efficiency but place bonds for them to stay longer

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