2014

ANNUAL REPORT
Who We Are 2
Message to Shareholders 4
Board of Directors 8
Senior Management and Consultants 10
Operating Statistics and Financial Highlights 12
Route Map 14
Our Fleet 16
Our Products 18
2014 Highlights 24
Corporate Social Responsibility 35
Financial Statements 37

FUN We enjoy our work and provide quality service in a fun-filled manner. the decisions we make. RESPECT We uphold the dignity and individuality of each person. EXCELLENCE We strive to be the best in everything we do. TEAMWORK We value and harness the strengths of each team member.OUR VALUES ACCOUNTABILITY We take responsibility for what we say. and the actions we take. INTEGRITY We are honorable. not what is expedient. We collaborate and cooperate with each other to achieve our goals. 2 . We do what is right.

We have a deep sense of family values throughout our airline.OUR VISION Cebu Pacific: The most successful low-cost carrier in the world. We are an employer of choice providing opportunities for professional and personal growth. OUR MISSION “Why everyone flies. We offer our shareholders a fair return on their investments. We enhance the quality of life of the communities we serve and are an active partner in our nation’s progress. 3 . affordable. reliable and fun-filled air travel. We are committed to innovation and excellence in everything we do.” Cebu Pacific brings people together through safe.

Gokongwei PRESIDENT & CEO 4 .0 billion in consolidated total revenues for 2014.0 billion posted in 2013.8% higher than the P41.5% over 14. resulting in a healthy 83. an increase of 17.4 million passengers flown in 2013. statistics from the Civil Aeronautics Board (CAB) show that the number of Philippine domestic passengers remained flattish at 20. Amidst this backdrop Cebu Pacific stood strong. Romulo CHAIRMAN The year 2014 was another notable year for all of us. Your company flew a total of 16.4% to 17. as we added five Airbus A320 aircraft and three Airbus A330 aircraft in 2014.9% seat load factor.1 million. Lance Y.1% GDP growth.33 million in 2013. While the Philippine economy achieved a 6. and triumphs to celebrate.8% to 20.9 million passengers in 2014. filled with challenges to learn from. This allowed us to post P52.3 million in 2013. Our seat capacity grew by 14. 26. This brought our total fleet to 52 aircraft at the end of the year. The same data showed that international passenger traffic for 2014 grew only 3. Ricardo J. as we performed well ahead of industry statistics.9 million from 17.35 million in 2014 from 20.MESSAGE TO SHAREHOLDERS Dear Shareholders.

we also saw notable passenger growth in Taiwan and Indonesia. Roxas and Tagbilaran. a testament to the airline’s commitment to safety and full compliance with international aviation safety standards.0 million passengers in 2014. and from Cebu to Cagayan De Oro and Davao. Cebu Pacific’s passengers will be able to enjoy seamless connections onto Tigerair’s network in South East Asia and India. while Singapore.8%. We are happy to report that Cebu Pacific was named Asia Pacific Low Cost Carrier of the Year by Center for Aviation (CAPA) at their Aviation Awards for Excellence held last October 2014. Hongkong and South Korea continued to be our largest international markets.1% from 11. will be able to select from Cebu Pacific’s extensive network in the Philippines and North Asia. In addition. We remained the leader on all important metrics. as we continued to fly to the most destinations through the most number of routes. both Cebu Pacific and Tiger Airways Singapore are able to provide guests more connections on both networks. on the other hand. By the end of 2014. General Santos. and then selected by an independent international panel of advisors. At the end of 2014. particularly in Visayas and Mindanao. the European Union also welcomed Cebu Pacific to fly European skies. and deliver our unique fun service with a warm. With the lifting of significant safety concerns by the International Civil Aviation Organization. Cebu Pacific garnered a market share of about 23%. we flew 13. Riyadh. Middle East and Australia.100 weekly flights. These were made possible with the full cooperation of the Philippine government and the Civil Aviation Authority of the Philippines. With Tigerair Philippines. with more seats during the year resulting to notable passenger growth in areas such as Camiguin. Domestically.CEB maintains dominance in the domestic market. Butuan. Tigerair’s customers. the US Federation Aviation Administration upgraded the Philippines to Category 1. work even smarter to get our planes off and on the ground on time. as we launched several new international destinations. Cebu Pacific started flying four times weekly to Nagoya and daily to Narita in Japan. 5 . earning the distinction of being the only LCC in the Philippines to receive the EU certification. up 18. We also launched new long haul destinations in 2014. New domestic routes were also introduced in 2014 such as direct flights from Davao to Bacolod and Cebu to Tandag. a rating which allows more Philippine carriers to start flying to the US. Through an interline agreement. on the country’s ability to meet global aviation standards. Cebu Pacific and Tigerair Philippines had the largest combined domestic market share at 60. In 2014. Tawi-tawi. Virac. These are welcome developments for many of us. We bolstered our domestic network. Cebu Pacific also formed a strategic alliance with Tiger Airways Singapore.0 million in 2013. Davao.7% in 2014 from 17. we flew to 34 domestic destinations through 57 routes and more than 2. including Kuwait. CEB broadens international reach CEB recognized by CAPA as Best LCC in Asia-Pacific Cebu Pacific’s international traffic grew 15. It is worthy to note that on international routes we operate. caring smile. including 322 domestic weekly flights of Tigerair Philippines. Aside from these new destinations in Japan. Receiving this prestigious award is proof of our commitment to efficiently manage our costs to provide the most affordable fares to the public.8 million passengers in 2014. Last March 2014.8% in 2013. Our international market share posted at 18. especially for the millions of Filipinos living and working abroad. and Sydney.7% to 3. Alongside the acquisition of Tigerair Philippines. Siargao and Zamboanga. and the most number of flights. we were able to provide more flight frequencies from Manila to Cagayan de Oro. The acquisition likewise solidified Cebu Pacific’s dominance in the domestic market. Cebu Pacific completed the acquisition of 100% of Tiger Airways Philippines (Tigerair Philippines). The CAPA Awards are independently researched by CAPA’s leading team of analysts.

while calculated gearing kept our net debt-to-equity level manageable at 1.1 block hours/day for our Airbus fleet. and turned our aircraft an average of 6. We ended the year with a cash balance of P3.7% from P512 million in 2013. Cebu Pacific posted a consolidated EBITDAR of P12.4x. up 2.5 and 2. Qatar. Margins also improved. Cebu Pacific launched twice weekly direct flights between Manila and Doha.33 driven by various cost initiatives and assisted by a recent decline in fuel prices. Last March 26. Our average cost per available seat-kilometer (ASK) declined 2.7% to P8.9% and EBIT margin of 8. 2015. comfortable and reliable travel experience to our guests. particularly during the Christmas peak season. Hawaii within the second half of 2015.0%. up 41. We will maintain our disciplined approach in expanding our fleet to reinforce our growth strategies.5 billion in 2013. Humbled by the trust placed by so many of our countrymen and tourists in our airline. We continued to deliver industry leading operating performance. while consolidated cargo revenues increased 20.15 billion.Our innovative marketing and distribution strategies were likewise recognized. On the back of this notable improvement in revenues and operating expenses. Ancillary revenue grew the fastest at 28.7 billion. serving more Global Filipinos in the Middle East. we expressed our commitment to further improve our service standards. Also. consolidated revenues grew 26.9 billion in 2013. Cebu Pacific started a four times weekly Cebu-Narita service. Total assets 6 .4 billion. There are lessons to learn as a continuously growing airline.1 billion from P67. with average daily aircraft utilization of 12. and Cebu Pacific is the only low-cost carrier operating this route. 2014 increased to P76. respectively. CEB learns from challenges and shortcomings CEB Net Income surged 66.8% to P3.6 times per day. 2015. we faced an enormous challenge in providing a smooth travel experience to our guests. last June 4.2 billion.4 billion. We ended the year 2014 with 52 aircraft Our balance sheet remained healthy. This robust financial condition will allow us to support further growth. Outlook We enter 2015 with much optimism as we continue to expand our network. up 66.9% to P40. as of December 31. With this sustained operational efficiency and increase in passenger traffic.96 billion.8% to P52. we aim to fly to Guam and Honolulu. Cebu Pacific posted EBITDAR margin of 23. Consolidated passenger revenues grew 26.6% to 3. Our President and CEO Lance Gokongwei received the Airline Personality of the Year award from SKAL International.0% to P2. Qatar has the third-largest Filipino community in the Middle East and Cebu Pacific is the only Philippine carrier flying between these two cities. as we added five new Airbus A320 aircraft into our fleet. and we have full faith that our team will work even harder to ensure that we provide an improved.7% to P853 million In the last part of 2014. and our consolidated pre-tax core net income surged 76. including closer coordination with our ground staff and airport personnel. a worldwide association of travel and tourism professionals promoting global tourism and friendship.3 billion. With the recent decline in fuel prices.0 billion. Finally.7% than previous year. with the upgrade of the Philippines’ aviation rating by the US FAA to Category 1. from P1. which brings us to a consolidated net income of P853 million.1 percentage points than previous year. This is the airline’s fourth route between Japan and the Philippines. as Cebu Pacific received the award Highly Commended as Most Creative Campaign by Airline in the Simplifying Awards for Excellence in Social Media 2014. Cebu Pacific posted fuel hedging losses of P2.

reliable and fun-filled air travel. in compliance with a Civil Aeronautics Board Resolution No. Romulo CHAIRMAN Lance Y. Within the first quarter of 2015. and weather the challenges that arise along the way. and to our management team. 29 Airbus A320. 7 . bringing our total fleet to 55 aircraft. Our orders for 30 Airbus A321 NEO aircraft are slated to arrive from 2017 to 2021. we are confident that we can sustain our successes. as well as our 6th Airbus A330 aircraft. We will likewise continue to implement measures to control our costs. sharklet-equipped Airbus A320 aircraft. created a unique and more robust travel culture among the Filipinos. our dedicated employees. ten Airbus A319 and eight ATR 72-500 turboprop planes. We feel fortunate to have inspired this low fare revolution that has altered the aviation landscape in the Philippines. such as building frequencies on existing routes. and the members of our Board of Directors for your continued trust and confidence in our Company. Last January 2015. With your support. maraming salamat po. CEB removed its fuel surcharges on all domestic and international flights. Gokongwei PRESIDENT AND CEO Acknowledgements Last January 2015. and business partners. we took delivery of two additional. allowing us to offer even more affordable fares.4 years as of end 2014. Ricardo J. and maximizing aircraft utilization to spread out fixed expenses. our shareholders. This is in line with Cebu Pacific’s strategy of replacing and upgrading our fleet with the larger. Earlier this year. Cebu Pacific also signed a forward sale agreement covering the sale of six Airbus A319 aircraft which will be scheduled for delivery between 2015 and 2016. maraming. It has been an amazing journey so far. mandating all domestic and international airlines operating to and from the Philippines to lift the imposition of fuel surcharges on international and domestic flights. we have made it our mission to bring people together through safe. 79.consisting of five Airbus A330. Our heartfelt thanks also go to all our loyal passengers. in many ways. we flew our 100 millionth passenger. The recent fuel cost decline will help improve overall profitability. and longer range A321 NEO. We take pride in owning one of the youngest fleets in the world with an average age of 4. and has. We are scheduled to take delivery of 5 more Airbus A320 aircraft between 2016 to 2017. with two more Airbus A320 aircraft for delivery in the 2nd half of 2015. We are very excited and hopeful about what lies ahead. suppliers. affordable. We cannot help but feel nostalgic as we remember our first year of operations in1996. For nearly 20 years. We would like to thank you. but there is still so much more we hope to learn and achieve. more fuel efficient. Once again. where we had flown just 360 thousand passengers.

Gokongwei. DIRECTOR James L.Ricardo J. Go DIRECTOR 8 . Romulo CHAIRMAN BOARD OF DIRECTORS John L. Jr.

Go PRESIDENT AND CEO DIRECTOR Jose F. Go Wee Khoon Oh DIRECTOR DIRECTOR 9 . Gokongwei-Pe DIRECTOR DIRECTOR Antonio L.Lance Y. Buenaventura Robina Y. Gokongwei Frederick D.

10 .

11 *Appointed after December 31. 2014 .

255 2.927 11.KEY OPERATING STATISTICS YEARS ENDED DECEMBER 31 2014 VS 2013 2014 2013 2012 INC (DEC) % CHANGE Passengers carried (‘000) 16.6% 2 ppts.9% 52 48 41 4 8.534 7.518 17.994 115.207 14.496 16.523 16.9% 82.587 14.4% ASK (million) 20.3% Fleet size at period end 12 .290 26.110 17.989 6.213 12.8% Seat load factor 83.9% 81.5% Number of sectors flown 122.287 25.352 13.041 2.005 108. RPK (million) 16.533 3.870 14.5% Available seats (‘000) 20.173 4.

320 1.241 9.654 41.843 38.89 0.7% Total assets 76.038 457 2.157 2.418 8.376 8.2% 1.082 22.663 1.539 21.446 39.523 46.535 12.600 35.996 26.414 8.9% 4.527 61.84 5.572 342 66.8% EBITDAR 12.062 67.078 17.401 1.878 2.442 76.753 72.FINANCIAL HIGHLIGHTS YEARS ENDED DECEMBER 31 (Php million) 2014 VS 2013 2014 2013 2012 INC (DEC) % CHANGE Total revenues 52.8% Total operating expenses 47.4% Equity 21.56 66.000 41.404 2.243 23.765 8.904 10.7% Pre-tax core net income 3.004 37.6% Total liabilities 54.9% 853 512 3.7% Operating income (loss) Net income (loss) Basic/diluted earnings per share (Php) 13 .043 3.41 0.

Ho Chi Minh) 14 . Jakarta). Singapore. Cambodia (Siem Reap). United Arab Emirates (Dubai). Japan (Nagoya. Kuwait. Korea (Busan. Xiamen). Hong Kong. Narita. Phuket). Incheon). Shanghai. Macau. Taiwan (Taipei). China (Beijing. Osaka). Thailand (Bangkok.Doha QATAR Bali INTERNATIONAL DESTINATIONS Australia (Sydney). Kingdom of Saudi Arabia (Riyadh). Brunei (Bandar Seri Begawan). Vietnam (Hanoi. Qatar (Doha). Malaysia (Kota Kinabalu. Indonesia (Bali. Guangzhou. Kuala Lumpur).

Boracay (Caticlan). Iloilo. Cagayan de Oro. Cotabato. Camiguin. Kalibo. Roxas. Pagadian. San Jose (Mindoro). Naga. Tagbilaran. Surigao. Tawi-Tawi. Busuanga (Coron). Clark.ROUTE MAP AND DESTINATIONS DOMESTIC DESTINATIONS Bacolod. Butuan. Zamboanga 15 . Virac. Tandag. Legazpi. Puerto Princesa. Siargao. Dipolog. Cebu. Dumaguete. Tacloban. Ozamiz. Davao. General Santos. Manila. Tuguegarao. Laoag. Cauayan (Isabela).

and 10 Airbus A319 aircraft. Sharklets allow airlines to reduce fuel burn by up to 4% on longer sectors. The Airbus A330 has 436 seats. newly designed wing-tip devices made from light-weight composites which are 2. 29 Airbus A320. Airbus Cebu Pacific ended 2014 with 5 Airbus A330. 29 Airbus A320. Thales and Rockwell Collins.4 meters tall. CEB’s Airbus A320 aircraft are also equipped with the latest avionics from Honeywell. and 8 ATR 72-500 turboprop planes. and 1 Airbus A330 aircraft. Cebu Pacific will take delivery of 9 more brand-new Airbus A320. Cebu Pacific’s brand-new Airbus A320 is equipped with Sharklets. all global leaders in aviation electronics. Between 2015 and 2021. 30 Airbus A321neo. the A320 has 180 seats. and the A319 has 156 seats. 10 Airbus A319.OUR FLEET CEB ended 2014 with 52 aircraft comprised of 5 Airbus A330. 16 .

to service its Boracay and Laoag flights. Several ATR aircraft are also based in Cebu to further expand CEB’s inter-island operations. Cebu Pacific took delivery of its first ATR aircraft in 2008. France. CEB’s ATR aircraft has 72 seats. and ability to land on short runways makes it the top choice in the turboprop class.41 years as of end 2014. ATR Cebu Pacific has a fleet of 8 ATR 72-500 aircraft manufactured by Avions de Transport Regional (ATR) based in Toulouse. Busuanga (Coron).Cebu Pacific operates one of the youngest fleets in the world with an average age of 4. The ATR’s reliability. ease of maintenance. among others. CEB has since then expanded its ATR operations to destinations such as Siargao. 17 . and San Jose (Mindoro).

encouraging passengers to carry less baggage by offering fare discounts. CEB Fare Bundles CEB Fare Bundles offer a simple solution for guests looking to book their travel essentials in one easy step. Different fare options are now available to guests with different travel preferences and requirements: “Fly” is for airfare. Aside from lower fares and lighter planes. CEB Mobile App Cebu Pacific’s official Mobile App is now available for download on iOS and Android devices to make it even more convenient for guests to book and check-in for their flights while on the go. and meal. Guests may avail of prepaid baggage at the time of booking until four hours before flight departure.OUR PRODUCTS Lite Fares and Prepaid Baggage Cebu Pacific was the first to introduce Lite Fares. “Fly+Bag” is for airfare and baggage allowance. baggage allowance. the Lite Fare product and prepaid baggage options also make the check-in process faster and easier to manage. . and “Fly+Bag+Meal” is for airfare. At the time of booking. Prepaid baggage options range from 15 kilos to 40 kilos. passengers can now pre-purchase baggage allowance to save on time and money at check-in. CEB Fare Bundles are available for all flights to domestic and international destinations.

TravelSure covers: • Emergency medical treatment in case of accident or sickness during travel • Unexpected travel circumstances like cancellations or delays due to weather. Agent Xpress can help passengers check-in for their flights from 4 hours up to 45 minutes before departure.Fast Check-in Options Web Check-In Kiosk Check-In Mobile Check-In Cebu Pacific was the first airline in the Philippines to provide guests the option to check-in for their flights online. Agent Xpress Cebu Pacific was the first airline in Southeast Asia to deploy roving airport agents. This is available from 72 hours up to four hours before international flight departure.. to offer TravelSure travel insurance to passengers. TravelSure Cebu Pacific partnered with the Malayan Insurance Co. and up to two hours before domestic flight departure. TravelSure allows guests from one to 65 years old to travel with peace of mind. and up to two hours before domestic flight departure. and other unforeseen events • Personal accidents • Recovery of travel expenses or reimbursement of the unused portion of travel and accommodation expenses • Baggage Protect – an insurance add-on that covers any unforeseen physical loss or damage to checked baggage 19 . Inc. loss of travel documents or luggage. Guests can check-in via the official Cebu Pacific Mobile App from 72 hours up to four hours before international flight departure. CEB Kiosks are conveniently located near Cebu Pacific’s check-in counters in select Philippine airports. equipped with tablets and mobile boarding pass printers. Guests may check-in at the kiosk for their flights from four hours up to an hour before departure. Now available in select Philippine airports. to check-in passengers and print boarding passes on the spot.

and is inclusive of government terminal and environmental fees. Sports Equipment Guests can avail of Cebu Pacific’s sports equipment handling service for a minimum fee upon booking. This service lets guests bring their own sports equipment to their destination. Equipment covered by this service include: • Bicycles • Fishing Equipment • Golf Clubs • Scuba/Diving Equipment • Surfboards/Wakeboards • Bowling balls CEB Transfers Cebu Pacific and Tigerair Philippines guests can now avail of CEB Transfers. collect checked-in luggage. 20 . Guests can select Preferred seats for additional leg room and easy access to the aisle. guests do not need to clear immigration. Inc. Seats closer to exits are available through the Standard Plus seat option. The CEB Transfers product is in partnership with Southwest Tours (Boracay). seats can be selected for a minimum fee.Seat Selector Every time guests book a flight online. to avoid spending for equipment rental fees. a safe and seamless transfer service from the Caticlan or Kalibo airports to the guests’ hotel or resort in the island of Boracay. Standard seats are all other available seats. CEB Connect Cebu Pacific guests with connecting flights through Singapore Changi Airport may avail of CEB Connect and simply collect their boarding pass for their onward flight at Transfer Lounge E within the airport’s transit area. and check-in again for their onward flight connections via Singapore. With CEB Connect.

Metrobank.com is a booking service working with all major car hire companies all over the world. Rentalcars. Cruise CEB Online Shopping Through Cebu Pacific’s cruise partner. Another hotel partner. offering the best prices and up to 15% savings on guests’ car rental needs in worldwide locations. provides options for accommodations in local destinations. guests are able to add more fun experiences on trips. and Banco de Oro Remittance Centers in Hong Kong and Macau Bancnet Online ATM transactions using Bancnet and Megalink member banks Robinsons Department Stores LBC branches Bayad Centers SM Department Stores Cebuana Lhuillier Hotels Car Rentals Guests can now immediately view and book options for hotel accommodations through our partner Agoda. Star Cruises. CEB passengers can avail of car rental services through touch points within the Cebu Pacific website. Cebu Pacific forged a partnership with Lazada to offer guests the option to shop in the comfort of their homes or offices. Banco de Oro.com on the Cebu Pacific website. Bank of the Philippine Islands.Payment Centers Paypal Cebu Pacific guests who are not credit cardholders can book flights through the website and pay via the airline’s payment centers: Cebu Pacific is the first airline in the Philippines to offer the global payment platform as a payment option. 21 . TravelBook. Cebu Pacific’s official car rental partner is rentalcars. • • • • • • • • Over-the-counter at Robinsons Bank.com. while booking for flights. 2015. Beginning June 1.

The airline’s buy-in-board menu has new offerings every quarter. children’s gifts and chocolates are available in-flight. and Lego. toys. and log on to CEB Air WiFi. among others. Smile also ranked 7th in CNN Travel’s World’s 12 Best Airline Magazines. FILM AWARDS AND FAME Making merry meals AMY BESA'S GUIDE TO HOLIDAY HOME-COOKING What you sew 5 floating villages from siem reap to Zamboanga TURNING LAKES OF LOTUS INTO Branch dressing Raising the skates the beauty of downtown tokyo’s parks HOW MICHAEL MARTINEZ REALIZED A DREAM IN SOCHI Lake and see Relax in Roxas 5 WAYS TO CHILL OUT IN THE CAPIZ CAPITAL A TOUR OF LAGUNA DE BAY'S ARTISAN ENCLAVES CEB Air WiFi Smile Inflight Magazine CEB now offers WiFi on its Airbus A330 flights. hot meals. A wide range of world-class Duty Free cosmetics. fragrances for men and women. Brands carried by Cebu Pacific include Estee Lauder. Clinique. and travel accessories are also available. and drinks fit for everyone’s tastes. skin care products. Calvin Klein. CEB’s Smile Magazine has a readership of over a million per issue. Revlon. jewelry. Johnnie Walker. magazine for CeBU PaCifiC • APRIL 2014 MAGAZINE FOR CEBU PACIFIC • JUNE 2014 MAGAZINE FOR CEBU PACIFIC • AUGUST 2014 M AG A Z I N E F O R C E B U PAC I F I C DECEMBER 2014 OUR OUR OUR Brad with the good IS COMPLIMENTARY • DECEMBER 2014 IS COMPLIMENTARY • AUGUST 2014 IS COMPLIMENTARY • JUNE 2014 Water way to live • PITT ON FAMILY BLISS. Lancome.Fun Café FunShop Inflight Duty Free Cebu Pacific presents a wide array of food items – sweet and savory snacks. Guests may use their WiFienabled devices after take-off. 22 . It features destination guides and news across the Cebu Pacific network. Cebu Pacific branded souvenirs like bags. The Duty Free service is available on Cebu Pacific’s international flights to and from Manila and Cebu. for as low as USD5.

Cebu Pacific is the preferred air cargo carrier in the Philippines. For more information.com. and get corporate fares using pre-approved credit lines and transferrable bookings. 23 . and 21 interline partnerships for worldwide reach. It services more than two thousand accounts. tailor-fitting cargo products to the clients’ domestic and international cargo needs. among other perks. flexible and straightforward air cargo service to an extensive network including individual shippers and cargo agents within the country and overseas.GetGo. lets companies max out their travel budgets.ph. GetGo Cargo Services GetGo is CEB’s newest lifestyle rewards program that allows guests to accumulate points with their Cebu Pacific and Tigerair Philippines flights. seamless transshipment.CEB BIZ Bright Skies for EveryJuan CEB BIZ. It provides competitive. This includes express cargo service. guests can visit the GetGo website www. Cebu Pacific Air and Worldwide Fund for Nature – Philippines (WWF) have been joining forces since 2008 for Bright Skies for Every Juan. linking islands together through exchange of goods. This lets travelers contribute to climate change adaptation programs for the Great Philippine Reefs (Tubbataha and Apo Reefs) while booking flights online. Book Cebu Pacific Air flights using Sky Partner. fast.  With enough accumulated points. as well as with their everyday expenses and transactions with GetGo partners. The Cebu Pacific Air group is the largest domestic cargo carrier with close to 155 million kilos delivered to domestic and international destinations in 2014. the airline’s corporate and government sales program. members may redeem free flights.

2014 HIGHLIGHTS 24 .

Malaysia. and entry into Australia. enlarged network and more seamless options for both business and leisure travel. CEB achieved notable passenger growth in both domestic and several international markets. 25 . Davao.CEB flies 16.5% from 14.  We look forward to offering greater convenience to customers with the increased flight frequencies. Maldives and Thailand. and expands our network with new destinations in Bangladesh. Clark. The airline also increased its flights to Osaka. with increased presence in the Middle East and Japan. Myanmar. CEB expanded its operations in Japan with the launch of daily services from Manila to Tokyo and a four times weekly service to Nagoya. and Tagbilaran. as its newly acquired subsidiary Cebgo.4 million passengers flown in 2013. we are proud to offer the largest. 2014. China. We look forward to offering our trademark low fares and fun flights to both Cebu Pacific and Tigerair customers. Cambodia. made further progress on an interline agreement with the first interline flights available for sale on the Tigerair website from July 23. launched eight domestic routes from its hubs in Manila and Cebu to Butuan. “Together with Tigerair. India. the airline launched direct non-stop flights from Manila to Kuwait. most extensive low cost network to and from the Philippines. The Cebu Pacific Air group increased flights to domestic markets. formerly Tigerair Philippines. CEB also launched a five times weekly service from Manila to Sydney. an increase of 17. “The interline arrangement harnesses the strengths and networks of Tigerair and Cebu Pacific. Cagayan de Oro.9M passengers in 2014 CEB achieved notable passenger growth in both domestic and several international markets Cebu Pacific flew 16.” said Tigerair Chief Operating Officer Ho Yuen Sang. General Santos. CEB flights were 84% full during the year. In 2014. Cebu Pacific and Tigerair have created the biggest network of flights from the Philippines to the region. Roxas. the two largest lowcost carriers in the Philippines and Singapore respectively. Cebu Pacific and Tigerair make progress with Interline Agreement Cebu Pacific and Tigerair. Indonesia. These are additional routes to its existing long haul service from Manila to Dubai.9 million passengers in 2014. Tigerair flights were available on Cebu Pacific’s website from September 2014.  With the interline agreement facilitating both domestic and international collaboration between both airlines. On average. Tigerair’s network reinforces Cebu Pacific’s strong presence in Asia. and Riyadh. from thrice weekly to a daily service.” remarked CEB President and CEO Lance Gokongwei.

but to the Philippines as well. Cebu Pacific is encouraged by recent Japan National Tourism Organization (JNTO) figures indicating that the Philippines is one of its fastest growing source of foreign visitor arrivals.” said Julian Vassallo. Philippine visitor arrivals to Japan grew by 129. we heartily welcome Cebu Pacific to European skies. Chargé d’affaires at the Delegation of the European Union to the Philippines. This translated to a growth of over 480%.5%. second ranked when it comes to the fastest growth. compared to the same period last year. For the month of April. those who have always been interested in traveling to Japan now find themselves able to do so. and especially the Civil Aviation Authority of the Philippines. “The decision of the European Commission to lift the ban on Cebu Pacific shows the ability of Philippine authorities and business to work with the EU to raise standards and create economic opportunity. We hope we can continue stimulating traffic not just to Japan. In May. “We welcome this development. CEB flew over 45.” said Lance Gokongwei. This amazing growth in Filipino tourist arrivals to Japan is what we call the Cebu Pacific effect.” said CEB VP for Marketing and Distribution Candice Iyog.” been interested in traveling to Japan now find themselves able to do so.5% in April 2014. With nearly a million Filipinos working in the EU. European Commission Lifts Ban on Cebu Pacific Cebu Pacific has been removed from the list of airlines banned from operating in European Union (EU) member countries. “With CEB’s new Japan destinations and trademark low fares. This would not have been possible without the full support of the Philippine government. and the most extensive route network in the Philippines. This was a month after CEB launched direct daily services to Tokyo (Narita) and four weekly services to Nagoya. visitors from the Philippines grew the most. compared to March 2014. considered the Philippines’ summer and Japan’s spring months. 2014. as formally announced by the European Commission on April 11. CEB also operated daily services to Osaka earlier this year. we look forward to offering CEB’s trademark lowest fares. those who have always “With CEB’s new Japan destinations and trademark low fares. topping even China. Japan seeks to achieve its goal of increasing the number of foreign visitors to 20 million. Cebu Pacific President and CEO. Philippine visitor arrivals grew by 71.” 26 . in the runup to the 2020 Tokyo Olympics. “This enables Cebu Pacific to continue flying to where the Filipinos are. a testament to Cebu Pacific’s commitment to safety and full compliance with international aviation safety standards. “Having demonstrated their commitment and capacity to adhere to international standards.” added Gokongwei.Filipino tourist arrivals into Japan up by 129% after CEB launches new Japan routes The only Philippine low-cost carrier operating between the Philippines and Japan.800 passengers to and from Japan for the months of April and May 2014.

interactive city. It aims to combine inspiration. get their Cebu Pacific boarding passes. and a variety of other establishments that form the inner-working core of a real city. With the help of Zupervisors. When they work at different establishments. KidZania Manila.” KidZania Manila is operated by its exclusive local franchise owner. Inside the aviation academy. “A lot of kids dream about becoming pilots and flight attendants. Launching our new destination.” said Cebu Pacific President and CEO Lance Gokongwei. so they can discover their talents and help create a better world. Kidzania Manila is set to open at the Bonifacio Global City in 2015. the KidZania International Airport. children can train to be a Cebu Pacific pilot or flight attendant. the global leader in children’s educational entertainment. A flight is the best way to welcome kids to this exciting. among others. “Cebu Pacific has always been a staunch advocate of education through travel. even if it’s just with their imaginations. President and CEO. and give children their Cebu Pacific boarding pass to a fun learning experience. Like many adult adventures. Meanwhile. “Like Cebu Pacific. Play Innovations. the pilots of KidZania can experience taking off and landing an aircraft using state-of-the-art flight simulators. and enter KidZania Manila. Cebu Pacific announced it will launch its newest flights to the nation where kids rule—KidZania Manila. Inc. bank. television station. children can roleplay over 100 exciting careers – from pilots and doctors. Establishments that are universal favorites among children who have visited Kidzania in 16 cities all over the world will also be at KidZania Manila –an aviation academy. fun and learning through role-play for children. we value fun and put a premium on the power of play. KidZania flight attendants can learn how to ensure the safety and comfort of their passengers through a safety demonstration and Fun Game. empowering them to explore myriad roles. a child-sized. KidZania Philippines Governor and Play Innovations. to actors and artists. We are very thrilled and proud for KidZania Manila to join their list of fantastic destinations. 27 .Cebu Pacific Air to launch flights to KidZania Manila to enable kids to fly. interactive play city built just for them. They can choose to save or spend these KidZos during their visit. CEB President and CEO. flights can lead to life-changing discoveries and boundless opportunities. There. kids will check in at Cebu Pacific counters. and Lance Gokongwei.” said Maricel Pangilinan-Arenas. pose with little CEB pilots and flight attendants. It is the official airline partner of the first Philippine facility of KidZania. Inc. “We are very excited to partner with KidZania Maricel Pangilinan-Arenas. the official KidZania currency. Governor of KidZania in the Philippines and President and CEO of Play Innovations. fire station. Inside KidZania Manila. Inc. hospital. kids will earn KidZos. Cebu Pacific is the perfect partner to introduce these kids to a Juan-of-a-Kind learning experience and the joys of ‘traveling’ to a new city. engineers and bank tellers. the journey to KidZania Manila begins at an airport. affirms this commitment.” Gokongwei added. Similar to real life.

Vaude Hogan Ultra-Light Tent. they were not afraid to think out of the box. Luke Landrigan. “To be honest. During the course of the challenge. They were very open. “Our Juan for Fun experience showed us that there are a lot of beautiful places that are just waiting to be explored. The UP Diliman Physics majors clinched the top scores in a series of thrilling tasks and adventurous dares. Internet funnyman Bogart the Explorer. This year. before we joined the challenge.000. The university teams and adventure coaches Bogart the Explorer. 28 . Each team member also brought home a Vaude Sapporo carry-on trolley. and that’s exactly what we plan to do in the future. Floyd Patricio.” Team Tuklas adventure coach Paolo Abrera confessed that he was also worried for his team in the beginning. And since they started out on almost a clean slate. The nine-day. Gretchen Ho and Jude Bacalso enjoyed an awesome adventure in the Cebu Pacific Juan for Fun Backpacker Challenge. and Canon Powershot SX510HS camera. besting four other university teams from across the Philippines. very enthusiastic to try and discover new things. I wondered if they were up to the challenge. Merrell. I’m very proud of them. and volleyball star Gretchen Ho offered tips and cheered for their respective teams through social media. The Cebu Pacific Juan for Fun Backpacker Challenge 2014 is co-presented by Jack ‘n Jill Magic Crackers. renowned travel writer Jude Bacalso. For their win. Esme Escoto and Gab Saplagio of Team Tuklas were named the big winners of the Cebu Pacific Juan for Fun Backpacker Challenge Year 3. Team Tuklas received 12 Cebu Pacific roundtrip tickets to any international or domestic destination. the teams were tasked to accomplish the most number of fun and exciting activities in each destination. Cebu Pacific brought the Juan for Fun teams to an international adventure. Canon and the Department of Tourism. It was actually our first time in Malaysia. they were given the freedom to plan their activities. and the endorsement of the Commission on Higher Education. One for all. Cebu. Camiguin and Cagayan de Oro. we hadn’t traveled that much. Camiguin and the other challenge destinations. and culminated in Manila. all for Juan.UP Physics majors bag first-place win in Cebu Pacific Juan for Fun challenge Abrera. who were assigned to mentor each team before they headed to their destination. but I realized quickly that I didn’t have to be worried. their ‘lack of experience’ was actually an advantage because they had this great eagerness. sportsman and TV host Paolo Discover Adventure Floyd of Team Tuklas shared that they discovered a stronger passion for adventure during the Juan for Fun Backpacker Challenge. Paolo Abrera. maximizing their travel allowance of 800 Malaysian Ringgit and PHP35.” he added. Malaysia. Special fun challenges prepared by the Department of Tourism and Tourism Malaysia also gave teams the chance to earn extra points and additional prizes. During the course of the challenge.” Paolo shared. as the challenge kicked off in Kuala Lumpur. six-city adventure continued in Bacolod.” he shared. “At first. Making this year’s challenge even more remarkable were the Adventure Coaches. To fully experience the fun of budget travel. champion surfer Luke Landrigan. with the support of Vaude. for the first time ever. noted personalities known for their love for travelling. “As it turned out.

self check-in kiosks at the airport. “Agent Xpress can make the check-in process faster and more convenient for our guests. Boarding passes can be emailed. saved as an image. an addition to CEB’s fast check-in options: web check-in. or those requiring special handling. Guests can do mobile check-in for up to 14 passengers. 29 . so guests can check-in using their mobile devices and book their flights on the go. “CEB introduces more check-in options so guests will be empowered to manage their trips. we encourage more guests to check-in online to avoid the line. and up to two hours for domestic flights. given space limitations in certain airports. Those with bags for check-in should proceed to the bag drop counters.” said CEB VP for Marketing and Distribution Candice Iyog. Its official Cebu Pacific mobile app is now available on the App Store. CEB launches mobile check-in option Cebu Pacific rolled out its mobile check-in option. verify their booking confirmation numbers or name and flight details. The Agent Xpress service can check in guests with confirmed flight itineraries. We are studying the launch of Agent Xpress in other airports as well. CEB launched the Agent Xpress service at Kalibo Airport on August 25. Roaming agents approach guests queuing up for a security screening or at the check-in counter. from four hours to 45 minutes before the flight departure. Mobile check-in is available from 72 hours up to four hours for international flights. prepaid baggage allowance and seat selection may be booked for up to 14 guests. interline or check-through flights. Seats will automatically be assigned for those with no pre-purchased seat assignments. CEB and Tigerair Philippines flights. due to the high volume of passengers and limited counter space. Busy Kalibo Airport was prioritized for CEB’s innovative service. and print their boarding passes. The mobile check-in service is not available for guests with infants. who can check in passengers using a tablet while they are still queuing up. and Agent Xpress (roving airport agents equipped with tablets). sent as an MMS or printed straight from the iPhone. It will be initially available for those with web or mobile bookings only. as they have to go through the usual check-in process. Kalibo is a gateway to the world-renowned island. Those who also wish to book flights can do so using the Cebu Pacific mobile app.NEW PRODUCTS CEB launches Agent Xpress check-in service at busy Kalibo airport Cebu Pacific became the first airline in Southeast Asia to deploy special roaming airport agents. With check-in counter space limitations in airports such as Manila or Kalibo.” said CEB VP for Marketing and Distribution Candice Iyog. Only credit cards are accepted for mobile app flight bookings. Those with no bags for check-in can immediately proceed to the boarding gate. 2014. just in time for the influx of tourists returning from a long weekend in Boracay.

Australian Ambassador Bill Tweddell and Department of Tourism Secretary Ramon Jimenez Jr. there are over 300. Eighteen years after the airline’s inception. and provide connections and low fares. 2014.000 Filipinos based in Australia.. 2014. Saturday and Sunday.NEW ROUTES CEB Chief Executive Adviser Garry Kingshott and Sydney Airport Managing Director and CEO Kerrie Mather.” The maiden flight to Sydney was sent off by CEB President and CEO Lance Gokongwei. will land in the Australia-Oceania region. a proud Philippine carrier. The airline is the only low-cost carrier operating the route. flanked by CEB and Sydney Airport staff. CEB’s flights to Sydney utilize the airline’s brandnew Airbus A330-300 fleet with a configuration of 436 all-economy class seats. and work towards doing the same. every Tuesday. lead the water cannon salute for CEB’s Airbus A330 aircraft before the Sydney-Manila inaugural flight on September 9. 2014. we have stimulated travel in Asia and in the Middle East. Thursday. CEB operates four weekly flights between Manila and Sydney. 30 . “This maiden flight to Australia allows us to share our brand of fun. Cebu Pacific sends off first flight to Australia Cebu Pacific launched its first Manila-Sydney nonstop flight on September 9. Cebu Pacific. marking the start of its long-haul service in Australia. Its 5th A330 aircraft was delivered brand-new from the Airbus factory in Toulouse. CEB President and CEO Lance Gokongwei said. to another part of the globe. ​During the send-off program. France on September 2. among other esteemed guests. to accommodate travel demand from the growing Filipino community in Australia. 2014. In our short history. An additional Wednesday frequency commenced on December 10. As per the Commission on Filipinos Overseas.

Ambassador Waleed Ahmad Al-Kandari of the Embassy of the State of Kuwait. The maiden flight passengers were sent off by CEB VP for Corporate Affairs. non-stop flights to Kuwait Cebu Pacific now flies thrice weekly. Japanese Ambassador to the Philippines Toshinao Urabe. and four times weekly flights from Manila to Nagoya. Japan is now more accessible and more affordable with Cebu Pacific flights. 31 . CEB VP for marketing and distribution. The airline’ thrice weekly flights from Manila to Kuwait depart every Tuesday. while flights from Kuwait to Manila depart every Monday. and direct. Passengers may also opt to purchase baggage allowance. DFA Executive Director for Migrant Workers Affairs Ricardo Endaya. Through Cebu Pacific’s trademark low fares. Nagoya international destinations on March 30. DOT Assistant Secretary Benito Bengzon. 2014. Jr. CEB Air Wi-Fi connectivity inflight and Hot Meals. DOTC Secretary Joseph Emilio Abaya. CEB also launched its Manila-Nagoya-Manila service with a Tuesday.Cebu Pacific launches new flights to Tokyo. Philippine Ambassador to Japan Manuel Lopez. Ambassador Waleed Ahmad Al-Kandari of the Embassy of the State of Kuwait. the fastest. “Similarly. CEB President and CEO Lance Gokongwei. 2014. utilizing brand-new Airbus A330-300 aircraft with a configuration of 436 alleconomy class seats. utilizing the airline’s brandnew Airbus A320 fleet. seat selection. when it launched the two new Cebu Pacific now flies direct. and DOT Assistant Secretary Benito Bengzon. and Japan National Tourism Organization Executive Director Kazuhiro Ito during the launch of CEB’s flights to Nagoya and Tokyo on March 30. Thursday. Department of Foreign Affairs Executive Director Ricardo Endaya. The maiden flight for Cebu Pacific’s Manila-Kuwait service departed at 9:30PM on September 2. CEB VP for Corporate Affairs Atty. Wednesday and Friday. among other esteemed guests. (L-R) MIAA General Manager Jose Angel Honrado. Thursday and Sunday. With our seat sales. we hope to stimulate travel and bring Japanese tourists to various destinations in fun Philippines. we hope these two new destinations will enable many Filipinos to explore Japan for leisure or business travel. Saturday and Sunday frequency. 2014..” she added.” said Alex Reyes. “We are very excited to finally be able to offer Cebu Pacific’s trademark lowest fares to these two new destinations in Japan. CEB launched daily services to Tokyo (Narita). Jorenz Tañada.  “We are proud to offer our kababayans. most affordable way to come home. Long Haul Division. non-stop service. It offers fast and convenient same-terminal connecting flights for guests taking advantage of CEB’s extensive Philippine network. Cebu Pacific became the first Philippine low-cost carrier to operate direct daily flights from Manila to Tokyo (Narita). 2014. and Department of Tourism Assistant Secretary Benito Bengzon Jr. On March 30. On the same day. we hope that they get to enjoy being around their loved ones more often. Jr. Cebu Pacific is the only airline offering nonstop flights to Kuwait. Jorenz Tanada. 2014. seamless Manila airport terminal connection and extensive network.” said Candice Iyog. General Manager. non-stop flights from Manila to Kuwait. are assisted by CEB cabin crew as they cut the ceremonial ribbon during the launch of CEB’s flights to Kuwait on September 2.

utilizes its brand-new Airbus A320 fleet. The maiden flight passengers were sent off by CEB General Manager for Long Haul Alex Reyes. Civil Aviation Authority of the Philippines Deputy Director General II Beda Badiola. non-stop flights between Manila and Riyadh. Royal Embassy of Saudi Arabia 2nd Secretary Fahad Eid AlRashidy. The maiden flight for Cebu Pacific’s Manila-Riyadh service departed at 5:05pm on October 1. Alex Reyes and Department of Foreign Affairs Executive Director for Migrant Workers Affairs Ricardo Endaya.” said Reyes. CEB’s four weekly flights (every Tuesday.” said CEB VP for Marketing and Distribution Candice Iyog. Cebu Pacific is the only low-cost carrier flying between the Philippines and the Kingdom of Saudi Arabia. 2014. “Cebu Pacific will keep flying to where the Filipinos are. 2015. Department of Foreign Affairs Executive Director for Migrant Workers Affairs Ricardo Endaya. we are proud to offer even more Filipinos in the Kingdom of Saudi Arabia – the fastest. and operates approximately 700 weekly flights. Ninoy Aquino International Airport Terminal 3 Manager Octavio Lina. and Sunday. Japan Tourism Agency Industry Relations Officer for the Philippines Yosuke Togezaki (left) and Cebu Pacific Air Vice President for Marketing and Distribution Candice Iyog (right) share a common goal of promoting travel between the Philippines and Japan.4% from January to September 2014. 2nd Secretary Fahad Eid M. Friday. among other esteemed guests. CEB General Manager.Cebu Pacific now flies direct. Its strategic location in central Philippines makes it the ideal gateway to beach and eco-adventure destinations in other parts of the country. compared to the same period last year. officially launch Cebu Pacific’s Manila-Riyadh route with a cake-cutting ceremony. Saturday and Sunday) between Cebu and Tokyo. and. “We hope to keep contributing to the national tourism agenda. (L-R) Civil Aviation Authority of the Philippines Deputy Director General II Beda Badiola. As we expand our operations in the Middle East. with CEB cabin crew. while flights from Riyadh to Manila depart every Monday. 32 . Passengers from the airline’s Cebu hub grew by 9. by providing direct access for Japanese leisure travelers to the island of Cebu. most affordable way to come home. CEB offers 27 domestic and international destinations from its Cebu hub. Long Haul Division. CEB’s flights from Manila to Riyadh depart every Wednesday. Thursday. Thursday and Saturday. AlRashidy of the Royal Embassy of Saudi Arabia. non-stop flights to Riyadh Cebu Pacific now flies thrice weekly. Cebu Pacific to boost PHL-JP traffic with new Cebu-Tokyo route CEB announced its direct flights between Cebu and Tokyo beginning March 26.

CAPA – Centre for Aviation is the leading provider of independent aviation market intelligence. Centre for Aviation (CAPA) recognized Cebu Pacific as the Asia-Pacific Low-Cost Carrier (LCC) of the Year.AWARDS Cebu Pacific Air Chief Executive Adviser Garry Kingshott (left) receives the Low-Cost Carrier of the Year award from CAPA Executive Chairman Peter Harbison (right).  “Our LCC of the Year has endured a tumultuous period in its home market.” said CAPA Executive Chairman Peter Harbison. analysis and data services. while quickly responding to the challenges in this segment. Ultimately. analysis and data services. CAPA names Cebu Pacific Air best low-cost carrier in Asia-Pacific Leading aviation think tank. during the CAPA Aviation Awards for Excellence held on October 14. CAPA – Centre for Aviation is the leading provider of independent aviation market intelligence. 33 .” he added. this sustainability will allow us to expand to more destinations. but maintained its focus and had the highest operating profit margin in the Asian airline industry. but have also provided industry leadership in adjusting to a new environment. 2014 in Singapore.” said CEB President and CEO Lance Gokongwei. covering worldwide developments. Established in 1990. “The Cebu Pacific team is honored to be recognized by CAPA. covering worldwide developments. We will continue to approach growth conservatively and responsibly in order to build a sustainable airline business. “The carrier has launched a long-haul operation which strategically improves its long-term position by opening up new markets. CAPA’s Aviation Awards for Excellence are intended to reward airlines and airports that are not only successful. making our low fares available to more people.

Skal International Makati President Robert Lim Joseph (left) and New World Makati Hotel General Manager Farid Schoucair (right) present CEB President and CEO Lance Gokongwei (center) with the Airline Personality of the Year Award. all over the world. in time for the Makati chapter’s 33rd anniversary. SKAL International is a worldwide association of travel and tourism professionals promoting global tourism and friendship. and the support of all industries interlocked with ours. “Such milestones were achieved because of the patronage of our passengers. This recognition validates Cebu Pacific’s growth. with the launch of Kuwait and Sydney in September. especially that of the travel and trade. India and Maldives through the CEB website. including Myanmar. The awards night is an annual event that celebrates the achievements of exemplary individuals in Philippine tourism. “I have long admired Skal’s efforts to promote camaraderie within the tourism industry. and shows the interdependent relationship we have. the determination of our team. 34 .” he added. and the launch of Riyadh in October.” said Gokongwei. 2014. Lance Gokongwei named Airline Tourism Personality of the Year Skal International Makati President Robert Lim Joseph and New World Makati Hotel General Manager Farid Schoucair presented Cebu Pacific Air (CEB) President and CEO Lance Gokongwei with the Airline Personality of the Year award. after he accepted the award. now numbering over 90 million. An interline agreement with Tigerair Singapore also provides more destination options for passengers. as tourism stakeholders. He noted CEB’s long-haul expansion and growth. This was held during the 24th Skal Tourism Personality Awards held on September 5. It is the only international group uniting all branches of the travel and tourism industry.

Bicol. The signing was held on January 6.  The Bangon Tours Project is an initiative of the Department of Tourism and the Tourism Promotions Board. It is an invitation to the Filipino market to travel within the Philippines during the holiday period (December to February).CORPORATE SOCIAL RESPONSIBILITY CEB Vice President for Marketing and Distribution Candice Iyog (left) and Tourism Promotions Board (TPB) Chief Operating Officer Domingo Ramon Enerio III (right) shake hands after signing the Memorandum of Understanding (MOU) in support of Bangon Tours. 35 .  It remains committed to assist in rehabilitation and tourism efforts with the launch of a special Bangon Tour seat sale in the coming weeks. Iloilo. Cebu. a project of the TPB--the marketing arm of the Philippine Department of Tourism (PDOT). 2014 at the Cebu Pacific Airline Operations Center in Pasay City. This project is in line with the government’s recovery and rebuilding efforts for the victims and survivors of calamities through the promotion of domestic tourism. RELIEF CEB partners with PDOT for Bangon Tours The first airline partner of Bangon Tours. Some of the areas featured for Bangon Tours include Ilocos. Boracay. Davao. promoting travel within the Philippines in its marketing materials. Siargao. Cebu Pacific (CEB). visit fun destinations. Puerto Princesa. and Cagayan de Oro-Camiguin. mounted humanitarian flights for stranded passengers in Tacloban and transported cargo to aid victims of Typhoon Yolanda (Haiyan). Bohol. Manila-Tagaytay. and participate in rebuilding efforts.

” said WWFPhilippines Vice-chair and CEO Jose Ma. Cebu Pacific had been implementing the Bright Skies for Every Juan program in partnership with the World Wide Fund for Nature (WWF-Philippines).  As we face a climate-defined future. Sharks are apex or toplevel predators that keep the stocks of other fish in check. “We have been working closely with the World Wide Fund for Nature (WWF) in our efforts to address some of the most pressing environmental concerns.ENVIRONMENT Cebu Pacific bans Shark Fin carriage Cebu Pacific announced that the airline no longer accepts carriage of shark fin. WWF lauds this decision as a manifestation of Cebu Pacific’s continuing commitment to conserve marine biodiversity and promote sustainable fisheries. “Cebu Pacific values biodiversity and marine life sustainability. Cebu Pacific’s decision to make this new counterpart gesture in support of the conservation of Philippine sharks will most certainly help disrupt the transport chains that fuel this highly destructive trade.” 36 . The ban also extends to meals inflight or during corporate events.  CEB’s website estimates carbon emissions based on air travel duration and guests can opt to donate a small amount based on that estimate. We have been working closely with the World Wide Fund for Nature (WWF) in our efforts to address some of the most pressing environmental concerns including climate change and marine life preservation. Two of the biggest coral reefs in the country – Apo Reef and Tubbataha Reefs – have now received stronger conservation and rehabilitation efforts. “For several years now. CEB Vice President for Corporate Affairs. The airline has formalized a freight policy for immediate implementation and strict compliance across Cebu Pacific stations.” WWF estimates 73 million sharks are killed yearly for their fins and flesh. it is the right thing to do. Proceeds support community-based climate adaptation projects for Apo Reef and the municipalities of Sablayan. “WWF welcomes this development. Jorenz Tanada. 2014.  Since 2008.” said Atty. to effectively offset carbon emissions. here in the Philippines. in Occidental Mindoro and Cagayancillo in Palawan. We are banning shark fin carriage effective immediately as we learned that unsustainable shark fishing and our carriage of shark fin is not aligned with CEB’s position on sustainable development. Lorenzo Tan. The program allows Cebu Pacific passengers to make donations while booking their flights online. beginning July 8. as the program has generated over P25 million since the program started. Cebu Pacific passengers have helped fund WWF’s conservation efforts in our two great Philippine reefs Tubbataha in Palawan and Apo in Mindoro. Cebu Pacific does not serve shark’s fin soup inflight or at corporate events or meals organized and hosted by the airline. Halting the trade in shark fins can boost the productivity of oceans.

FINANCIAL STATEMENTS 37 .

.

No. 2014. November 15. 6760 Ayala Avenue 1226 Makati City Philippines Tel: (632) 891 0307 Fax: (632) 819 0872 ey. but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. valid until November 16. and its Subsidiaries. Cebu City We have audited the accompanying consolidated financial statements of Cebu Air. We conducted our audits in accordance with Philippine Standards on Auditing. 39 . the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances. statements of changes in equity and statements of cash flows for each of the three years in the period ended December 31. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management. as well as evaluating the overall presentation of the consolidated financial statements. December 28. Inc. and a summary of significant accounting policies and other explanatory information. In making those risk assessments.SyCip Gorres Velayo & Co. which comprise the consolidated statements of financial position as at December 31. 2015 INDEPENDENT AUDITORS’ REPORT The Stockholders and the Board of Directors Cebu Air. Doña Juanita Marquez Lim Building Osmeña Boulevard. whether due to fraud or error. 0012-FR-3 (Group A). 2nd Floor. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Philippine Financial Reporting Standards.com/ph BOA/PRC Reg. 2012. whether due to fraud or error. 2012. 2015 SEC Accreditation No. 0001. and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement. and the consolidated statements of comprehensive income. Inc. The procedures selected depend on the auditor’s judgment. 2014 and 2013. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. valid until December 31. including the assessment of the risks of material misstatement of the consolidated financial statements. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. Auditors’ Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audits. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements.

4751320. 08-001998-73-2012. the financial position of Cebu Air. valid until March 25. Inc. in all material respects. valid until April 10. April 11. 2014. 2015. the consolidated financial statements present fairly. January 5. 2017 Tax Identification No. March 26. Sabado Partner CPA Certificate No. 2015 40 . Michael C. SYCIP GORRES VELAYO & CO.Opinion In our opinion. 160-302-865 BIR Accreditation No. 0664-AR-2 (Group A). 2014 in accordance with Philippine Financial Reporting Standards. Makati City March 24. 2012. 89336 SEC Accreditation No. and its Subsidiaries as at December 31. 2015 PTR No. 2014 and 2013. and their financial performance and their cash flows for each of the three years in the period ended December 31.

199.141.546.668.781.804.020.236 3.923 8.533 – 1.319.840.197.287.683 – 1.081.526.897 1.net (Notes 7 and 25) Other noncurrent liabilities (Notes 19 and 24) Total Noncurrent Liabilities Total Liabilities Equity (Note 20) Common stock Capital paid in excess of par value Treasury stock Other comprehensive loss (Notes 9 and 24) Retained earnings Total Equity See accompanying Notes to Consolidated Financial Statements.862.466.419 679.713 P =76.446 46.414.651.181.137.056.808 56.613.258.090.902 54.710 – 44.321) (341.130 21. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 2014 December 31 2013 ASSETS Current Assets Cash and cash equivalents (Note 8) Financial assets at fair value through profit or loss (Note 9) Receivables (Notes 7 and 10) Expendable parts.456.188.719 P9.454.326 67.733 =67.587.471.494.062. 29 and 30) Investments in joint ventures (Notes 14) Goodwill (Notes 7 and 15) Deferred tax assets .149 30.236.594.638 24.368 591.083.899.191.621 25.148.503 5.486 566. 41 .445.653.120 (529.505.191.405.379 1.321) (131.227.550 8.258.538.394 57.535.860 1.437.527.281.550 8.933.456.816.808 613.917.175.CEBU AIR.453 – 112.824.636.260.462.418.215 10. 17.400 10.603 711.948.338. fuel.net (Note 25) Other noncurrent assets (Notes 7 and 16) Total Noncurrent Assets P =3.968.278) 12.963.909.712.062.374 129.869 18.650.527.296 P P =10.412.323.net of current portion (Notes 13 and 18) Deferred tax liabilities .817.319.831.718.484 28.120 (529.896 39. INC.740 4. materials and supplies (Note 11) Other current assets (Note 12) Total Current Assets Noncurrent Assets Property and equipment (Notes 13.912.535 29.315.107.563 65.244 21.111.568.125.602 390.160.465.338.559.568.095 =6.107.505 = 5.405.156.292) 13.291 2.284 578.742.373.651 6.150.296 P LIABILITIES AND EQUITY Current Liabilities Accounts payable and other accrued liabilities (Notes 7 and 17) Unearned transportation revenue (Notes 4 and 5) Current portion of long-term debt (Notes 13 and 18) Financial liabilities at fair value through profit or loss (Note 9) Due to related parties (Note 27) Income tax payable Total Current Liabilities Noncurrent Liabilities Long-term debt .523.755.187 P =76.981 613.803 P 166.339.070 2.577.962 – 2.315 =67.196.744.236.060.033.

INC.572.152. 42 2012 P =40.619.004.404) 5.544.934) P =1.938. NET OF TAX Basic/Diluted Earnings Per Share (Note 26) See accompanying Notes to Consolidated Financial Statements.501.602.89 PROVISION FOR (BENEFIT FROM) INCOME TAX (Note 25) NET INCOME Other comprehensive income (loss) to be reclassified to profit or loss in subsequent periods: Actuarial gains (losses) on pension liability (Note 24) Provision for (benefit from income tax) (Notes 24 and 25) OTHER COMPREHENSIVE INCOME (LOSS).007 415.149.146.207.314.764.503.521 2.032) (1.461.853.CEBU AIR.681.207.325.360.371 20.296.870.533.299.083.929.910 2.480.720.012 3.137.904.807.314.216 511.098 25.604.859.012.783 1.919 6.862 878.433.701.662.454.665.096.515 41.356 (109.409.635.609.738.063.694 1.489) (48.727 37.382 825.153.471.341.740.018 3.508) 258.623 3.234 35.817.157.810 1.369.781) (20.415.029.825.842.485.384.475 54.445. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME 2014 REVENUE Sale of air transportation services (Note 4) Passenger Cargo Ancillary revenues (Note 21) EXPENSES Flying operations (Note 22) Aircraft and traffic servicing (Note 22) Repairs and maintenance (Notes 19 and 22) Depreciation and amortization (Note 13) Aircraft and engine lease (Note 30) Reservation and sales General and administrative (Note 23) Passenger service OTHER INCOME (EXPENSE) Equity in net income of joint ventures (Note 14) Interest income (Note 8) Gain on sale on financial assets designated at fair value through profit or loss and available for sale financial assets Foreign exchange gains (losses) Interest expense (Note 18) Hedging gains (losses) (Note 9) P =31.506 3.996) (865.020.326.847 3.111.662.591.701.774 3.216.444.158 1.377 52.927.236 96.663.445) 290.984) (3.229 3.342 (365.188.437.599.860 2.000.320 21.270) (69.641.815 1.204.263 301.205.272 119.990 2.476.723) 298.063.953.863.352.805.241.565 3.013.489.873 – (127.626.946.544) 209.945.740 P =3.623 26.982 4.451 47.768 (406.635 38.770.684.590 (732.007.453.380.775 1.523.579.624 5.033.484.535.241.220 2.310 INCOME BEFORE INCOME TAX TOTAL COMPREHENSIVE INCOME Years Ended December 31 2013 .41 P =0.115 2.286 3.014.478) 91.982.987.681.986 (255.075.543.489 4.018.525.84 P =5.404.021 1.498.006) – (2.241.430.847 2.411.984 105.278.202 P =256.434 906.469 219.461.149.007 4.777.314.258.697.180.329 P =1.093 (2.336.057.835 853.090 1.017.767.212.480.944.281.272 2.044.353) (2.731.310 8.091 79.387 4.432.281 P =29.949.

740 – – 2.315 – – – 853.120 Capital Paid in Excess of Par Value (Note 20) P =8.43 Balance at January 1.660) (1.916. 2014 Common Stock (Note 20) = P613.968.568.037.236.940.986 – – 209.681.236.236.986 – 209.081.000.244 P =21.953.180.000.916.681.000 (2.489) – (255.550 – – – – – = P613.550 Capital Paid in Excess of Par Value (Note 20) = P8. 2013 Balance at January 1.906.762.986 – 853.016.000) – – – – (605.187 CEBU AIR.142.000 = P12.319.650.000.604.000.804.120 For the Year Ended December 31.278) P =3.489) – 511.568.244 = P21.604.577.498.216 – 209.650.953.789) = P1.292) P =6.236.321) (P =341.946.000 P =9.319.916.278) = P3.550 – – – – – P =613.500.211.538.498.330) (605.321) (P = 131.202 – – 3. 2013 Other Appropriated Unappropriated Comprehensive Retained Retained Treasury Stock Loss Earnings Earnings Total (Note 20) (Notes 3 and 24) (Note 20) (Note 20) Equity (P =529.130 P =21.498. 2014 Net income Other comprehensive income Total comprehensive income Appropriation of retained earnings Dividend declaration Balance at December 31.405.081.000 (3.321) (P = 341. 2013 Net income Other comprehensive loss Total comprehensive income Appropriation of retained earnings Dividend declaration Balance at December 31.416.405.681.568.229 – (255.000 = P9.321) (P =86.216 1.946.319.405.000.946.315 For the Year Ended December 31. INC.216 853.235 – – – 511.550 Common Stock (Note 20) P =613. 2014 Other Appropriated Unappropriated Comprehensive Retained Retained Treasury Stock Loss Earnings Earnings Total (Note 20) (Note 24) (Note 20) (Note 20) Equity (P = 529.216.525.319.016.120 – – – – – = P8.211.000) – – – – (1.045.000 P =6.264.120 – – – – – P =8.980.762.675 = P22.000.980.762.341.489) – – (255. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY .500.405.604.577.568.906.330) (P = 529.229 256.063.229 511.660) (P =529.762.

953.116) = P933.405.045.235 .975 – – – 3.321) (P =86.630.940.480.261 – – 5.568.263 3.931.014.216.014.120 – – – – – – = P8.262. 2012 Common Stock (Note 20) = P613.037.142.523.550 Capital Paid in Excess of Par Value (Note 20) = P8.416.568.195.113.000 = P12.330) (605.236.329 – – 483.675 = P22. 2012 Net income Other comprehensive loss Total comprehensive income Appropriation of retained earnings Dividend declaration Reversal Balance at December 31.734.550 – – – – – – = P613.762.533.934) – (48.321) (P =43.630.789) = P1.500.480.319.44 Balance at January 1.572.934) – – (48.330) – 5.014.405.480.141.319.120 For the Year Ended December 31.262.236.742 = P19.934) – 3.953.000 = P9.261 (P =529.000 (483.000) – – – – (605.263 3.572.572. 2012 Other Appropriated Unappropriated Comprehensive Retained Retained Treasury Stock Loss Earnings Earnings Total (Note 20) (Notes 3 and 24) (Note 20) (Note 20) Equity (P =529.263 – (48.

550.241.454.293 3.289) 8.796.529 164.156 405.734) (10.060 – – 83.282 4.002.414.147) (13.100) (676.150.075.279 325.506 P =3.935.099 1.984 1.600.718) 83.289.440.501.384.570 1.378.208.909) (422.521.097 (729.018 2.919.559. INC.781.635.179.927.104.069 (444.013.094 (13.007 3.216.820) 4.459 (1.612.353 476.638.692) 112.090.340.514) (45.630) (34.591.090) (54.856) (12.810) 732.348.060.452.781.508) (301.195.842.774.415.770.123.543.242 – (119.209 – (96.272) 8.790 (729.733 6.449) 27.322) 226.510.984 P =105.295.430 7.430.736) – 550.115 (290. materials and supplies Other current assets Increase (decrease) in: Unearned transportation revenue Accounts payable and other accrued liabilities Amounts of due to related parties Noncurrent liabilities Net cash generated from operations Interest paid Income tax paid Interest received Net cash provided by operating activities CASH FLOWS FROM INVESTING ACTIVITIES Acquisitions of property and equipment (Notes 13 and 31) Proceeds from sale (disposals) of: Other noncurrent assets Property and equipment Financial assets at FVPL (Note 9) Available-for sale investments (Note 9) Dividends received from a joint venture (Note 14) Decrease (increase) in other noncurrent assets Acquisition of investments: Investments in joint ventures (Note 14) Payment to acquire a subsidiary (Notes 7 and 31) Net cash used in investing activities (Forward) 45 2012 P =878.377.811.324.619 2.605.281.258.229.007) (415.405.355.326.133) 1.919) 111.123.054 (642.166) (599.863.016 170.993 9.141 (1.292.718 53.172. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS Years Ended December 31 2013 2014 CASH FLOWS FROM OPERATING ACTIVITIES Income before income tax Adjustments for: Depreciation and amortization (Note 13) Hedging losses (gains) (Note 9) Interest expense (Note 18) Provision for return cost (Note 19) Unrealized foreign exchange losses (gains) Loss (gain) on disposal of property and equipment (Note 13) Gain on sale of available for sale financial assets Equity in net income of joint ventures (Note 14) Interest income (Note 8) Operating income before working capital changes Decrease (increase) in: Receivables Financial assets at fair value through profit or loss (derivatives) (Note 9) Expendable parts.873) 6.421.564) .227 (4.383.357.374.160.445 – (488.305.551 (949.104) – – (12.734.743.508 577.762.989 (413.278.352.030 727.207.325.444) 115.469) (219.751 – 3.619.641.093) 865.525.475) 6.860 (258.767.857.091) (79.793) 873.889 (170.958 (270.714) (1.764.860.979. fuel.781 338.002.359.360.103 – – – 52.526.056.300.778.883.857.575.809 31.347.241.017.CEBU AIR.541.063.043.957.098 4.875) (101.316.537.445 590.004.058 – 1.369.883.899.719.902.929.968.856 (1.670 (24.690.648.548.645) – (6.782) 6.540) (5.595 110.564 (771.314.678) 737.186) 226.870.556.

408.011.695.728.921.721.801.339 256.176.214.326.148.330) 3.672.509.783.510.325 8.953.469. 46 .522) 1.033) 204.915.946 (14.056.694) (1.770.040.348.677.677 (262.771.912.015 (4.330) 2.211.119) (4.Years Ended December 31 2013 2014 CASH FLOWS FROM FINANCING ACTIVITIES Long-term debt: Availments (Notes 18 and 31) Payments of long-term debt (Note 18) Dividends paid Net cash provided by financing activities EFFECTS OF EXCHANGE RATE CHANGES IN CASH AND CASH EQUIVALENTS NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS CASH AND CASH EQUIVALENTS ATTRIBUTABLE TO BUSINESS COMBINATION (Notes 7 and 31) 2012 P =8.964 P =7.087.803 10.728.478.356.508.646 = P5.565.000 (3.137) (2.803 = P10.986 CASH AND CASH EQUIVALENTS AT END OF YEAR (Note 8) P =3.026.325 See accompanying Notes to Consolidated Financial Statements.906.660) 3.111.542.536) (605.963.812 (2.721) (605.326.957.953.202.999 – – CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 6.056.683 P =6.425.111.

The Parent Company’s common stock was listed with the Philippine Stock Exchange (PSE) on October 26. namely: Cebu Aircraft Leasing Limited (CALL). INC.CEBU AIR. Inc. 47 . (CPAHI). its ten SPEs and TAP (collectively known as “the Group”) are consolidated for financial reporting purposes (Note 2). the Parent Company is entitled to certain fiscal and non-fiscal incentives. Corporate Information Cebu Air. BLL. purchase. 7151.15%-owned by CP Air Holdings. The Parent Company’s ultimate parent is JG Summit Holdings. the Parent Company was granted a franchise to operate air transportation services. In September 2001. Under the terms of the registration and subject to certain requirements. mail. Doña Juanita Marquez Lim Building. (the Parent Company) was incorporated and organized in the Philippines on August 26. Panatag Two Aircraft Leasing Limited (PTALL). maintain. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Cebu City. On March 20. POALL. SLL. the general business of a private carrier or charter engaged in the transportation of passengers. merchandise and freight. Sharp Aircraft Leasing Limited (SALL). The Parent Company is 66. pursuant to Republic Act (RA) No. the Parent Company’s initial public offering (IPO). The principal place of business of the Parent Company is at 2nd Floor. The Parent Company has ten special purpose entities (SPE) that it controls. construct. own. 2014. lease. operate and dispose of airplanes and other aircraft of every kind and description. ILL. Inc. lease. PTHALL and SAALL acquired the passenger aircraft for lease to the Parent Company under finance lease arrangements (Note 13) and funded the acquisitions through long-term debt (Note 18). CALL. VALL POALL. 1988 to carry on. CALL. the Philippine Civil Aeronautics Board (CAB) issued the permit to operate scheduled international services and a certificate of authority to operate international charters. In 1991. SLL. Inc. construct. an income tax holiday (ITH) for a period of four (4) to six (6) years (Notes 25 and 32). SALL. Boracay Leasing Limited (BLL). including among others. In August 1997. convenient or useful as an auxiliary to aircraft transportation. Osmeña Boulevard. aircraft service stations and agencies. the Office of the President of the Philippines gave the Parent Company the status of official Philippine carrier to operate international services. and also to own. both domestic and international. IBON Leasing Limited (ILL). and to acquire. The Parent Company. BLL. operate and dispose of hangars. PTALL. Vector Aircraft Leasing Limited (VALL) Panatag One Aircraft Leasing Limited (POALL). PTALL and PTHALL are SPEs in which the Parent Company does not have equity interest. SALL. (JGSHI). the Parent Company acquired 100% ownership of Tiger Airways Philippines (TAP) (Note 7). by means of aircraft of every kind and description. purchase. Panatag Three Aircraft Leasing Limited (PTHALL) and Summit A Aircraft Leasing Limited (SAALL). and other objects and service of a similar nature which may be necessary. The Parent Company is registered with the Board of Investments (BOI) as a new operator of air transport on a pioneer and non-pioneer status. VALL. ILL. 2010. Surigao Leasing Limited (SLL). transportation depots.

2. b. The franchise tax of the Parent Company is abolished.00% to 12. 9361. 48 . The Parent Company shall be subject to corporate income tax. Among the relevant provisions of RA No. Increase in the VAT rate imposed on goods and services from 10. The Department of Finance through the Bureau of Internal Revenue issued RR No. 2008. the excess input tax shall be carried over to the succeeding quarter or quarters. 9337 or the R-VAT Act of 2005. Change in corporate income tax rate from 32.Prior to the grant of the ITH and in accordance with the Parent Company’s franchise. the Parent Company’s functional and presentation currency.00% to 35. the Parent Company is subject to corporate income tax and to real property tax. 2-2007 to implement the provisions of the said law. royalties. 2006. 9337 are the following: a. the amendment shall apply to the quarterly VAT returns to be filed after the effectivity of RA No. On November 21. c. registration license. The Parent Company shall remain exempt from any taxes. On May 24. 2005. 2005.00% effective on February 1. and f. partnership or corporation received and enjoyed tax privileges and other favorable terms which tended to place the Parent Company at any disadvantage. On December 16. duties.00% starting on January 1. Basis of Preparation The accompanying consolidated financial statements of the Group have been prepared on a historical cost basis. All amounts are rounded to the nearest peso unless otherwise indicated. the Reformed-Value Added Tax (R-VAT) law was signed as RA No. then such privileges shall have been deemed by the fact itself of the Parent Company’s tax privileges and shall operate equally in favor of the Parent Company. the Parent Company was registered as a Clark Freeport Zone (CFZ) enterprise and committed to provide air transportation services both domestic and international for passengers and cargoes at the Diosdado Macapagal International Airport.00% for the next three years effective on November 1. 16-2005 which provides for the implementation of the rules of the R-VAT law.00% cap on the input VAT that can be claimed against output VAT. 9361. which amends Section 110 (B) of the Tax Code. and other fees and charges. d. and 30. provides that if the input tax. The R-VAT law took effect on November 1. 2009 and thereafter. which extends up to year 2031: a. The Parent Company is subject to franchise tax of five percent (5%) of the gross revenue derived from air transportation operations. 70. 2005 of Revenue Regulation (RR) No. 2006. 2005 following the approval on October 19. the President signed into law RA No. except for financial assets and liabilities at fair value through profit or loss (FVPL) and available-for-sale (AFS) investment that have been measured at fair value. 2006. which became effective on December 13. inclusive of the input tax carried over from the previous quarter exceeds the output tax. b. For revenue earned from activities other than air transportation. In the event that any competing individual. The financial statements of the Group are presented in Philippine Peso (P =). e. This law. Based on the regulation.

existing rights that give it the current ability to direct the relevant activities of the investee). 2014. the Parent Company considers all relevant facts and circumstances in assessing whether it has power over an investee. The Group has adopted the new and revised accounting standards. Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Parent Company of the Group and to the non-controlling interests. income and expenses and cash flows relating to transactions between members of the Group are eliminated on consolidation. the Group finalized its acquisition of TAP. which became effective beginning January 1. 49 . On March 20. to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. using consistent accounting policies. the Parent Company has: · · · power over the investee (that is. the SPEs that it controls and its wholly owned subsidiary TAP. or has rights. or rights. including: · · · the contractual arrangement with the other vote holders of the investee. the Group finalized the purchase price allocation. Consolidation of a subsidiary begins when the Parent Company obtains control over the subsidiary and ceases when the Parent Company loses control of the subsidiary. in the accompanying financial statements. Assets. and the Parent Company’s voting rights and potential voting rights. and only if. 2014. equity. The Parent Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. liabilities. All intragroup assets. liabilities. 2014 when the Group gained control (Note 7). Control is achieved when the Parent Company is exposed. even if this results in the non-controlling interests having a deficit balance. the Parent Company controls an investee if. Basis of Consolidation The consolidated financial statements as of December 31. income and expenses of the a subsidiary acquired or disposed of during the year are included in the consolidated statement of comprehensive income from the date the Parent Company gains control until the date the Parent Company ceases to control the subsidiary. exposure. 2014 and 2013 represent the consolidated financial statements of the Parent Company. Consolidation of TAP started on March 20. The acquisition was accounted for as a business combination (Note 7). Accordingly. and the ability to use its power over the investee to affect the amount of the investor's returns When the Parent Company has less than a majority of the voting or similar rights of an investee. The financial statements of the subsidiaries are prepared for the same balance sheet date as the Parent Company. rights arising from other contractual arrangements. Specifically. to variable returns from its involvement with the investee.Statement of Compliance The consolidated financial statements of the Group have been prepared in compliance with Philippine Financial Reporting Standards (PFRS).

including intercompany profits and unrealized profits and losses. The exception to consolidation requires investment entities to account for subsidiaries at fair value through profit or loss. the adoption of the new and amended PFRS and Philippine Interpretations did not have any effect on the consolidated financial statements of the Group. The consolidated financial statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. The amendments affect disclosures only and had no impact on the Group’s financial position or performance. Financial Instruments: Presentation . Except as otherwise indicated. subject to certain transition relief. If the Parent Company loses control over a subsidiary. 3.Offsetting Financial Assets and Financial Liabilities These amendments clarify the meaning of ‘currently has a legally enforceable right to set-off’ and the criteria for non-simultaneous settlement mechanisms of clearing houses to qualify for offsetting and are applied retrospectively. Consolidated Financial Statements. · PAS 32. Impairment of Assets . Recognizes the fair value of the consideration received.Recoverable Amount Disclosures for Non-Financial Assets (Amendments) These amendments remove the unintended consequences of PFRS 13 on the disclosures required under PAS 36. PFRS 12. Recognizes any surplus or deficit in profit or loss. In addition. except for the adoption of new and amended PFRS and Philippine Interpretations from International Financial Reporting Interpretations Committee (IFRIC) that are discussed below. and Reclassifies the Parent Company’s share of components previously recognized in OCI to profit or loss or retained earnings. Disclosure of Interests in Other Entities. All significant intercompany transactions and balances. The amendments must be applied retrospectively. 50 . Changes in Accounting Policies The accounting policies adopted are consistent with those of the previous financial year. · PAS 36. it: · · · · · · · Derecognizes the assets (including goodwill) and liabilities of the subsidiary. Derecognizes the cumulative translation adjustments recorded in equity. · Investment Entities (Amendments to PFRS 10. these amendments require disclosure of the recoverable amounts for the assets or cash-generating units (CGUs) for which impairment loss has been recognized or reversed during the period. is accounted for as an equity transaction. without a loss of control. The amendments affect disclosure only and have no impact on the Group’s financial position or performance. The amendments have no impact on the Group’s financial position or performance. Separate Financial Statements) These amendments provide an exception to the consolidation requirement for entities that meet the definition of an investment entity under PFRS 10. as appropriate.A change in the ownership interest of a subsidiary. as would be required if the Parent Company had directly disposed of the related assets and liabilities. Recognizes the fair value of any investment retained. and PAS 27. are eliminated in the consolidation. Derecognizes the carrying amount of any non-controlling interests.

Levies IFRIC 21 clarifies that an entity recognizes a liability for a levy when the activity that triggers payment. The Group does not expect the adoption of these standards to have a significant impact in the consolidated financial statements. This interpretation has no impact on the Group’s financial position or performance. This amendment has no impact on the Group. which included an amendment to PFRS 13. This list consists of standards and interpretations issued. The amendment to PFRS 1 is effective immediately. The remainder of the change in fair value is 51 .2012 annual improvements cycle. · Philippine Interpretation IFRIC 21. be subsequently measured at amortized cost if it is held within a business model that has the objective to hold the assets to collect the contractual cash flows and its contractual terms give rise. This amendment has no impact on the Group as it is not a first-time PFRS adopter. but permits early application. Equity financial assets held for trading must be measured at fair value through profit or loss. occurs. the amount of change in the fair value of a liability that is attributable to changes in credit risk must be presented in OCI. Annual Improvements to PFRSs (2010-2012 cycle) In the 2010 . The Group intends to adopt those standards when they become effective. seven amendments to six standards were issued.2013 annual improvements cycle. Fair Value Measurement. the interpretation clarifies that no liability should be anticipated before the specified minimum threshold is reached. All other debt instruments are subsequently measured at fair value through profit or loss. For a levy that is triggered upon reaching a minimum threshold. A debt financial asset may. Financial Instruments: Recognition and Measurement. Annual Improvements to PFRSs (2011-2013 cycle) In the 2011 . four amendments to four standards were issued. It clarifies that an entity may choose to apply either a current standard or a new standard that is not yet mandatory. · PFRS 9. which included an amendment to PFRS 1. For FVO liabilities. PFRS 9 requires all financial assets to be measured at fair value at initial recognition. which the Group reasonably expects to be applicable at a future date. to cash flows that are solely payments of principal and interest on the principal outstanding. if the fair value option (FVO) is not invoked. Financial Instruments: Recognition and Measurement . 2014. on specified dates. unless otherwise stated. provided either standard is applied consistently throughout the periods presented in the entity’s first PFRS financial statements. First-time Adoption of Philippine Financial Reporting Standards-First-time Adoption of PFRS.Classification and Measurement (2010 version) PFRS 9 (2010 version) reflects the first phase on the replacement of PAS 39 and applies to the classification and measurement of financial assets and liabilities as defined in PAS 39.Novation of Derivatives and Continuation of Hedge Accounting (Amendments) These amendments provide relief from discontinuing hedge accounting when novation of a derivative designated as a hedging instrument meets certain criteria. Financial Instruments .· PAS 39. Standards Issued but not yet Effective The Group has not applied the following PFRS and Philippine Interpretations which are not yet effective as of December 31. All equity financial assets are measured at fair value either through other comprehensive income (OCI) or profit or loss. as identified by the relevant legislation. The amendment to PFRS 13 is effective immediately and it clarifies that short-term receivables and payables with no stated interest rates can be measured at invoice amounts when the effect of discounting is immaterial. The amendments have no financial impact on the Group’s financial position or performance.

but will potentially have no impact on the classification and measurement of financial liabilities. except when such contract qualifies as construction contract to be accounted for under PAS 11. · Philippine Interpretation IFRIC 15. however. Share-based Payment . including the embedded derivative separation rules and the criteria for using the FVO. instead of allocating the contributions to the periods of service. unless presentation of the fair value change in respect of the liability’s credit risk in OCI would create or enlarge an accounting mismatch in profit or loss.presented in profit or loss. if the amount of the contributions is independent of the number of years of service. 2015 · PAS 19. 2018 when the final version of PFRS 9 was adopted by the Philippine Financial Reporting Standards Council (FRSC). These amendments clarify that. an entity is permitted to recognize such contributions as a reduction in the service cost in the period in which the service is rendered. or involves rendering of services in which case revenue is recognized based on stage of completion. The amendments will have no impact on the Group’s financial statements. covers accounting for revenue and associated expenses by entities that undertake the construction of real estate directly or through subcontractors. Construction Contracts. 2015. This mandatory adoption date was moved to January 1. The adoption of the first phase of PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets. Annual Improvements to PFRSs (2010-2012 cycle) The Annual Improvements to PFRSs (2010-2012 cycle) are effective for annual periods beginning on or after January 1. Agreement for Construction of Real Estate This Philippine Interpretation. is still for approval by the Board of Accountancy (BOA).Defined Benefit Plans: Employee Contributions PAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. Employee Benefits . which may be early applied. including: · · A performance condition must contain a service condition A performance target must be met while the counterparty is rendering service 52 . · PFRS 2. Contracts involving provision of services with the construction materials and where the risks and reward of ownership are transferred to the buyer on a continuous basis will also be accounted for based on stage of completion. The adoption of the interpretation will have no impact on the Group’s financial position or performance as the Group is not engaged in real estate businesses. Effective January 1.Definition of Vesting Condition This improvement is applied prospectively and clarifies various issues relating to the definitions of performance and service conditions which are vesting conditions. they should be attributed to periods of service as a negative benefit. This Philippine Interpretation requires that revenue on construction of real estate be recognized only upon completion. Such adoption. All other PAS 39 classification and measurement requirements for financial liabilities have been carried forward into PFRS 9. PFRS 9 (2010 version) is effective for annual periods beginning on or after January 1. Where the contributions are linked to service. The SEC and the FRSC have deferred the effectivity of this interpretation until the final Revenue standard is issued by the International Accounting Standards Board (IASB) and an evaluation of the requirements of the final Revenue standard against the practices of the Philippine real estate industry is completed. 2015 and are not expected to have a material impact on the Group.

Related Party Disclosures . Financial Instruments: Recognition and Measurement (or PFRS 9. regardless of the reason.. The amendments affect disclosures only and will have no impact on the Group’s financial position or performance. ceases to provide service during the vesting period. 53 . the service condition is not satisfied. The reconciliation of segment assets to total assets is only required to be disclosed if the reconciliation is reported to the chief operating decision maker. if early adopted). the accumulated depreciation or amortization is the difference between the gross and carrying amounts of the asset. This amendment does not apply to the Group as it has no share-based payments. sales and gross margins) used to assess whether the segments are ‘similar’. · PFRS 3. an entity that uses a management entity is required to disclose the expenses incurred for management services. It clarifies that a contingent consideration that is not classified as equity is subsequently measured at fair value through profit or loss whether or not it falls within the scope of PAS 39. is a related party subject to the related party disclosures. Plant and Equipment . The amendments affect disclosures only and have no impact on the Group’s financial position or performance. 2014. Operating Segments . In addition. The amendment will have no impact on the Group’s financial position or performance. The Group shall consider this amendment for future business combinations.g. · PAS 16.Accounting for Contingent Consideration in a Business Combination The amendment is applied prospectively for business combinations for which the acquisition date is on or after July 1.Revaluation Method . or to those of another entity in the same group A performance condition may be a market or non-market condition If the counterparty. · PFRS 8. · PAS 24. including a brief description of operating segments that have been aggregated and the economic characteristics (e. similar to the required disclosure for segment liabilities.Key Management Personnel The amendment is applied retrospectively and clarifies that a management entity. Financial Instruments. which is an entity that provides key management personnel services.Aggregation of Operating Segments and Reconciliation of the Total of the Reportable Segments’ Assets to the Entity’s Assets The amendments are applied retrospectively and clarify that: · · An entity must disclose the judgments made by management in applying the aggregation criteria in the standard.Proportionate Restatement of Accumulated Depreciation The amendment is applied retrospectively and clarifies in PAS 16 and PAS 38 that the asset may be revalued by reference to the observable data on either the gross or the net carrying amount. Business Combinations .· · · A performance target may relate to the operations or activities of an entity. Property. In addition.

· This scope exception applies only to the accounting in the financial statements of the joint arrangement itself. biological assets that meet the definition of bearer plants will no longer be within the scope of PAS 41. and PAS 41.Scope Exceptions for Joint Arrangements The amendment is applied prospectively and clarifies the following regarding the scope exceptions within PFRS 3: · Joint arrangements. and PAS 38. The amendments also require that produce that grows on bearer plants will remain in the scope of PAS 41 measured at fair value less costs to sell. 2016. Under the amendments. not just joint ventures. Instead. and not the description of ancillary services in PAS 40. Property. Agriculture . Intangible Assets . Fair Value Measurement . The amendment will have no significant impact on the Group’s financial position or performance. property.Portfolio Exception The amendment is applied prospectively and clarifies that the portfolio exception in PFRS 13 can be applied not only to financial assets and financial liabilities. 2016 · PAS 16.Bearer Plants (Amendments) The amendments change the accounting requirements for biological assets that meet the definition of bearer plants.Annual Improvements to PFRSs (2011-2013 cycle) The Annual Improvements to PFRSs (2010-2012 cycle) are effective for annual periods beginning on or after January 1.e. is used to determine if the transaction is the purchase of an asset or business combination. PAS 16 will apply. 2015 and are not expected to have a material impact on the Group.Clarification of Acceptable Methods of Depreciation and Amortization (Amendments) The amendments clarify the principle in PAS 16 and PAS 38 that revenue reflects a pattern of economic benefits that are generated from operating a business (of which the asset is part) rather than the economic benefits that are consumed through use of the asset. Business Combinations . After initial recognition. Property. Investment Property The amendment is applied prospectively and clarifies that PFRS 3. a revenue-based method cannot be used to depreciate property. The amendment will have no significant impact on the Group’s financial position or performance. For government grants related to bearer 54 . but also to other contracts within the scope of PAS 39. As a result. Plant and Equipment. The amendments are effective prospectively for annual periods beginning on or after January 1. The description of ancillary services in PAS 40 only differentiates between investment property and owner-occupied property (i. The amendment will have no significant impact on the Group’s financial position or performance. Effective January 1.. plant and equipment). · PAS 16. · PFRS 13. Plant and Equipment. with early adoption permitted. are outside the scope of PFRS 3. bearer plants will be measured under PAS 16 at accumulated cost (before maturity) and using either the cost model or revaluation model (after maturity). plant and equipment and may only be used in very limited circumstances to amortize intangible assets. · PAS 40. · PFRS 3. The amendment will have no impact on the Group’s financial position or performance.

The amendments apply to both the acquisition of the initial interest in a joint operation and the acquisition of any additional interests in the same joint operation and are prospectively effective for annual periods beginning on or after January 1. with early adoption permitted. even if these assets are housed in a subsidiary. and risks associated with. joint ventures and associates in their separate financial statements. a scope exclusion has been added to PFRS 11 to specify that the amendments do not apply when the parties sharing joint control.Equity Method in Separate Financial Statements (Amendments) The amendments will allow entities to use the equity method to account for investments in subsidiaries. These amendments are not expected to have any impact to the Group. with early adoption permitted. These amendments are not expected to have any impact to the Group. The standard requires disclosures on the nature of. A partial gain or loss is recognized when a transaction involves assets that do not constitute a business. 2016. The amendments are retrospectively effective for annual periods beginning on or after January 1. Investments in Associates and Joint Ventures . For first-time adopters of PFRS electing to use the equity method in its separate financial statements. in which the activity of the joint operation constitutes a business must apply the relevant PFRS 3 principles for business combinations accounting. to continue applying most of its existing accounting policies for regulatory deferral account balances upon its first-time adoption of PFRS. the entity’s rate-regulation and the effects of that 55 .Sale or Contribution of Assets between an Investor and its Associate or Joint Venture These amendments address an acknowledged inconsistency between the requirements in PFRS 10 and those in PAS 28 (2011) in dealing with the sale or contribution of assets between an investor and its associate or joint venture. are under common control of the same ultimate controlling party. The amendment will have no significant impact on the Group’s financial position or performance. Entities already applying PFRS and electing to change to the equity method in its separate financial statements will have to apply that change retrospectively.plants. Entities that adopt PFRS 14 must present the regulatory deferral accounts as separate line items on the statement of financial position and present movements in these account balances as separate line items in the statement of profit or loss and other comprehensive income. will apply. Separate Financial Statements . Accounting for Government Grants and Disclosure of Government Assistance. The amendments also clarify that a previously held interest in a joint operation is not remeasured on the acquisition of an additional interest in the same joint operation while joint control is retained. · PFRS 14. Consolidated Financial Statements and PAS 28. PAS 20. · PFRS 10. The amendment will have no significant impact on the Group’s financial position or performance. they will be required to apply this method from the date of transition to PFRS. The amendments require that a full gain or loss is recognized when a transaction involves a business (whether it is housed in a subsidiary or not). Joint Arrangements . In addition.Accounting for Acquisitions of Interests in Joint Operations (Amendments) The amendments to PFRS 11 require that a joint operator accounting for the acquisition of an interest in a joint operation. 2016. Regulatory Deferral Accounts PFRS 14 is an optional standard that allows an entity. · PFRS 11. These amendments are effective from annual periods beginning on or after 1 January 2016. whose activities are subject to rateregulation. · PAS 27. including the reporting entity.

The amendment is to be applied such that the assessment of which servicing contracts constitute continuing involvement will need to be done retrospectively. When there is no deep market for high quality corporate bonds in that currency. therefore. The amendment will have no significant impact on the Group’s financial position or performance. Changes include 56 .Servicing Contracts PFRS 7 requires an entity to provide disclosures for any continuing involvement in a transferred asset that is derecognized in its entirety. Effective January 1. Financial Instruments: Disclosures . 2018 · PFRS 9. rather than the country where the obligation is located. this standard would not apply. government bond rates must be used. Financial Instrument . comparative disclosures are not required to be provided for any period beginning before the annual period in which the entity first applies the amendments.regional market issue regarding discount rate This amendment is applied prospectively and clarifies that market depth of high quality corporate bonds is assessed based on the currency in which the obligation is denominated. PFRS 7 and PAS 39 (2013 version) PFRS 9 (2013 version) already includes the third phase of the project to replace PAS 39 which pertains to hedge accounting. · PFRS 7 . Non-current Assets Held for Sale and Discontinued Operations . Employee Benefits . However. Annual Improvements to PFRSs (2012-2014 cycle) The Annual Improvements to PFRSs (2012-2014 cycle) are effective for annual periods beginning on or after January 1. The amendment clarifies that a servicing contract that includes a fee can constitute continuing involvement in a financial asset. 2016. · PFRS 7. PFRS 14 is effective for annual periods beginning on or after January 1. · PAS 19.rate-regulation on its financial statements. no interruption of the application of the requirements in PFRS 5. An entity must assess the nature of the fee and arrangement against the guidance in PFRS 7 in order to assess whether the disclosures are required.Hedge Accounting and amendments to PFRS 9. There is. The amendment will have no significant impact on the Group’s financial position or performance. The amendment also clarifies that changing the disposal method does not change the date of classification. · PFRS 5. The amendment will have no significant impact on the Group’s financial position or performance.Applicability of the Amendments to PFRS 7 to Condensed Interim Financial Statements This amendment is applied retrospectively and clarifies that the disclosures on offsetting of financial assets and financial liabilities are not required in the condensed interim financial report unless they provide a significant update to the information reported in the most recent annual report. 2016 and are not expected to have a material impact on the Group. rather it is a continuation of the original plan.Changes in Methods of Disposal The amendment is applied prospectively and clarifies that changing from a disposal through sale to a disposal through distribution to owners and vice-versa should not be considered to be a new plan of disposal. The amendment will have no significant impact on the Group’s financial position or performance. Since the Group is an existing PFRS preparer. This version of PFRS 9 replaces the rules-based hedge accounting model of PAS 39 with a more principles-based approach.

was issued. Either a full or modified retrospective application is required for annual periods beginning on or after January 1. 57 . 2018. with early application permitted. Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. PFRS 9 (2013 version) has no mandatory effective date. The standard introduces new requirements for classification and measurement. provided that the risk component is separately identifiable and reliably measurable.replacing the rules-based hedge effectiveness test with an objectives-based test that focuses on the economic relationship between the hedged item and the hedging instrument. the final version of PFRS 9. 2015. but comparative information is not compulsory. The adoption of the final version of PFRS 9. and allowing the time value of an option. and hedge accounting. 2018 was eventually set when the final version of PFRS 9 was adopted by the FRSC. is still for approval by BOA. PFRS 9 is effective for annual periods beginning on or after January 1. The principles in IFRS 15 provide a more structured approach to measuring and recognizing revenue. The following new standard issued by the IASB has not yet been adopted by the FRSC IFRS 15. Under IFRS 15 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. allowing risk components to be designated as the hedged item. and the effect of credit risk on that economic relationship. Retrospective application is required. · PFRS 9. and all previous versions of PFRS 9. PFRS 9 also requires more extensive disclosures for hedge accounting. 2017 with early adoption permitted. The new revenue standard is applicable to all entities and will supersede all current revenue recognition requirements under IFRS. however. The mandatory effective date of January 1. PFRS 9 reflects all phases of the financial instruments project and replaces PAS 39. Financial Instruments. The Group is currently assessing the impact of IFRS 15 and plans to adopt the new standard on the required effective date once adopted locally. Early application of previous versions of PFRS 9 is permitted if the date of initial application is before February 1. impairment. but will have no impact on the classification and measurement of the Group’s financial liabilities. not only for financial items but also for non-financial items. Financial Instruments (2014 or final version) In July 2014. Financial Instruments: Recognition and Measurement. The adoption will also have an effect on the Group’s application of hedge accounting. The adoption of PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets but will have no impact on the classification and measurement of the Group’s financial liabilities. the forward element of a forward contract and any foreign currency basis spread to be excluded from the designation of a derivative instrument as the hedging instrument and accounted for as costs of hedging. The adoption of PFRS 9 will have an effect on the classification and measurement of the Group’s financial assets and impairment methodology for financial assets. The Group is currently assessing the impact of adopting this standard.

Revenue is measured at the fair value of the consideration received. Expenses that arise in the course of ordinary regular activities of the Group include.4. The commission related to the sale of air transportation services is recognized as outright expense upon the receipt of payment from customers. cash equivalents. among others. and is included under ‘Reservation and sales’ account. excluding cash on hand. The following specific recognition criteria must also be met before revenue is recognized: Sale of air transportation services Passenger ticket and cargo waybill sales are initially recorded under ‘Unearned transportation revenue’ account in the consolidated statement of financial position until recognized under Revenue account in the consolidated statement of comprehensive income when carriage is provided or when the flight is uplifted. rebates and other sales taxes or duty. Expense Recognition Expenses are recognized when it is probable that decrease in future economic benefits related to decrease in an asset or an increase in liability has occurred and the decrease in economic benefits can be measured reliably. 58 . Financial Instruments Date of recognition Purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace are recognized using the settlement date accounting. excluding discounts. Interest income Interest on cash. are classified and accounted for as loans and receivables. Cash equivalents include short-term investment that can be pre-terminated and readily convertible to known amount of cash and that are subject to an insignificant risk of changes in value. Summary of Significant Accounting Policies Revenue Recognition Revenue is recognized to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Cash and cash equivalents. short-term cash investments and debt securities classified as financial assets at FVPL is recognized as the interest accrues using the effective interest method. the operating expenses on the Group’s operation. mail and merchandise are recognized when transactions are carried out. General and Administrative Expenses General and administrative expenses constitute cost of administering the business. Cash and Cash Equivalents Cash represents cash on hand and in banks. Ancillary revenue Revenue from services incidental to the transportation of passengers. Cash equivalents are short-term. Derivatives are recognized on a trade date basis. cargo. highly liquid investments that are readily convertible to known amounts of cash with original maturities of three months or less from dates of placement and that are subject to an insignificant risk of changes in value. These are recognized as expenses when it is probable that a decrease in future economic benefit related to a decrease in an asset or an increase in a liability has occurred and the decrease in economic benefits can be measured reliably.

Management determines the classification of its investments at initial recognition and. the Group determines the appropriate method of recognizing the ‘Day 1’ profit or loss amount. Determination of fair value The fair value of financial instruments traded in active markets at the statement of financial position date is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions). 59 . The classification depends on the purpose for which the investments were acquired and whether they are quoted in an active market. comparison to similar instruments for which market observable prices exist. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: · · · Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable. re-evaluates such designation at every reporting date. Except for financial instruments at FVPL. Valuation techniques include net present value techniques. The Group has no HTM and AFS investments as of December 31. In cases where the transaction price used is made of data which is not observable. ‘Day 1’ profit or loss Where the transaction price in a non-active market is different from the fair value based on other observable current market transactions in the same instrument or based on a valuation technique whose variables include only data from an observable market. held-to-maturity (HTM) investments. For each transaction. When current bid and ask prices are not available. the Group recognizes the difference between the transaction price and fair value (a ‘Day 1’ profit or loss) in profit or loss unless it qualifies for recognition as some other type of asset or liability. when the inputs become observable or when the instrument is derecognized. For all other financial instruments not listed in an active market. options pricing models and other relevant valuation models. the initial measurement of financial assets includes transaction costs. the price of the most recent transaction provides evidence of the current fair value as long as there has not been a significant change in economic circumstances since the time of the transaction. AFS investments and loans and receivables. 2014 and 2013. Financial liabilities are classified into financial liabilities at FVPL and other financial liabilities carried at cost or amortized cost. either directly or indirectly Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. Any difference noted between the fair value and the transaction price is treated as expense or income. the difference between the transaction price model value is only recognized in profit or loss. unless it qualifies for recognition as some type of asset or liability. The Group classifies its financial assets into the following categories: financial assets at FVPL.Initial recognition of financial instruments Financial instruments are recognized initially at the fair value of the consideration given. without any deduction for transaction costs. the fair value is determined by using appropriate valuation techniques. where allowed and appropriate.

or (b) a hedge of the exposure to variability in cash flows attributable to an asset or liability or a forecasted transaction (cash flow hedge). that it would not be separately recorded. 2014 and 2013.Financial assets and financial liabilities at FVPL Financial assets and financial liabilities at FVPL include financial assets and financial liabilities held for trading purposes. or The assets or liabilities are part of a group of financial assets. 2014 and 2013. The gains or losses on these instruments are accounted for directly as charges to or credits against current operations under ‘Fuel hedging gains (losses)’ account in profit or loss. As of December 31. The Group enters into fuel derivatives to manage its exposure to fuel price fluctuations. Changes in fair value are reflected in profit or loss. Such fuel derivatives are not designated as accounting hedges. 2014 and 2013. while dividend income is recorded in other revenue according to the terms of the contract. respectively. Derivatives recorded at FVPL The Group is counterparty to certain derivative contracts such as commodity options. financial liabilities or both which are managed and their performance are evaluated on a fair value basis. unless the embedded derivative does not significantly modify the cash flows or it is clear. derivative instruments or those designated upon initial recognition as at FVPL. These derivatives are entered into for risk management purposes. AFS investments AFS investments are those non-derivative investments which are designated as such or do not qualify to be classified or designated as financial assets at FVPL. or The financial instrument contains an embedded derivative. the Group has no embedded derivatives. liability or a firm commitment (fair value hedge). For the purpose of hedge accounting. Derivatives are carried as assets when the fair value is positive and as liabilities when the fair value is negative. Financial assets and financial liabilities at FVPL are presented in the consolidated statement of financial position at fair value. The Group’s financial assets and liabilities at FVPL consist of derivative liabilities and derivative assets as of December 31. with little or no analysis. respectively (Note 9). HTM investments or loans and 60 . Such derivative financial instruments are initially recorded at fair value on the date at which the derivative contract is entered into and are subsequently re-measured at fair value. The Group did not apply hedge accounting on its derivative transactions for the years ended December 31. or when the right of the payment has been established. hedges are classified primarily as either: (a) a hedge of the fair value of an asset. Financial assets and financial liabilities are designated by management on initial recognition when any of the following criteria are met: · · · The designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognizing gains or losses on them on a different basis. in accordance with a documented risk management or investment strategy. Interest earned or incurred is recorded in interest income or expense. Any gains or losses arising from changes in fair values of derivatives (except those accounted for as accounting hedges) are taken directly to profit or loss.

receivables. They are purchased and held indefinitely, and may be sold in response to liquidity
requirements or changes in market conditions.
After initial measurement, AFS investments are subsequently measured at fair value.
The unrealized gains and losses are recognized directly in equity [other comprehensive income
(loss)] under ‘Net unrealized gain (loss) on AFS investments’ account in the statement of financial
position. When the investment is disposed of, the cumulative gain or loss previously recognized
in the statement of comprehensive income is recognized in the statement of income. Where the
Group holds more than one investment in the same security they are deemed to be disposed of on
a first-in first-out basis. Dividends earned while holding AFS investments are recognized in the
statement of income when the right of the payment has been established. The losses arising from
impairment of such investments are recognized in the statement of income and removed from the
‘Net unrealized gain (loss) on AFS investments’ account.
As of December 31, 2014 and 2013, the Group has no AFS investments.
Receivables
Receivables are non-derivative financial assets with fixed or determinable payments and fixed
maturities that are not quoted in an active market. After initial measurement, receivables are
subsequently carried at amortized cost using the effective interest method less any allowance for
impairment loss. Amortized cost is calculated by taking into account any discount or premium on
acquisition, and includes fees that are an integral part of the effective interest rate (EIR) and
transaction costs. Gains and losses are recognized in profit or loss, when the receivables are
derecognized or impaired, as well as through the amortization process.
This accounting policy applies primarily to the Group’s trade and other receivables (Note 10) and
certain refundable deposits (Note 16).
Financial liabilities
Issued financial instruments or their components, which are not designated at FVPL are classified
as other financial liabilities where the substance of the contractual arrangement results in the
Group having an obligation either to deliver cash or another financial asset to the holder, or to
satisfy the obligation other than by the exchange of a fixed amount of cash or another financial
asset for a fixed number of own equity shares. The components of issued financial instruments
that contain both liability and equity elements are accounted for separately, with the equity
component being assigned the residual amount after deducting from the instrument as a whole the
amount separately determined as the fair value of the liability component on the date of issue.
After initial measurement, other financial liabilities are subsequently measured at cost or
amortized cost using the effective interest method. Amortized cost is calculated by taking into
account any discount or premium on the issue and fees that are an integral part of the EIR. Any
effects of restatement of foreign currency-denominated liabilities are recognized in profit or loss.
This accounting policy applies primarily to the Group’s accounts payable and other accrued
liabilities, long-term debt, and other obligations that meet the above definition
(Notes 17, 18 and 19).

61

Impairment of Financial Assets
The Group assesses at each reporting date whether there is objective evidence that a financial asset
or group of financial assets is impaired. A financial asset or a group of financial assets is deemed
to be impaired if, and only if, there is objective evidence of impairment as a result of one or more
events that has occurred after the initial recognition of the asset (an incurred ‘loss event’) and that
loss event (or events) has an impact on the estimated future cash flows of the financial asset or the
group of financial assets that can be reliably estimated. Evidence of impairment may include
indications that the borrower or a group of borrowers is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability that they will
enter bankruptcy or other financial reorganization and where observable data indicate that there is
a measurable decrease in the estimated future cash flows, such as changes in arrears or economic
conditions that correlate with defaults.
Assets carried at amortized cost
If there is objective evidence that an impairment loss on financial assets carried at amortized cost
(i.e., receivables) has been incurred, the amount of the loss is measured as the difference between
the assets’ carrying amount and the present value of estimated future cash flows discounted at the
asset’s original EIR. Time value is generally not considered when the effect of discounting is not
material. The carrying amount of the asset is reduced through the use of an allowance account.
The amount of the loss shall be recognized in profit or loss. The asset, together with the
associated allowance accounts, is written-off when there is no realistic prospect of future recovery.
The Group first assesses whether objective evidence of impairment exists individually for
financial assets that are individually significant, and collectively for financial assets that are not
individually significant. If it is determined that no objective evidence of impairment exists for an
individually assessed financial asset, whether significant or not, the asset is included in a group of
financial assets with similar credit risk characteristics and that group of financial assets is
collectively assessed for impairment. Assets that are individually assessed for impairment and for
which an impairment loss is or continues to be recognized are not included in the collective
assessment of impairment.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be
related objectively to an event occurring after the impairment was recognized, the previously
recognized impairment loss is reversed. Any subsequent reversal of an impairment loss is
recognized in profit or loss to the extent that the carrying value of the asset does not exceed its
amortized cost at the reversal date.
The Group performs a regular review of the age and status of these accounts, designed to identify
accounts with objective evidence of impairment and provide the appropriate allowance for
impairment loss. The review is accomplished using a combination of specific and collective
assessment approaches, with the impairment loss being determined for each risk grouping
identified by the Group.
AFS investments
The Group assesses at each reporting date whether there is objective evidence that a financial asset
or group of financial assets is impaired. In the case of debt instruments classified as AFS
investments, impairment is assessed based on the same criteria as financial assets carried at
amortized cost. Interest continues to be accrued at the original EIR on the reduced carrying
amount of the asset and is recorded under interest income in profit or loss. If, in a subsequent
year, the fair value of a debt instrument increases, and the increase can be objectively related to an
event occurring after the impairment loss was recognized in profit or loss, the impairment loss is
also reversed through profit or loss.

62

For equity investments classified as AFS investments, objective evidence would include a
significant or prolonged decline in the fair value of the investments below its cost. The
determination of what is significant and prolonged is subject to judgment. Where there is
evidence of impairment, the cumulative loss measured as the difference between the acquisition
cost and the current fair value, less any impairment loss on that investment previously recognized
is removed from other comprehensive income and recognized in profit or loss. Impairment losses
on equity investments are not reversed through the statement of comprehensive income. Increases
in fair value after impairment are recognized directly in other comprehensive income.
Derecognition of Financial Instruments
Financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of financial
assets) is derecognized where:
·
·
·

the rights to receive cash flows from the asset have expired;
the Group retains the right to receive cash flows from the asset, but has assumed an obligation
to pay them in full without material delay to a third party under a “pass-through” arrangement;
or
the Group has transferred its rights to receive cash flows from the asset and either: (a) has
transferred substantially all the risks and rewards of ownership and retained control over the
asset; or (b) has neither transferred nor retained the risks and rewards of the asset but has
transferred the control over the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, and has neither transferred nor retained substantially all the risks and
rewards of the asset nor transferred control over the asset, the asset is recognized to the extent of
the Group’s continuing involvement in the asset. Continuing involvement that takes the form of a
guarantee over the transferred asset is measured at the lower of original carrying amount of the
asset and the maximum amount of consideration that the Group could be required to repay.
Financial liabilities
A financial liability is derecognized when the obligation under the liability is discharged,
cancelled or has expired. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the respective carrying amounts is
recognized in profit or loss.
Offsetting Financial Instruments
Financial assets and liabilities are offset and the net amount reported in the consolidated statement
of financial position if, and only if, there is a currently enforceable legal right to offset the
recognized amounts and there is an intention to settle on a net basis, or to realize the asset and
settle the liability simultaneously. This is not generally the case with master netting agreements;
thus, the related assets and liabilities are presented gross in the consolidated statement of financial
position.
Expendable Parts, Fuel, Materials and Supplies
Expendable parts, fuel, materials and supplies are stated at lower of cost and net realizable value
(NRV). Cost of flight equipment expendable parts, materials and supplies are stated at acquisition
cost determined on a moving average cost method. Fuel is stated at cost on a weighted average
cost method. NRV is the estimated selling price in the ordinary course of business less estimated
costs to sell.

63

Business Combinations and Goodwill
PFRS 3 provides that if the initial accounting for a business combination can be determined only
provisionally by the end of the period in which the combination is effected because either the fair
values to be assigned to the acquiree’s identifiable assets, liabilities or contingent liabilities or the
cost of the combination can be determined only provisionally, the acquirer shall account for the
combination using those provisional values. The acquirer shall recognize any adjustments to those
provisional values as a result of completing the initial accounting within twelve months of the
acquisition date as follows: (i) the carrying amount of the identifiable asset, liability or contingent
liability that is recognized or adjusted as a result of completing the initial accounting shall be
calculated as if its fair value at the acquisition date had been recognized from that date;
(ii) goodwill or any gain recognized shall be adjusted by an amount equal to the adjustment to the
fair value at the acquisition date of the identifiable asset, liability or contingent liability being
recognized or adjusted; and (iii) comparative information presented for the periods before the
initial accounting for the combination is complete shall be presented as if the initial accounting has
been completed from the acquisition date.
Business combinations are accounted for using the acquisition method. The cost of an acquisition
is measured as the aggregate of the consideration transferred measured at acquisition date fair
value and the amount of any non-controlling interests in the acquiree. For each business
combination, the Group elects whether to measure the non-controlling interests in the acquiree at
fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related
costs are expensed as incurred and included in administrative expenses.
When the Group acquires a business, it assesses the financial assets and liabilities assumed for
appropriate classification and designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition date. This includes the separation of
embedded derivatives in host contracts by the acquiree.
If the business combination is achieved in stages, any previously held equity interest is remeasured
at its acquisition date fair value and any resulting gain or loss is recognized in profit or loss.
Any contingent consideration to be transferred by the acquirer will be recognized at fair value at
the acquisition date. Contingent consideration classified as an asset or liability that is a financial
instrument and within the scope of PAS 39, Financial Instruments: Recognition and
Measurement, is measured at fair value with changes in fair value recognized either in profit or
loss or as a change to OCI. If the contingent consideration is not within the scope of PAS 39, it is
measured in accordance with the appropriate IFRS. Contingent consideration that is classified as
equity is not remeasured and subsequent settlement is accounted for within equity.
Goodwill is initially measured at cost, being the excess of the aggregate of the consideration
transferred and the amount recognized for non-controlling interests, and any previous interest
held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net
assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and all of the liabilities assumed and
reviews the procedures used to measure the amounts to be recognized at the acquisition date. If
the reassessment still results in an excess of the fair value of net assets acquired over the aggregate
consideration transferred, then the gain is recognized in profit or loss.
After initial recognition, goodwill is measured at cost less any accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s CGU that are expected to benefit from the

64

fixtures and office equipment Communication equipment Special tools Maintenance and test equipment Other equipment *With residual value of 15. Construction in-progress are transferred to the related ‘Property and equipment’ account when the construction or installation and related activities necessary to prepare the property and equipment for their intended use are completed.000 flight cycles. and the property and equipment are ready for service. Construction in-progress is not depreciated until such time when the relevant assets are completed and available for use. Property and Equipment Property and equipment are carried at cost less accumulated depreciation. 2014. irrespective of whether other assets or liabilities of the acquiree are assigned to those units. The EULs of property and equipment of the Group follows: Passenger aircraft* Engines Rotables Ground support equipment EDP Equipment. The initial cost of property and equipment comprises its purchase price. Subsequent costs are capitalized as part of ‘Property and equipment’ account only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.1 million and goodwill recognized as a result of the acquisition amounted to = P566. until the next major overhaul or inspection. Generally. mainframe and peripherals Transportation equipment Furniture. regardless of utilization. On March 20. whichever is applicable. 65 . Depreciation and amortization of property and equipment commence once the property and equipment are available for use and are computed using the straight-line method over the estimated useful lives (EULs) of the assets. Subsequent costs such as actual costs of heavy maintenance visits for passenger aircraft are capitalized and depreciated based on the estimated number of years or flying hours.00% 15 years 15 years 15 years 5 years 3 years 5 years 5 years 5 years 5 years 5 years 5 years Leasehold improvements are amortized over the shorter of their EULs or the corresponding lease terms. if any. Pre-delivery payments for the construction of aircraft are initially recorded as Construction in-progress when paid to the counterparty. whichever comes first.combination. heavy maintenance visits are required every five to six years for airframe and ten years or 20. for landing gear. amortization and impairment loss. the Parent Company acquired 100% shares of TAP in which total consideration amounted to P =265. All other repairs and maintenance are charged against current operations as incurred. any related capitalizable borrowing costs attributed to progress payments incurred on account of aircraft acquisition under construction and other directly attributable costs of bringing the asset to its working condition and location for its intended use.8 million (Notes 7 and 15).

The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition (Notes 7 and 16). Intangible assets with indefinite useful lives are not amortized. if appropriate. 66 .An item of property and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. If not. the Group recognizes expense on an accrual basis. Advance payment for materials for the restoration of the aircraft is initially recorded as Advances to Supplier. For maintenance contract under PBH. and (b) power-by-the-hour (PBH) contract. Aircraft Maintenance and Overhaul Cost The Group recognizes aircraft maintenance and overhaul expenses in accordance with the contractual terms. If there is a commitment related to maintenance of aircraft held under operating lease arrangements. ARO The Group is contractually required under various lease contracts to restore certain leased aircraft to its original condition and to bear the cost of restoration at the end of the contract period. as the usage determines the timing and nature of the entity completes the overhaul and restoration. Intangible Assets Intangible assets acquired separately are measured on initial recognition at cost. at each financial year-end. For maintenance contract under TMB. the change in useful life from indefinite to finite is made on a prospective basis. The event that gives rise to the obligation is the actual flying hours of the asset as used. useful lives and methods of depreciation and amortization are reviewed and adjusted. The maintenance contracts are classified into two: (a) those based on time and material basis (TMB). but are tested for impairment annually. This is recouped when the expenses for restoration of aircraft have been incurred. in the year the item is derecognized. contractual obligations. overhaul and restoration of the leased aircraft to its original condition. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in profit or loss. The provision is made based on historical experience. Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the statement of profit or loss when the asset is derecognized. The intangible asset of the Group has indefinite useful lives. the Group recognizes expenses based on expense as incurred method. manufacturers’ advice and if relevant. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. Regular aircraft maintenance is accounted for as expense when incurred. The contractual obligation includes regular aircraft maintenance. either individually or at the CGU level. while overhaul and restoration are accounted on an accrual basis. The assets’ residual values. to determine the present value of the estimated future major airframe inspections cost and engine overhauls. a provision is made during the lease term for the lease return obligations specified within those lease agreements. The Group regularly assesses the provision for ARO and adjusts the related liability (Note 5).

The Group estimates the recoverable amount of the intangible asset. the investments in JV are carried in the consolidated statement of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the JV. Impairment of Intangibles Intangible assets with indefinite lives are assessed for impairment annually irrespective of whether there is any indication that it may be impaired.00% and 35. Under the equity method. unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. Inc. After such a reversal. The investee companies’ accounting policies conform to those by the Group for like transactions and events in similar circumstances. That increased amount cannot exceed the carrying amount that would have been determined. the asset or CGU is considered impaired and is written down to its recoverable amount.00%. The consolidated statement of comprehensive income reflects the Group’s share in the results of operations of the JV. Impairment of Nonfinancial Assets This accounting policy applies primarily to the Group’s property and equipment. the Group makes a formal estimate of recoverable amount. Dividends received are treated as a revaluation of the carrying value of the investment. 49. on a systematic basis over its remaining life. A jointly controlled entity is a JV that involves the establishment of a separate entity in which each venturer has an interest. in which case the recoverable amount is assessed as part of the CGU to which it belongs. the carrying amount of the asset is increased to its recoverable amount. Recoverable amount is the higher of an asset’s or CGU’s fair value less costs to sell and its value in use and is determined for an individual asset. An assessment is made at each statement of financial position date as to whether there is any indication that a previously recognized impairment loss may no longer exist or may have decreased. are accounted for under the equity method (Note 14).Investments in Joint Ventures A joint venture (JV) is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. the Group assesses whether there is any indication that its nonfinancial assets may be impaired. A previously recognized impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. An intangible asset is impaired when its carrying amount exceeds recoverable amount. the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset or CGU. respectively. When an indicator of impairment exists or when an annual impairment testing for an asset is required. In assessing value in use. had no impairment loss been recognized for the asset in prior years.00% investments in Philippine Academy for Aviation Traning. An impairment is recognized immediately in the profit or loss. net of depreciation and amortization. If such indication exists. (PAAT). Where the carrying amount of an asset or CGU exceeds its recoverable amount. the recoverable amount is estimated. This impairment test 67 . the depreciation and amortization expense is adjusted in future years to allocate the asset’s revised carrying amount. Such reversal is recognized in profit or loss. Aviation Partnership (Philippines) Corporation (A-plus) and SIA Engineering (Philippines) Corporation (SIAEP). The Group’s 50. less any allowance for impairment in value. The financial statements of the investee companies used in the preparation of the consolidated financial statements are prepared as of the same date with the Group. At each reporting date. If that is the case. less any residual value.

and 68 . Recoverable amount is the higher of an asset’s or CGU’s fair value less cost to sell and its value in use. In determining the value in use of the investment. Impairment of Goodwill The Group determines whether goodwill is impaired at least on an annual basis. and only if. which is the net selling price or value-in-use of the CGU to which the goodwill is allocated. The reduction is an impairment loss and shall be recognized immediately in profit or loss. A CGU is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from either assets or group of assets. The most recent recoverable amount calculation resulted in an amount that exceeded the carrying amount of the CGU by a significant margin. by comparing its recoverable amount (higher of value in use and fair value less costs to sell) with its carrying amount. whenever application of the requirements in PAS 39 indicates that the investment may be impaired. there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. Accordingly. and only if. or (b) the present value of the estimated future cash flows expected to arise from dividends to be received from the investment and from its ultimate disposal. Value in use is the present value of the future cash flows expected to be derived from an asset or each CGU. including the cash flows from the operations of the JV and the proceeds on the ultimate disposal of the investment. either individually or at the CGU level. provided it is performed at the same time every year. A reversal of an impairment loss shall be recognized immediately in profit or loss. The impairment testing may be performed at any time in the annual reporting period. there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognized. Intangible assets with indefinite useful lives are tested for impairment annually. but it must be performed at the same time every year and when circumstances indicate that the carrying amount is impaired. an entity estimates: (a) its share of the present value of the estimated future cash flows expected to be generated by the JV. An impairment loss recognized in prior periods shall be reversed if. A reversal of an impairment loss shall be recognized immediately in profit or loss.may be performed at any time during an annual period. An impairment loss recognized in prior periods shall be reversed if. the carrying amount shall be reduced to its recoverable amount. The most recent detailed calculation made in a preceding period of the recoverable amount of the CGU may be used for the impairment testing for the current period provided that: · · The assets and liabilities making up the CGU have not changed significantly from the most recent calculation. An impairment loss recognized in those circumstances is not allocated to any asset that forms part of the carrying amount of the investment in a JV. Impairment of Investments in JV The Group’s investment in JV is tested for impairment in accordance with PAS 36 as a single asset. any reversal of that impairment loss is recognized in accordance with PAS 36 to the extent that the recoverable amount of the investment subsequently increases. If the recoverable amount of an asset is less than its carrying amount. The impairment testing also requires an estimation of the recoverable amount.

69 .· The likelihood that a current recoverable amount calculation would be less than the carrying amount of the CGU is remote based on an analysis of events that have occurred and circumstances that have changed since the most recent recoverable amount calculation. in the case of stock dividends. Proceeds in excess of par value are recorded as ‘Capital paid in excess of par value’ in the consolidated statement of financial position. for example under an insurance contract.e. and (c) a reliable estimate can be made of the amount of the obligation. more likely than not) that an outflow of assets embodying economic benefits will be required to settle the obligation. Retained Earnings Retained earnings represent accumulated earnings of the Group less dividends declared. where appropriate. (b) it is probable (i. Where the Group expects a provision to be reimbursed. sale. issue or cancellation of the Parent Company’s own equity instruments. An impairment loss recognized for goodwill shall not be reversed in a subsequent period. When value-in-use calculations are undertaken. the increase in the provision due to the passage of time is recognized as an interest expense in profit or loss. or by the BOD and shareholders. the asset and the related income are recognized in the consolidated financial statements. If the effect of the time value of money is material. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.. the risks specific to the liability. Dividends on Common Shares Dividends on common shares are recognized as a liability and deducted from equity when approved and declared by the BOD. Provisions and Contingencies Provisions are recognized when: (a) the Group has a present obligation (legal or constructive) as a result of a past event. Common Stock Common stocks are classified as equity and recorded at par. No gain or loss is recognized in the profit and loss on the purchase. in the case of cash dividends. management must estimate the expected future cash flows from the asset of CGU and choose a suitable discount rate in order to calculate the present value of those cash flows. provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and. If it is virtually certain that an inflow of economic benefits will arise. Contingent liabilities are not recognized in the consolidated statement of financial position but are disclosed unless the possibility of an outflow of resources embodying economic benefits is remote. Contingent assets are not recognized but disclosed in the consolidated financial statements when an inflow of economic benefits is probable. Where discounting is used. Treasury Stock Own equity instruments which are acquired (treasury shares) are recognized at cost and deducted from equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain.

the fair value of plan assets is estimated by discounting expected future cash flows using a discount rate that reflects both the risk associated with the plan assets and the maturity or expected disposal date of those assets (or. Defined benefit costs comprise the following: (a) service cost. 70 . Plan assets are assets that are held by a long-term employee benefit fund or qualifying insurance policies. The cost of providing benefits under the defined benefit plans is actuarially determined using the projected unit credit method. Net interest on the net defined benefit liability or asset is the change during the period in the net defined benefit liability or asset that arises from the passage of time which is determined by applying the discount rate based on high quality corporate bonds to the net defined benefit liability or asset. if they have no maturity. nor can they be paid directly to the Group. Past service costs are recognized when plan amendment or curtailment occurs. Service costs which include current service costs. adjusted for any effect of limiting a net defined benefit asset to the asset ceiling. The Group’s right to be reimbursed of some or all of the expenditure required to settle a defined benefit obligation is recognized as a separate asset at fair value when and only when reimbursement is virtually certain. The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted as of the reporting date. Plan assets are not available to the creditors of the Group. Remeasurements are not reclassified to profit or loss in subsequent periods. the expected period until the settlement of the related obligations). When no market price is available. Fair value of plan assets is based on market price information. and (c) remeasurements of net defined benefit liability or asset. Remeasurements comprising actuarial gains and losses. return on plan assets and any change in the effect of the asset ceiling (excluding net interest on defined benefit liability) are recognized immediately in OCI in the period in which they arise.Pension Costs Defined benefit plan The net defined benefit liability or asset is the aggregate of the present value of the defined benefit obligation at the end of the reporting period reduced by the fair value of plan assets. (b) net interest on the net defined benefit liability or asset. Net interest on the net defined benefit liability or asset is recognized as expense or income in profit or loss. past service costs and gains or losses on nonroutine settlements are recognized as expense in profit or loss. The asset ceiling is the present value of any economic benefits available in the form of refunds from the plan or reductions in future contributions to the plan. Income Taxes Current tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss. and carryforward benefits of unused tax credits from excess minimum corporate income tax (MCIT) over RCIT and unused net operating loss carryover (NOLCO). or contains a lease. other than a renewal or extension of the arrangement. Deferred tax assets are recognized for all deductible temporary differences with certain exceptions. Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority. there is a change in the determination of whether fulfillment is dependent on a specified asset. with certain exceptions. 71 . at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. a renewal option is exercised or an extension granted. to the extent that it is probable that sufficient taxable income will be available against which the deductible temporary differences and carryforward benefits of unused tax credits from excess MCIT and unused NOLCO can be utilized. is based on the substance of the arrangement at inception date. Deferred tax assets and liabilities are measured at the tax rates that are applicable to the period when the asset is realized or the liability is settled. affects neither the accounting income nor taxable profit or loss. however. c. With respect to interests in JV. Deferred tax liabilities are recognized for all taxable temporary differences. based on tax rates (and tax laws) that have been enacted or substantively enacted as of the statement of financial position date. A reassessment is made after inception of the lease only if one of the following applies: a. Deferred tax assets. there is a change in contractual terms. at the time of transaction. or d. Deferred tax liabilities are not provided on non-taxable temporary differences associated with interests in JV. The carrying amounts of deferred tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax assets to be utilized. unless that term of the renewal or extension was initially included in the lease term. with certain exceptions. and requires an assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset or assets and the arrangement conveys a right to use the asset. are not recognized when it arises from the initial recognition of an asset or liability in a transaction that is not a business combination and. Leases The determination of whether an arrangement is. b. there is a substantial change to the asset. and are recognized to the extent that it has become probable that future taxable income will allow the deferred tax assets to be recovered. deferred tax liabilities are recognized except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Unrecognized deferred tax assets are reassessed at each reporting date.Deferred tax Deferred tax is provided using the liability method on all temporary differences. Deferred tax items are recognized in correlation to the underlying transaction either in profit or loss or other comprehensive income.

Where a reassessment is made, lease accounting shall commence or cease from the date when the
change in circumstances gave rise to the reassessment for (a), (c) and (d) scenarios above, and at
the date of renewal or extension period for scenario (b).
Group as lessee
Finance leases, which transfer to the Group substantially all the risks and benefits incidental to
ownership of the leased item, are capitalized at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum lease payments and included
under ‘Property and equipment’ account with the corresponding liability to the lessor included
under ‘Long-term debt’ account in the consolidated statement of financial position. Lease
payments are apportioned between the finance charges and reduction of the lease liability so as to
achieve a constant rate of interest on the remaining balance of the liability. Finance charges are
charged directly to profit or loss.
Leased assets are depreciated over the useful life of the asset. However, if there is no reasonable
certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated
over the shorter of the EUL of the asset and the lease term.
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are
classified as operating leases. Operating lease payments are recognized as an expense in profit or
loss on a straight-line basis over the lease term.
Group as lessor
Leases where the Group does not transfer substantially all the risks and benefits of ownership of
the assets are classified as operating leases. Initial direct costs incurred in negotiating operating
leases are added to the carrying amount of the leased asset and recognized over the lease term on
the same basis as the rental income. Contingent rents are recognized as revenue in the period in
which they are earned.
Borrowing Costs
Borrowing costs are generally expensed as incurred. Borrowing costs are capitalized if they are
directly attributable to the acquisition or construction of a qualifying asset. Capitalization of
borrowing costs commences when the activities to prepare the asset are in progress, and
expenditures and borrowing costs are being incurred. Borrowing costs are capitalized until the
assets are substantially ready for their intended use.
The Group had not capitalized any borrowing costs for the years ended December 31, 2014 and
2013 as all borrowing costs from outstanding long-term debt relate to assets that are at state ready
for intended use (Note 18).
Foreign Currency Transactions
Transactions in foreign currencies are initially recorded in the Group’s functional currency using
the exchange rates prevailing at the dates of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated at the functional currency using the Philippine
Dealing and Exchange Corp. (PDEX) closing rate prevailing at the reporting date. All differences
are taken to the consolidated statement of comprehensive income. Non-monetary items that are
measured in terms of historical cost in a foreign currency are translated using the prevailing
closing exchange rate as of the date of initial transaction.

72

Earnings (Loss) Per Share (EPS)
Basic EPS is computed by dividing net income applicable to common stock by the weighted
average number of common shares issued and outstanding during the year, adjusted for any
subsequent stock dividends declared.
Diluted EPS amounts are calculated by dividing the net profit attributable to ordinary equity
holders of the Group by the weighted average number of ordinary shares outstanding during the
year plus the weighted average number of ordinary shares that would be issued on the conversion
of all the dilutive potential ordinary shares into ordinary shares.
For the years ended December 31, 2014 and 2013, the Parent Company does not have any dilutive
potential ordinary shares.
Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the
Chief Operating Decision Maker (CODM). The CODM, who is responsible for resource
allocation and assessing performance of the operating segment, has been identified as the
President. The nature of the operating segment is set out in Note 6.
Events After the Reporting Date
Post-year-end events that provide additional information about the Group’s position at the
reporting date (adjusting event) are reflected in the consolidated financial statements. Post-yearend events that are not adjusting events are disclosed in the consolidated financial statements,
when material.
5. Significant Accounting Judgments and Estimates
In the process of applying the Group’s accounting policies, management has exercised judgments
and estimates in determining the amounts recognized in the consolidated financial statements.
The most significant uses of judgments and estimates follow.
Judgments
a. Going concern
The management of the Group has made an assessment of the Group’s ability to continue as a
going concern and is satisfied that the Group has the resources to continue in business for the
foreseeable future. Furthermore, the Group is not aware of any material uncertainties that may
cast significant doubts upon the Group’s ability to continue as a going concern. Therefore, the
consolidated financial statements continue to be prepared on a going concern basis.
b. Classification of financial instruments
The Group exercises judgment in classifying a financial instrument, or its component, on
initial recognition as either a financial asset, a financial liability or an equity instrument in
accordance with the substance of the contractual arrangement and the definitions of a financial
asset, financial liability or equity instrument. The substance of a financial instrument, rather
than its legal form, governs its classification in the consolidated statement of financial
position.

73

In addition, the Group classifies financial assets by evaluating, among others, whether the
asset is quoted or not in an active market. Included in the evaluation on whether a financial
asset is quoted in an active market is the determination of whether quoted prices are readily
and regularly available, and whether those prices represent actual and regularly occurring
market transactions on an arm’s length basis.
c. Fair values of financial instruments
Where the fair values of certain financial assets and liabilities recorded in the consolidated
statement of financial position cannot be derived from active markets, they are determined
using valuation techniques, including the discounted cash flow model. The inputs to these
models are taken from observable market data where possible, but where this is not feasible,
estimates are used in establishing fair values. The judgments include considerations of
liquidity risk, credit risk and volatility. Changes in assumptions about these factors could
affect the reported fair value of financial instruments. For derivatives, the Group generally
relies on calculation agent’s valuation.
The fair values of the Group’s financial instruments are presented in Note 29.
d. Impairment of financial assets
In determining whether an impairment loss should be recorded in profit or loss, the Group
makes judgments as to whether there is any objective evidence of impairment as a result of
one or more events that has occurred after initial recognition of the asset and that loss event or
events has an impact on the estimated future cash flows of the financial assets or the group of
financial assets that can be reliably estimated. This observable data may include adverse
changes in payment status of borrowings in a group, or national or local economic conditions
that correlate with defaults on assets in the portfolio.
e. Classification of leases
Management exercises judgment in determining whether substantially all the significant risks
and rewards of ownership of the leased assets are transferred to the Group. Lease contracts,
which transfer to the Group substantially all the risks and rewards incidental to ownership of
the leased items, are capitalized. Otherwise, they are considered as operating leases.
The Group also has lease agreements where it has determined that the risks and rewards
related to the leased assets are retained with the lessors. Such leases are accounted for as
operating leases (Note 30).
f.

Consolidation of SPEs
The Group periodically undertakes transactions that may involve obtaining the rights to
variable returns from its involvement with the SPE. These transactions include the purchase
of aircraft and assumption of certain liabilities. Also, included are transactions involving
SPEs and similar vehicles. In all such cases, management makes an assessment as to whether
the Group has the right over the returns of its SPEs, and based on this assessment, the SPE is
consolidated as a subsidiary or associated company. In making this assessment, management
considers the underlying economic substance of the transaction and not only the contractual
terms.

74

maintenance expense. The estimate of the probable costs for the resolution of these claims has been developed in consultation with outside counsel handling the defense in these matters and is based upon an analysis of potential results. their respective joint arrangement agreements requires unanimous consent from all parties to the agreement for the relevant activities identified.g. It is possible. lease expense (for aircraft under operating lease) and interest expense based on the related long-term debt are specifically identified per aircraft based on an actual basis. j. events and conditions that are relevant to the entity. costs and expenses are classified as exclusive and common. The Group currently does not believe that these proceedings will have a material adverse effect on the Group’s financial position and results of operations. cargo revenue. i. The Group and the parties to the agreement only have rights to the net assets of the joint venture through the terms of the contractual arrangements. the Group provides allocation based on activity factors that closely relate to the earning process of the revenue. In making this judgment. Contingencies The Group is currently involved in certain legal proceedings. which include management determining the appropriate data points for evaluating hedge effectiveness. that future results of operations could be materially affected by changes in the estimates or in the effectiveness of the strategies relating to these proceedings (Note 30). fuel and oil expense. The Group’s consolidated financial statements are presented in Philippine peso. specifically on hedge documentation designation and effectiveness testing. costs and expenses Revenue. establishing that the hedged forecasted transaction in cash flow hedges are probable of occurring. 75 . cost and expense accounts that are not identifiable per aircraft. hull/war/risk insurance. Allocation of revenue. Determination of functional currency PAS 21 requires management to use its judgment to determine the entity’s functional currency such that it most faithfully represents the economic effects of the underlying transactions. and assessing the credit standing of hedging counterparties (Note 9). Classification of joint arrangements The Group’s investments in joint ventures (Note 14) are structured in separate incorporated entities. and c) the currency in which receipts from operating activities are usually retained. excess baggage revenue. each entity in the Group considers the following: a) the currency that mainly influences sales prices for financial instruments and services (this will often be the currency in which sales prices for its financial instruments and services are denominated and settled). Judgment is involved in these areas. Exclusive revenue. k. Application of hedge accounting The Group applies hedge accounting treatment for certain qualifying derivatives after complying with hedge accounting requirements. b) the currency in which funds from financing activities are generated. For revenue. Even though the Group holds various percentage of ownership interest on these arrangements. fuel and insurance surcharge. h. depreciation (for aircraft under finance lease). however. cost and expenses such as passenger revenue. which is also the Parent Company’s functional currency.

982 306.622 P 235. In determining the NRV. materials and supplies to be written-down below cost no longer exist or when there is a clear evidence of an increase in NRV because of a change in economic circumstances.563 Receivables Allowance for credit losses 2013 =2. customers and other counterparties.549.254. A new assessment is made of NRV in each subsequent period. Estimation of allowance for credit losses on receivables The Group maintains allowance for impairment losses at a level considered adequate to provide for potential uncollectible receivables. materials and supplies are expected to be realized. the length of the Group’s relationship with the agents. but are not limited to. the payment behavior of agents and customers. of the amount that the expendable parts.00% for nonmoving items for more than one year.169. fuel.019 b. l) Impairment of PPE and investments in JV The Company assesses at the end of each reporting period whether there is any indication that an asset may be impaired. The Group reviews the age and status of receivables. The recoverable amounts of the intangible assets were determined based on value in use calculations using cash flow projections from financial budgets approved by management covering a five-year period. fuel. When the circumstances that previously caused expendable parts. the entity shall estimate the recoverable amount of the asset. Determination of NRV of expendable parts. Impairment of goodwill and intangible assets The Group performs its annual impairment test on its goodwill and other intangible assets with indefinite useful lives as of reporting date irrespective of whether there is any indication of impairment. Intangibles The Group assesses intangible as having an indefinite useful life when based on the analysis of relevant factors. fuel. materials and supplies are based on the most reliable evidence available at the time the estimates are made. which is generally providing 100. materials and supplies The Group’s estimates of the NRV of expendable parts.438. 76 . The related balances follow (Note 10): 2014 P =2. These factors include. the Group considers any adjustment necessary for obsolescence. The level of this allowance is evaluated by management on the basis of factors that affect the collectibility of the accounts. fuel. If any such indication exists. m.053.831. the amount of the write-down is reversed so that the new carrying amount is the lower of the cost and the revised NRV. Estimates and Assumptions The key assumptions concerning the future and other sources of estimation uncertainty at the statement of financial position date that have significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next year are discussed below: a.l. other counterparties and other known market factors. and identifies accounts that are to be provided with allowances on a continuous basis. the Group has no foreseeable limit to the period of which the intangible asset is expected to generate cash inflow for the Group.

A reduction in the EUL or residual value of property and equipment would increase recorded depreciation and amortization expense and decrease noncurrent assets. No additional provision for inventory write-down was recognized by the Group in 2014 and 2013. allowance for inventory write-down for expendable parts amounted to = P20. Fuel.985.9 million for the years ended December 31. respectively (Notes 19 and 22).714.190. Estimation of ARO The Group is contractually required under certain lease contracts to restore certain leased passenger aircraft to stipulated return condition and to bear the costs of restoration at the end of the contract period. The related repairs and maintenance expense for the years ended December 31. As of December 31. respectively (Note 13).5 million.0 million.5 million. Regular aircraft maintenance is accounted for as expense when incurred. Since the first operating lease entered by the Group in 2001. 2014 and 2013.227. Assumptions used to compute ARO are reviewed and updated annually by the Group.6 million and = P2.281.767. As of December 31.600. d. 2014. The amount and timing of recorded expenses for any period would differ if different judgments were made or different estimates were utilized.412.226 P 303. the carrying values of the Group’s property and equipment amounted to = P65. 2014. The recognition of ARO would increase other noncurrent liabilities and repairs and maintenance expense.The related balances follow (Note 11): Expendable Parts.331 174. As of December 31. The Group reviews annually the EULs and residual values of property and equipment based on factors that include physical wear and tear. The Group estimates the residual value of its property and equipment based on the expected amount recoverable at the end of its useful life. respectively (Note 13). P =590. 2014 and 2013. It is possible that future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. The Group’s depreciation and amortization expense amounted to P = 4. The contractual obligation includes regular aircraft maintenance.1 million and = P56.6 million and = P577. P =3. 2014 and 2013.637.454.1 million and = P1. respectively (Note 19). c. these costs are accrued based on an internal estimate which includes estimates of certain redelivery costs at the end of the operating aircraft lease. Estimation of useful lives and residual values of property and equipment The Group estimates the useful lives of its property and equipment based on the period over which the assets are expected to be available for use. Materials and Supplies At NRV At cost 2014 2013 P =504. the Group’s ARO liability (included under ‘Other noncurrent liabilities’ account in the statements of financial position) has a carrying value of = P586. 2013 and 2012 amounted to P =476. 77 . the cost of restoration is computed based on the Group’s average borrowing cost.634 As of December 31. 2014 and 2013.739 =407. while overhaul and restoration are accounted on an accrual basis.3 million. overhaul and restoration of the leased aircraft to its original condition.5 million. 2013 and 2012. technical and commercial obsolescence and other limits on the use of the assets.5 million.

5 million. 2014 and 2013. As of December 31.412. The impairment testing may be performed at any time in the annual reporting period. particularly property and equipment and investment in JV. The impairment testing also requires an estimation of the recoverable amount. The factors that the Group considers important which could trigger an impairment review include the following: · · · significant underperformance relative to expected historical or projected future operating results. Impairment of goodwill and intangibles The Group determines whether goodwill and intangibles are impaired at least on an annual basis.227.8 million as of December 31. but it must be performed at the same time every year and when circumstances indicate that the carrying amount is impaired. There were no provision for impairment losses on the Group’s property and equipment and investments in JV for the years ended December 31. the carrying values of the Group’s property and equipment amounted to = P65. The fair value less cost to sell is the amount obtainable from the sale of an asset in an arm’s length transaction while value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. Impairment of property and equipment and investment in JV The Group assesses the impairment of nonfinancial assets. Recoverable amounts are estimated for individual assets or investments or. 2014 and 2013. An impairment loss is recognized whenever the carrying amount of an asset or investment exceeds its recoverable amount. In determining the present value of estimated future cash flows expected to be generated from the continued use of the assets. which is the net selling price or value-in-use of the CGU to which the goodwill and intangibles are allocated. if it is not possible.1 million and = P56. f. respectively (Note 13). 78 . The most recent recoverable amount calculation resulted in an amount that exceeded the carrying amount of the CGU by a significant margin. and significant negative industry or economic trends.e. whenever events or changes in circumstances indicate that the carrying amount of the nonfinancial asset may not be recoverable. the Group is required to make estimates and assumptions that can materially affect the consolidated financial statements. respectively (Note 14). 2014 and 2013. The recoverable amount is the higher of an asset’s fair value less cost to sell and value in use. Investments in JV amounted to P =591.3 million and = P578. for the CGU to which the asset belongs. and The likelihood that a current recoverable amount calculation would be less than the carrying amount of the CGU is remote based on an analysis of events that have occurred and circumstances that have changed since the most recent recoverable amount calculation. The most recent detailed calculation made in a preceding period of the recoverable amount of the CGU may be used for the impairment testing for the current period provided that: · · · The assets and liabilities making up the CGU have not changes significantly from the most recent calculation. significant changes in the manner of use of the acquired assets or the strategy for overall business.

respectively (Notes 19 and 24). h. and for which deferred tax assets and deferred tax liabilities were not set up on account of the Parent Company’s ITH. the balances of the Group’s unearned transportation revenue amounted to P =6. Those assumptions include. (b) carriage is provided or (c) when the flight is uplifted. either: (a) when transportation services are already rendered. Recognition of deferred tax assets The Group assesses the carrying amounts of deferred income taxes at each reporting date and reduces deferred tax assets to the extent that it is no longer probable that sufficient taxable income will be available to allow all or part of the deferred tax assets to be utilized.4 million and = P1. 2014 and 2013.7. The Group’s pension liability (included in ‘Other noncurrent liabilities’ account in the consolidated statements of financial position) amounted to P = 385. 2014 and 2013. 2014 and 2013. There are no unrecognized deferred tax assets as of December 31. Passenger revenue recognition Passenger sales are recognized as revenue when the obligation of the Group to provide transportation service ceases.5 million.338. As of December 31. Goodwill amounted to = P566.373. including the cost of paid leaves based on historical leave availments of employees. g. among others. the Group has deferred tax assets amounting P =1. These estimates may vary depending on the future changes in salaries and actual experiences during the year. based upon the likely timing and level of future taxable profits together with future tax planning strategies. As of December 31.9 million. As of December 31. 2014 and 2013. the Group had certain gross deductible and taxable temporary differences which are expected to expire or reverse within the ITH period.7 million and = P538. The Group also estimates other employee benefit obligations and expense. respectively. Estimation of pension and other employee benefit costs The determination of the obligation and cost of pension and other employee benefits is dependent on the selection of certain assumptions used in calculating such amounts. respectively (Notes 7 and 15). 2014 and 2013. 79 . i. While the Group believes that the assumptions are reasonable and appropriate. 2014 and 2013.967.611.8 million and nil as of December 31. As of December 31. respectively.When value in use calculations are undertaken. significant differences between actual experiences and assumptions may materially affect the cost of employee benefits and related obligations. 2014 amounted to P =347.7 million and P = 5. 2013 (Note 25). subject to the Group’s policy. the Group has determined that goodwill and intangibles are recoverable as there were no indications that it is impaired. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized. discount rates and salary increase rates (Note 24). management must estimate the expected future cash flows from the asset or CGUs and choose a suitable discount rate in order to calculate the present value of those cash flows.2 million as of December 31. Unrecognized deferred tax assets as of December 31.

363 =52.096. Segment information for the reportable segment is shown in the following table: Revenue Net income Depreciation and amortization Interest expense Interest income 2014 =52.844.927.065.633.623 176. which is the airline business (system-wide).305.229 3.770.873 The reconciliation of total revenue reported by reportable operating segment to revenue in the consolidated statements of comprehensive income is presented in the following table: Total segment revenue of reportable operating segment Nontransport revenue and other income Total revenue 2014 2013 2012 P =52.271.904. interest income.037 =41.310 P =41.993 P Nontransport revenue and other income includes foreign exchange gains. This is consistent with how the Group’s management internally monitors and analyzes the financial information for reporting to the CODM.863.767.591.475 2012 =39.401.501.013.612.014.272 2013 =41.318 P 1. Segment Information The Group has one reportable operating segment. who is responsible for allocating resources.844.401.498.673 P 629.939.353 79.993 P 3.018.619. equity in net income of JV and gain on sale on financial assets designated at FVPL and AFS financial assets.370 =39. fuel hedging gains.281 P =37.946.263 2.572. assessing performance and making operating decisions. 80 .454.004.018 1.453.241.000.216 4.508 415.281.271.115 865.445 219. The amount of segment assets and liabilities are based on the measurement principles that are similar with those used in measuring the assets and liabilities in the consolidated statements of financial position which is in accordance with PFRS. Transfer prices between operating segments are on an arm’s length basis in a manner similar to transactions with third parties.6. The revenue of the operating segment was mainly derived from rendering transportation services.860 732.641.633.176.253.065.673 P 853.525.318 P 511.176.

157.663.253.305 P 1. On March 20. The Parent Company has paid the purchase price covering the transfer of shares from TAH.954.216 209. net of tax Total comprehensive income 2014 2013 2012 P =4.415.137.508) 406.986 =1.691 (301.723 511.014.604.756.535.523.533 =265. 7.236 176.738.781.946. the Parent Company gained control of TAP on the same date.336.591.409.404.037 1. closing of the transaction is subject to the satisfaction or waiver of each of the conditions contained in the SPA. a note relating to Events after the Statement of Financial Position Date disclosed that there could be a goodwill amounting P =665.509.147 P In the December 31.672. 2013 consolidated financial statements.939.441) (732.229 (298.063.572.363 629.305. The fair values of the identifiable assets and liabilities of TAP at the date of acquisition follow: Total cash.9 million.928.740 = (48.084.202 P (2.990 P =2.00% or more to the revenues of the Group.454.768) 853. on February 10.370 (3.934) =3.411.533.263 (255.835) 3.369) (25.681. accrued expenses and unearned income Net liabilities Goodwill Acquisition cost at post-closing settlement date Fair Value recognized in the acquisition =1.109. which is employed across its route network (Note 13).329 P The Group’s major revenue-producing asset is the fleet of aircraft owned by the Group.1 million. 2014. Under the terms of the SPA.910 = P2.180.The reconciliation of total income reported by reportable operating segment to total comprehensive income in the consolidated statements of comprehensive income is presented in the following table: Total segment income of reportable segment Add (deduct) unallocated items: Nontransport revenue and other income Nontransport expenses and other charges Benefit from (provision for) income tax Net income Other comprehensive gain (loss). Consequently. 2014. the Parent Company signed a Sale and Purchase Agreement (SPA) to acquire 100% of TAP.489) P256. The total consideration for the transaction amounted to = P265. The Group has no significant customer which contributes 10.498.386) 566.234. receivables and other assets Total accounts payable.612. The Parent Company also identified other assets representing costs to establish 81 .341.480. all the conditions precedent has been satisfactorily completed. Business Combination As part of the strategic alliance between the Parent Company and Tiger Airways Holding Limited (TAH).

683 Cash on hand Cash in banks (Note 28) Short-term placements (Note 28) 2013 P24.805 =6.056.115.111.803 P Cash in banks earns interest at the respective bank deposit rates. If the combination had taken place at the beginning of the year in 2014. respectively.773.98%. 1.571.363 2. This account amounted to P = 2. 2014 and 2013. Such amount is booked under ‘other receivables’ and is accounted for as an adjustment in the purchase price (Note 10). The related deferred tax liability on this business combination amounted to = P185.461 5. respectively.469 1. Interest income on cash and cash equivalents. the Group has outstanding fuel hedging transactions.379. Cash and Cash Equivalents This account consists of: 2014 P =27. As of December 31.963.6 million and = P415. the Parent Company’s share in TAP’s total revenue and net loss would have been = P3. respectively.537 = 476.5 million in 2014 and 2013. 9. Short-term placements. 2013 and 2012. 2013 and 2012. 8.912.372. The notional quantity is the amount of the derivatives’ underlying asset or liability. From the date of acquisition.8 million in 2014. Investment and Trading Securities This account consists of derivative financial liabilities in 2014 and derivative financial assets in 2013 that are not designated as accounting hedges.851 P =3.6 million and = P1. respectively. which represent money market placements. Such fuel derivatives are not designated as accounting hedges. 2013 and 2012.92%. the Parent Company reached an agreement with ROAR II on the settlement of post-closing adjustments amounting P = 223. 0. The gains or losses on these instruments are accounted for directly as a charge against or credit to profit or loss.5 million pursuant to the SPA.0 million and = P159. Short-term placements denominated in Philippine peso earn an average interest of 2.9 million. reference rate or index and is the basis upon which changes in the value of derivatives are measured.84% and 3.6 million and = P166. the Parent Company’s share in TAP’s revenue and net loss amounted to = P2. respectively.6 million (Note 25). short-term placements in US dollar earn interest on an average rate of 0.925.45% in 2014.286.555. 2014 and 2013. Moreover.brand and market opportunities under the strategic alliance with TAH (Note 16).830.011. = P219.6% in 2014.623. The swaps can be exercised at various 82 .8 million. Commodity Swaps The Group enters into fuel derivatives to manage its exposure to fuel price fluctuations. respectively.89% and 1. presented in the consolidated statements of comprehensive income amounted to P =79.260.6 million. As of December 31. this account consists of commodity swaps. In February 2015.054. are made for varying periods depending on the immediate cash requirements of the Group.

3 million gain.862. respectively.559.334 4.481 2.169. For the year ended December 31. As of December 31.325.456.872 2.563 P =1.302 134.559.445 731.754 1.093 393.147. The swaps have various maturity dates through December 31.904.424.896) =102.732 P 556.008.284.718. The gains or losses on these instruments are accounted for directly as a charge against or credit to profit or loss. Receivables This account consists of: Trade receivables (Note 28) Due from related parties (Notes 27 and 28) Interest receivable Others (Note 7) Less allowance for credit losses (Note 28) Trade receivables are noninterest-bearing and generally have 30 to 90 days terms.314. During the year.241. where the Group recognized realized gain of P =109. Foreign Currency Forwards In 2014.603 P 10. Such derivatives are not designated as accounting hedges.302.550.087) (112. These are recognized in “Hedging gains (losses)” under the consolidated statements of comprehensive income.855 (226.897 (2.8 million from the transaction.897 P =– P 2014 P =1.342. Fair value changes on derivatives The changes in fair value of all derivative financial instruments not designated as accounting hedges follow: 2014 Balance at beginning of year Derivative assets Net changes in fair value of derivatives Fair value of settled instruments Balance at end of year Attributable to: Derivative assets Derivative liabilities 2013 P =166.019 =1.424.007.817.816.622 235.456. 83 . 2014.473.984) (2.438.260.549. the Group entered into foreign currency hedging arrangements with various counterparties to manage its exposure to foreign currency fluctuations.254. The receivables are carried at cost. such realized gain is recognized in “Hedging gains (losses)” under the consolidated statement of comprehensive income.774.calculation dates with specified quantities on each calculation date.809) (P =2.591.762 P 290. the Group recognized net changes in fair value of derivatives amounting = P2.982 306.896 =166. the Group pre-terminated all foreign currency derivative contracts. 2016 (Note 5).897 P P =– P =2.456.958) =166. 2014 and 2013.682.785.419 2013 =944.684 547.053.260.0 million loss and = P290.774.831.

438.522.144 17.722.110. Fuel.906.144 P Total =235.190 69.330.334 P 1.4 million.739 P =679. respectively.400 P =235.9 million in 2014 and 2013.563 303.2 million. = P19.860 P The cost of expendable and consumable parts.875 P Others =229.053. 84 .563 P 2013 Trade Receivables =6.993. 2014. Expendable Parts.197.600. The changes in the allowance for credit losses on receivables follow: Balance at beginning of year Unrealized foreign exchange gain on allowance for credit losses Allowance for credit losses Balance at end of year Balance at beginning of year Unrealized foreign exchange gain on allowance for credit losses 2014 Trade Receivables =6.175. 11.019 Balance at end of year As of December 31.071 29.107.7 million and P =17. Materials and Supplies This account consists of: At NRV: Expendable parts At cost: Fuel Materials and supplies 2014 2013 P =504.330.744 P Total =218.Interest receivable pertains to accrual of interest income from short-term placements amounting = P1.107.371 174.190 – =230. = P279.368 45.634 =711.9 million. In 2014.561. 2013 and 2012 amounted to = P365.3 million.190.714.070 273. 2013 and 2012.875 17.354 =306.875 P Others =211.210.315. employees and counterparties.019 P – 69.778. respectively.229 P 1.9 million in 2014.400 P =229.226 P 129.985. 2014 and 2013. respectively.330.200. Others include receivable from insurance. respectively (Note 22). the specific allowance for credit losses on trade receivables and other receivables amounted to = P306.722.671.0 million and = P4. it includes the settlement receivable from ROAR (Note 7).331 =407.8 million and = P290.490.831.237. and materials and supplies recognized as expense (included under ‘Repairs and maintenance’ account in the consolidated statements of comprehensive income) for the years ended December 31.619 P – P =6. The cost of fuel reported as expense under ‘Flying operations’ amounted to P = 23.438.354 =76.671.8 million and = P235.200.

923 Advances to suppliers Deposit to counterparties (Note 9) Prepaid rent Prepaid insurance Others 2013 =997. 2014 and 2013.897. The advances are unsecured and noninterest-bearing (Note 30).060 P =2.471.535.113. Deposit to counterparties pertains to collateral deposits provided to counterparties for fuel hedging transactions. Prepaid rent pertains to advance rental on aircraft under operating lease and on office spaces in airports (Note 30).281. Prepaid insurance consist of aviation insurance which represents insurance of hull.400 P Advances to suppliers include advances made for the purchase of various aircraft parts. commission.180.307 841.5 million as of December 31. respectively.439. 85 .642 48.023. service maintenance for regular maintenance and restoration costs of the aircraft. No expendable parts.716. casualty and marine insurance as well as car/motor insurance.022 318.656 P – 231. war.027 4.020. passenger and cargo insurance for the aircraft during flights and non-aviation insurance represents insurance payments for all employees’ health and medical benefits.783.4 million and = P389. advance payment for restoration costs is recouped when the expenses for restoration of aircraft have been incurred.817 =1. Other Current Assets This account consists of: 2014 P =851. material and supplies are pledged as security for liabilities.507 5. whereas. fuel. 12.The cost of expendable parts amounted to P =481. There are no additional provisions for inventory write down in 2014 and 2013. Advances for regular maintenance are recouped from progress billings which occurs within one year from the date the advances arose. and risk.285 3.329.546.

887 (16.240.054 = 474. 2014 Additions through business combination (Note 7) Additions Reclassification Disposals/others Balance at December 31.101.008.260.142 = 4.731.390.986.662.203.135) 85.521.654.769.090 2.775.513) 618.634) 65.214) (239.855.036) 76.710) (307.285 Total = 56.933.595.294 = 439.856 (18.393 1.253) 2.217.376 343.720 62.503.098) (69.681.060 6.967 (1.339 (42.736.647 P = 48.175.649 3.037.225.121.316.321 1.515 = 63.913.594.198 P Transportation Equipment = 72.984. 2014 Net Book Value at December 31.074.109.548 = 4.646.103) (1.766) 20.455.003 (140.452 P 305.215 53.925.277 – 230.614.501 Special Tools = 131.255 69.569.829 Other Equipment = 732.267 1.054 102.612.125 (24.500 876.494 – 1.646.589) 963.623.798 P = 1.704 21.878 6.130.141 – 7.300.123.217 P Cost Balance at January 1.842 – 54.162) 766.993 13.089 (10.099.474 – – 150.140 104.210.955.524.542.469.398) 343.146.598.895.258.411.549 P = 2.072 – – 1.775.886 – – 6.188.630.991.516.766.271) 16.979 8.714.899.376 (39.609.738.794 (2.885 12.547.914.578.400 107.986.908 P Ground Support Equipment 2014 = 11.629.071 (222.631 Maintenance and Test Equipment 2014 P = 147.030 (237.750.681.233. 2014 Passenger Aircraft (Notes 18 and 32) The composition and movements in this account follow: 13.584) 473.128.793) (1.422 451.155.591 (11.980.378.366.105.767 Rotables 13.501.300.494.768 P 129.616.291.650 P 350.930.552.057 13. 2014 Cost Balance at January 1.686 3.900 10.819.551.194.618 P Leasehold Improvements = 8.997 P 167.994.085.371.836.522 628.166.189.758.863.154 P Sub-total .298 115.161 P 3.398) 475.070.255 P Engines = 55.586 – (16.939 Construction In-progress = 59. Fixtures and Office Equipment = 98.785) 90.702.946 = 187. 2014 Accumulated Depreciation and Amortization Balance at January 1.991.988.560.743.616 P Communication Equipment Furniture.630.467.053) (198.361.575.115.222.803.128) 116.435.745.172 (16.178 – 22.482.788.731.504 241.191 EDP Equipment.648) (91.355.125 – 978.909.934.275.015 P = 675.431 169.389.217 P 16.053.412 (3.961 566.442 50.241. 2014 Additions through business combination (Note 7) Additions Reclassification Disposals/others Balance at December 31.250 P 374.748 – – 209.315.833.719. Property and Equipment 6. Mainframe and Peripherals = 81.293) 152.926.376.86 (Forward) P = 12.636. 2014 Depreciation and amortization Reclassification Disposals/others Balance at December 31.811 (423.091.209.623 4.676 P – 3.281 P 3.771.748.411) 14.795.029.631 P = 6.

439.367 71.649 – – 6.840.029.455.697.053.936 P 495.798 – (1.150 P 49.581.885.133.416.233.195.125.163 2.793 3.315.069 P = 71.736 P – 140.550.833 P 10.958 – (194.993 – (1.071.414) – 12.704 =169.198 2.432 P69.785) 71.595.777. 2013 Depreciation and amortization Reclassification Disposals/others Balance at December 31.210) (91.771 50.614.154 Sub-total = 65.363.494 P 107. 2013 Additions Reclassification Disposals/others Balance at December 31.368) 55.374.729.550.179.225. 2014 Net Book Value at December 31.935.263 (686.361) 374.009.371.774.008.193.069.428.165 265.203.281.908 Ground Support Equipment 2013 = 1.368 P P = 16.257.422 =3.528.334 9.423.039.720 =333.951 P = 11.016 (43.895.636.418 P = 6.720.600 1.999.638) (202.980 (49.503.498.290.762.523.125 (686.263) – 129.649 =41.734) 305.587.997 4.430 (49.531 12.000 130.973.915.083.925. 2013 Accumulated Depreciation and Amortization Balance at January 1.109.877.042) (175.539.367 5.258.423.024.939 P =– P 3.898 P 138.525.733.882.265 =46.339 Other Equipment =58.466 P 253.121.482 (5.225.344.319 278.142 2.837.450.507) 13.473) – 187.830.766. 2014 Depreciation and amortization Reclassification Disposals/others Balance at December 31.629.854 P 444.326.980.917 Total .888) 20.128.257 – – 1.467.657.618 Leasehold Improvements = 18.710.284 P Engines P7.769) 63.018 (10.101.264.191 EDP Equipment. 2013 Net Book Value at December 31.198 Transportation Equipment = 8.411.782.646.276. 2013 Accumulated Depreciation and Amortization Balance at January 1.946.542. Mainframe and Peripherals = 183.217 Passenger Aircraft (Notes 18 and 32) Communication Equipment Furniture.389 24.972.442 =385.255 =622.089.091.147.337) 81.551.336 P 251.564 P 207.718.366.342.703) 1.466 (1.903 29.652) – – Construction In-progress P =47.638) (7.885 P 6.855 – – 9.189 P 23.483.594.479.594.882 – 474.546 (222.862.227.162 P 52.183.767 Rotables = 3.87 Cost Balance at January 1.964) 675.186.761.871.259 P 7.730.974. Fixtures and Office Equipment =133.255 843.951.656 = 11.502 2.087 (591.318 P 438. 2014 =2.358 P 2.722.988 (319.817 – – 167.529.607.025.809.490 P = 64.897 – – 4.355.330.623 P =52.091.431 =1.652 (3.370 Special Tools =109.433.219.577 = 1.512) 16.031.213 Maintenance and Test Equipment 2014 =306.910) 566.568 P =1.222.614.934.213.537 (546.578 (2.683.332.734) 439.

2013 Net Book Value at December 31.598.240.731.228 – (101.943 (2.782.564 =391.067 P P =6.281 Total .458.676 P =8.745 10.420) – 8.399.650 58.491 – – 6.974.692 (362.911 – – 69.436.039 P Furniture.681.318 =1.997 P =56.310 1.559 (594.577 =3.630.281) 16.806 8.824 3.074.753 – (157.166.412.759 371.727.788.499) 81.616 6.115 (9.615.138.628.161 Other Equipment – – – – – =8.253 P 1.528.073 216.284 P =60. 2013 Depreciation and amortization Reclassification Disposals/others Balance at December 31.284.259 =17.057 – – 98.153 P 2. 2013 Accumulated Depreciation and Amortization Balance at January 1.363.721.656 =29.393 Special Tools 6.767.930.108) (3.929 – – 7.503.631 Maintenance and Test Equipment 2013 57.576 39.661) (204.113.454.994 P 11.775.669) 11.88 Cost Balance at January 1.593 P 17.675.036) 72.148.648 1.031.290.408 580.767.210.630. Fixtures and Office Equipment =81.186.267.512.351.071.014.354.250.676 Construction In-progress 13.931.264.977 (2.641.267. 2013 Additions Reclassification Disposals/others Balance at December 31. 2013 Communication Equipment =9.100) 64.768) 12.980.363 – – 11.538.902 P =75.507.982.076 P 9.420.582.075 P P =12.681.694.631 – – – 6.448 12.598.841.466.538.

Under the terms of the ECA loan and commercial loan facilities (Note 18). Investments in Joint Ventures The investments in joint ventures represent the Parent Company’s 50.7 billion and P =43. 2014 and 2013. Operating Fleet As of December 31. there are no temporary idle property and equipment.023. As of December 31.Passenger Aircraft Held as Securing Assets Under Various Loans The Group entered into various ECA and commercial loan facilities to finance the purchase of its aircraft and engines. the outstanding amount of loan (including accrued interest) will be payable by CALL or ILL or BLL or SLL or SALL or VALL or POALL or PTALL or PTHALL. 2014 and 2013. upon the event of default. As of December 31.4 billion. and ten (10) Airbus A320 aircraft under ECA loans. As of December 31. BLI. 2014 and 2013.6 billion and = P8. or SAALL or by the guarantors which are CPAHI and JGSHI. the Group has ten (10) Airbus A319 aircraft. respectively. the carrying amounts of the securing assets (included under the ‘Property and equipment’ account) amounted to P =49. ILL. respectively. respectively (Note 30).01 million.00% and 35.00% interests in PAAT. the Group’s operating fleet follows (Note 32): Owned (Note 16): Airbus A319 Airbus A320 ATR 72-500 Under operating lease (Note 30): Airbus A320 Airbus A330 2014 2013 10 22 8 10 17 8 7 5 52 11 2 48 Construction in-progress represents the cost of aircraft and engine construction in progress and buildings and improvements and other ground property under construction. five (5) ATR aircraft and six (6) engine under commercial loans. A-plus and SIAEP. respectively. and twelve (12) Airbus A320 aircraft.1 billion. The joint ventures are accounted for as jointly controlled entities.00%. the gross amount of fully depreciated property and equipment which are still in use by the Group amounted to = P1. 49. 2014 and 2013. the Group’s capitalized pre-delivery payments as construction in-progress amounted to P =8.9 million and = P851. As of December 31. 14. Construction in-progress is not depreciated until such time when the relevant assets are completed and available for use. 89 . As of December 31. 2014 and 2013. 2014. CPAHI and JGSHI are guarantors to loans entered into by CALL. Failure to pay the obligation will allow the respective lenders to foreclose the securing assets. seven (7) Avion de Transport Regional (ATR) 72-500 turboprop aircraft. SLL and SALL.

420 – 18.292.900 P (24.497) (10.864 P 119.058) 104.072.510) (14.174.729 – (3.893.174.853.00% investment in shares of the joint venture.889) 80.811. However.482) (34.336 =578.579.745.244) 21.072) =245.117 P (3. as well as aircraft maintenance and repair organizations.015 – (24.775.966.590.645 P =526. The movements in the carrying values of the Group’s investments in joint ventures in A-plus.Investment in PAAT pertains to the Parent Company's 60.369 =591.901.453 P .689.284 P 52. 2005 and started commercial operations on July 1.763. PAAT was formally incorporated on January 27.261 (83.418 P 7. the Parent Company recognizes equivalent 50% share in net income and net assets of the joint venture.572 P 80.360.802 =191.763 90.482) =280.763.889) 52.639 =153. PAAT was created to address the Group’s training requirements and to pursue business opportunities for training third parties in the commercial fixed wing aviation industry. A-plus was incorporated on May 24.336 96.085.075.590) – (59.572 P 42.873.811.840.900 P PAAT Total =134.650.824. SIAEP and PAAT follow: Cost Balance at beginning of the year Accumulated Equity in Net Income (Loss) Balance at beginning of the year Equity in net income (loss) during the year Dividends received Balance at end of the year Net Carrying Value Cost Balance at beginning of the year Accumulated Equity in Net Income (Loss) Balance at beginning of the year Equity in net income during the year Dividends received Balance at end of the year Net Carrying Value A-plus =87. 2009.828 P 2013 SIAEP =304.046.469 (52.292.374 P A-plus =87.645 P =526.873.053. As such. utilizing the facilities and services at airports in the country.273.650.590.710.282.058) 64.486 P PAAT Total =134.012. 2008 and started commercial operations on August 17.456.318.781) =131.599 108.117 P (46.781) 22.072.307.326.492.666. A-plus and SIAEP were established for the purpose of providing line.171 P 90 2014 SIAEP =304. including other local and international airline companies.012.307.725 (52.599 =167.339. the joint venture agreement between the Parent Company and CAE International Holdings Limited (CAE) states that the Parent Company is entitled to 50% share on the net income/loss of PAAT.091 (83. 2005 while SIAEP was incorporated on July 27. 2012 and started commercial operations in December 2012. light and heavy maintenance services to foreign and local airlines.

760.339) (16.004.888 (307.580 94.393 (39.773) 47.492.051 35% =280.729 P 2013 Revenue Expenses Other income (expenses) Income before tax Income tax expense Net income Group’s share of profit for the year The fiscal year-end of A-plus and SIAEP is every March 31 while the year-end of PAAT is every December 31.729.267 (361.328 =108.363) 307.914.043) (97.695.218 = 1.954.766.059 = (537.457 =7.579.151.690 = (643.958.284 P Aplus =542.993 2.005. 91 .219 14.620.113) (P =34.158.060) 702.239.757.879.932 P 106.030.635.142.537.567 50% =153.880.713.471 P 1.988 = 124.840 =22.309.485.021 (671.775.374 P SIAEP P653.000) (653.889.173 = (847.657.962) 16.454.841.588 P 821.592) 2.887.458 316.498 49% =191.145 49% =167.288 62.350.406 = (463.304.075.675) – 340.728 50% =131.105 = (164.565.528) 801.731.860.362.984. SIAEP and PAAT as of December 31 follow: 2014 Total current assets Noncurrent assets Current liabilities Noncurrent liabilities Equity Proportion of the Group’s ownership Carrying amount of the investments Aplus P628.913) (379.510.153 44.318.828 P PAAT P253.079.252 221.937 35% =245.085.180.171 P SIAEP =772.966.982.590) PAAT P227.937) 22.354.130.747 263.076) 319.483 = 779.873.033.757) – 391.210 = (169.990.928 =90.456.247.779 (626.542 17.328.282.137.389.723.323.853.924.652.710.590.005.409.261 P SIAEP P749.420 P Aplus P709.015 P PAAT P186.273.550.418 P PAAT =176. SIAEP and PAAT for the twelve month period ended December 31 follow: 2014 Revenue Expenses Other income (expenses) Income before tax Income tax expense Net income Group’s share of profit for the year Aplus P831.946) (686.191 78.042 =21.967) – 262.107 (734.681.863.725 P SIAEP P717.053) 70.550.263 184.722) (79.Selected financial information of A-plus.676 3.997.330 7.521 (99.378.307) (2.745.101.864 P 2013 Total current assets Noncurrent assets Current liabilities Noncurrent liabilities Equity Proportion of the Group’s ownership Carrying amount of the investments Summary of statements of profit and loss of A-plus.

Accounts Payable and Other Accrued Liabilities This account consists of: 2014 P =4.505 P .009.8 million and = P80.129.290. 15. The Group has no share of any contingent liabilities or capital commitments as of December 31.651 Accrued expenses Accounts payable (Notes 27 and 30) Airport and other related fees payable Advances from agents and others Interest payable (Note 18) Other payables 92 2013 =3.120.330.899.509. this account includes security deposits provided to lessors and maintenance providers and other refundable deposits to be applied against payments for future aircraft deliveries.The undistributed earnings of A-plus included in the consolidated retained earnings amounted to P =104.565.2 million (Note 7).921 P 4.947 146. Defensive Strategy Acquiring a competitor enables the Parent Company to manage overcapacity in certain geographical areas/markets.882.109 207.539.892 P =10.756 742.742.823 291. 2014 and 2013.625 554. which is not currently available for dividend distribution unless declared by A-plus. 17.1 million as of December 31.288 198. given its existing market share. Other Noncurrent Assets In 2013.188.288 =9.147 3.266. improving TAP’s overall profit. 16.620. respectively. Goodwill This account represents the goodwill arising from the acquisition of TAP (Note 7). As of December 31.614.668. Goodwill is attributed to the following: Achievement of Economies of Scale Using the Parent Company’s network of suppliers and other partners to improve cost and efficiency of TAP.984. 2014. In 2014.211.313.819. it also includes other assets representing costs to establish brand and market opportunities under the strategic alliance with TAP amounting = P852.429 102.437. thus.931 1. the Goodwill amounted to = P566. 2014 and 2013.8 million (Note 7).

011 150.923 163. Accounts Payable Accounts payable consists mostly of payables related to the purchase of inventories.983.292.081.614 P =4.580.597.751 240. which include aviation fuel. expendables parts.242.855 511.684.956 78. These inventories are necessary for the daily operations and maintenance of the aircraft.519.526.954 180. are noninterest-bearing and are normally settled on a 60-day term.688.921 P Others represent accrual of professional fees. This account includes commissions payable.167.648 8. Accrued Interest Payable Interest payable is related to long-term debt and normally settled quarterly throughout the year. Airport and Other Related Fees Payable Airport and other related fees payable are amounts payable to the Philippine Tourism Authority and Air Transportation Office on aviation security.044 120.035.577 324.391 243. Advances from Agents and Others Advances from agents and others represent cash bonds required from major sales and ticket offices or agents.699.006 50.726 =3.483.339 23.611 283. terminal fees and travel taxes.453. It also includes other nontrade payables.009 113.630.767 184.906.174 32.997 245.742.131.129.Accrued Expenses The Group’s accrued expenses include accruals for: 2014 P =1.497.518 229. refunds payable and other tax liabilities such as withholding taxes and output VAT.539.214 380.450 744.227 8. Other Payables Other payables are noninterest-bearing and have an average term of two months.882.646.061. 93 .236 114.468 P 552.129.095.874 159.335.079. This also includes commitment fees received for the sale and purchase agreement of six (6) A319 aircraft.973 169.147 Maintenance (Note 30) Compensation and benefits Advertising and promotion Navigational charges Landing and take-off fees Training costs Fuel Repairs and services Aircraft insurance Professional fees Rent (Note 30) Ground handling charges Catering supplies Reservation costs Others 2013 =984.509 314.193.659 92. security.768.616.587 107.565. utilities and other expenses.565.866. equipment and in-flight supplies.

547.155 33.314 6.510 170.679. Long-term Debt This account consists of: ECA loans 2014 Interest Rates Range (Note 28) 2.110.00% (US Dollar LIBOR) Commercial loans 4.051 20. The semi-annual lease rentals to BLL are guaranteed by JGSHI. The quarterly rental payments made by the Parent Company to CALL correspond to the principal and interest payments made by CALL to the ECA-backed lenders.406.755.465.785 394.804.589 1.00% to 2.855 16.378 84.00% to 6. The security trustee of the ECA loans established CALL.926.00% to 2.194. The outstanding balance 94 .696.786.246.323.689 662. In 2008.00% to 2.529 4.490.614. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to twelve-year finance lease agreements. The quarterly lease rentals to CALL are guaranteed by CPAHI and JGSHI.00% (US Dollar LIBOR) Less current portion US Dollar US$289.478 105.00% (US Dollar LIBOR) Less current portion ECA loans Philippine Peso Equivalent P = 10.858.695.757 36. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to ten-year finance lease agreements.211.18.300 192.291 P = 29.00% Maturities Various dates through 2023 1.712.804 207.00% to 6.797.748.340.931. a special purpose company.396. The semi-annual rental payments made by the Parent Company to BLL corresponds to the principal and interest payments made by BLL to the ECA-backed lenders.131 US$651.108 455.608.374 2013 Interest Rates Range (Note 28) 2.630 170.345.579 165. the Group entered into ECA-backed loan facilities to partially finance the purchase of ten Airbus A319 aircraft.651.231 17.00% (US Dollar LIBOR) Commercial loans US Dollar US$244.672 3.141.161.202 362.042 29. a special purpose company.164 756.347 8.377.00% to 2.581 Philippine Peso Equivalent P =12. The security trustee of the ECA loans established BLL. On November 30.00% to 6.00% Various dates through 2017 1.437.197.222.626.382.271.871.689 7.282. the Group entered into ECA-backed loan facilities to partially finance the purchase of six ATR 72-500 turboprop aircraft. the Parent Company pre-terminated the lease agreement with BLL related to the disposal of one ATR 72-500 turboprop aircraft.885 7.721.849.765. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases.285 9.00% Various dates through 2017 1.584.00% Maturities Various dates through 2023 1.665 4.00% to 6.614.465.274.662. 2010.962 7.137.580.159.279 149.290.789 US$577.496.361.558.710 P =25.924. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases.962 ECA Loans In 2005 and 2006.

In 2012. Principal repayments shall be made on a quarterly basis for Airbus A319 and A320 aircraft. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases. The proceeds from the insurance claim on the related aircraft were used to settle the loan and accrued interest. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to ten-year finance lease agreements. The security trustee of the ECA loans established VALL. which are the same for each of the ten Airbus A319 aircraft. the Group entered into ECA-backed loan facilities to fully finance the purchase of three Airbus A320 aircraft.00% and variable rates are based on US dollar LIBOR plus margin. eight ATR 72-500 turboprop aircraft and seven Airbus A320 aircraft. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to twelve-year finance lease agreements. a special purpose company. the Group entered into ECA-backed loan facilities to partially finance the purchase of three Airbus A320 aircraft. a special purpose company. Interest on loans from the ECA lenders are a mix of fixed and variable rates. Principal repayments shall be made on a semi-annual basis for ATR 72-500 turboprop aircraft. The quarterly rental payments made by the Parent Company to VALL corresponds to the principal and interest payments made by VALL to the ECA-backed lenders. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases. The terms of the ECA-backed facilities. the Group entered into ECA-backed loan facilities to partially finance the purchase of two ATR 72-500 turboprop aircraft. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to twelve-year finance lease agreements. The quarterly rental payments made by the Parent Company to SALL corresponds to the principal and interest payments made by SALL to the ECA-backed lenders. delivered between 2010 to January 2011. delivered between 2011 to January 2012. JGSHI was released as guarantor on the related loans. In 2010. the Group entered into ECA-backed loan facilities to partially finance the purchase of four Airbus A320 aircraft. seven ATR 72-500 turboprop aircraft and ten Airbus A320 aircraft. The semi-annual rental payments made by the Parent Company to SLL corresponds to the principal and interest payments made by SLL to the ECA-backed lenders. and ten years for each ATR 72-500 turboprop aircraft. The security trustee of the ECA loans established SLL.00% to 6. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to twelve-year finance lease agreements.of the related loans and accrued interests were also pre-terminated. In 2011. special purpose company. The semi-annual lease rentals to SLL are guaranteed by JGSHI. Annuity style principal repayments for the first four Airbus A319 aircraft. The quarterly lease rentals to SALL are guaranteed by JGSHI. Fixed interest rates ranges from 2. and equal principal repayments for the last six Airbus A319 aircraft and last three Airbus A320 aircraft. 95 . The security trustee of the ECA loans established SALL. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases. The security trustee of the ECA loans established POALL. follow: · · · Term of 12 years starting from the delivery date of each Airbus A319 aircraft and Airbus A320. a special purpose company. In 2009. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases. The quarterly rental payments made by the Parent Company to POALL corresponds to the principal and interest payments made by POALL to the ECA-backed lenders.

the engines and the QEC Kit for a nominal amount at the end of such leases. the total outstanding balance of the ECA loans amounted to = P17. (d) commencement of insolvency proceedings against CALL or BLL or SLL or SALL or VALL or POALL becomes insolvent. the Group entered into a commercial loan facility to partially finance the purchase of two Airbus A320 aircraft. semi-annual installments starting six months after the utilization date. The ECA-backed facilities also provide for the following events of default: (a) nonpayment of the loan principal or interest or any other amount payable on the due date. covenant on preservation of transaction documents. and (j) occurrence of an event of default under the lease agreement with the Parent Company. CALL. The security trustee of the commercial loan facility established ILL. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company. one CFM 565B4/P engine. including interest accrued. VALL and POALL must not allow impairment of first priority nature of the lenders’ security interests.6 million in 2014. obtaining preference or giving preference to any person. consecutive. a special purpose company. the Group also entered into a commercial loan facility. other than what is permitted by the transaction documents or the ECA administrative parties.626. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to (a) ten-year finance lease arrangement for the aircraft. As of December 31.2 million) and = P20.5 million. BLL. The semiannual rental payments of the Parent Company correspond to the principal and interest 96 .2 million and = P632. In 2012. in addition to ECA-backed loan facility.8 million (US$455.8 million (US$394. SALL. a special purpose company. = P625. a special purpose company. The commercial loan facility is payable in 12 equal. 2014 and 2013.3 million). The security trustee of the commercial loan facility established PTALL. SLL. the ECA lenders will foreclose on secured assets. Also. the Group entered into a commercial loan facility to partially finance the purchase of four Airbus A320 aircraft. contrary to the laws of the Cayman Islands. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to ten-year finance lease arrangement for the aircraft. SALL. BLL’s.· · · · As provided under the ECA-backed facility. respectively. 2013 and 2012. (b) breach of negative pledge. CALL. Upon default. namely the aircraft (Note 13). (h) cessation of business. (b) six-year finance lease arrangement for the engines and (c) five-year finance lease arrangement for the QEC Kit. SALL’s VALL’s and POALL’s assets. The security trustee of the commercial loan facility established BLL. the Group. The quarterly rental payments of the Parent Company correspond to the principal and interest payments made by ILL to the commercial lenders and are guaranteed by JGSHI. JGSHI or CPAHI of any transaction document or security interest. VALL and POALL cannot create or allow to exist any security interest. two CFM 565B5/P engines and one QEC Kit. An event of default under any ECA loan agreement will occur if an event of default as enumerated above occurs under any other ECA loan agreement. Commercial Loans In 2007. (e) failure to discharge any attachment or sequestration order against CALL’s. In 2008. SLL. to partially finance the purchase of six ATR 72-500 turboprop aircraft. (g) sale of any aircraft under ECA financing prior to discharge date.211. (c) misrepresentation. BLL. respectively. Interest expense amounted to = P551. (i) revocation or repudiation by CALL or BLL or SLL or SALL or VALL or POALL. SLL’s. The Parent Company has the option to purchase the aircraft. the outstanding amount of loan will be payable. (f) entering into an undervalued transaction.

00% to 6.0 million in 2014. including interest accrued. In 2013. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases. The quarterly rental payments of the Parent Company correspond to the principal and interest payments made by PTHALL to the commercial lenders. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases. the outstanding amount of loan will be payable. The lenders will foreclose on secured assets.7 million. Interest rates ranges from 1. the Group entered into a commercial loan facility to partially finance the purchase of five Airbus A320 aircraft. Principal repayments shall be made on a quarterly and semi-annual basis for the two Airbus A320 aircraft.7 million (US$207.3 million and P =100. 97 . P =240.222. Term of six years starting from the delivery date of each ATR 72-500 turboprop aircraft. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to ten-year finance lease arrangement for the aircraft. respectively. respectively. 2014 and 2013. Annuity style principal repayments for the two Airbus A320 aircraft and six ATR 72-500 turboprop aircraft. The quarterly rental payments of the Parent Company correspond to the principal and interest payments made by SAALL to the commercial lenders. The terms of the commercial loans follow: · · · · · · · Term of ten years starting from the delivery date of each Airbus A320 aircraft. In 2014.9 million (US$362. a special purpose company. and equal principal repayments for the engines and the QEC Kit.194.00%. Upon default. the total outstanding balance of the commercial loans amounted to = P16. namely the aircraft. The Parent Company has the option to purchase the aircraft for a nominal amount at the end of such leases. engines and the QEC Kit and six ATR 72-500 turboprop aircraft. 2014 and 2013. 2013 and 2012.8 million) and = P9. The commercial loan facility provides for material breach as an event of default. The security trustee of the commercial loan facility established PTHALL. respectively. which purchased the aircraft from the supplier and leases such aircraft to the Parent Company pursuant to ten-year finance lease arrangement for the aircraft. Interest expense amounted to P =461.1 million). Terms of six and five years for the engines and QEC Kit. a special purpose company. the Group entered into a commercial loan facility to partially finance the purchase of two Airbus A320 aircraft. The Group is not in breach of any loan covenants as of December 31. As of December 31. Interests on loans are a mix of fixed and variable rates. respectively.payments made by PTALL to the commercial lenders. The security trustee of the commercial loan facility established SAALL.

953.941) =1.340. respectively.015) (1.000 605.484 P P =1.000.419.148.516. wherein it offered 212. Other Noncurrent Liabilities This account consists of: December 31 2013 2014 =1.345.5 million.953. the Parent Company listed with the PSE its common stock.996 385.069. 2013 and 2012 ARO expenses included as part of repairs and maintenance amounted to P =476. These costs are accrued based on estimates made by the Group’s engineers which include estimates of certain redelivery costs at the end of the operating aircraft lease (Note 5).800 shares are newly issued shares with total 98 .090.527. the Group returned four (4) aircraft under its operating lease agreements.000 605. by way of primary and secondary share offerings.608 P =586.345.953.227.516.196 280.524 P =1.953.880 224.293. 30.413.638.608 = 590.504 538.017. Equity The details of the number of common shares and the movements thereon follow: 2014 1.000.529 (382.700 shares to the public at = P125.330 Authorized . In 2014.345.330 – – 605.665.223.637.6 million and = P577.661. Of the total shares sold.196.330 Issuance of Common Shares of Stock On October 26.099 476.19.637. The Company started to restore these aircraft in 2013. P =590.608 P P =586. 20.196 P In 2014.340.at P =1 par value Beginning of year Treasury shares Issuance of shares during the year Issued and outstanding 2013 1.0 million.429. The rollforward analysis of the Group’s ARO follows: Balance at beginning of year Provision for return cost Payment of restorations during the year Balance at end of year 2013 2014 P1. Accrued Maintenance This account pertains to accrual of maintenance costs of aircraft based on the number of flying hours or cycles but will be settled beyond one year based on management’s assessment.330 – – 605.149 ARO Accrued maintenance Pension liability (Note 24) ARO The Group is legally required under certain lease contracts to restore certain leased passenger aircraft to stipulated return conditions and to bear the costs of restoration at the end of the contract period.637.449 =2.00 per share.069.456. 2010.

Likewise.0 million or = P1.3 million. 2014 and payable on August 11. respectively. retained earnings are restricted for the payment of dividends to the extent of the cost of common shares held in treasury.211. 2013 and April 19. 2014.0 million worth of the Parent Company’s common share.0 billion. On June 28.9 million as of December 31. 2012 and was paid on August 13. March 8. 2011. 2012.800. 2011 and was paid on May 12.2 million or P =1.00 per share in the amount of P =606.0 million or = P1.0 million as of December 31. The SBP shall commence upon approval and shall end upon utilization of the said amount. or as may be otherwise determined by the BOD.222. 2013 and payable on August 12.0 million or = P1. 2011. 2014.07 billion which will be spent over the next five years. from its unrestricted retained earnings as of December 31.0 million of = P1. 2010. 2011. The Parent Company has outstanding treasury shares of 7. restricting the Parent Company from declaring an equivalent amount from unappropriated retained earnings as dividends.00 per common share to all stockholders of record as of July 18. 2014.00 per share and a special cash dividend in the amount of P =611. the Parent Company’s BOD approved the declaration of a regular cash dividend in the amount of = P606.proceeds amounting P =3. the BOD of the Parent Company approved the declaration of a regular cash dividend in the amount of P =1.4 million.5 billion and = P483. Appropriation of Retained Earnings On November 27. 2014 and 2013.00 per share from the unrestricted retained earnings of the Parent Company to all stockholders of record as of April 14.00 per share from the unrestricted retained earnings of the Parent Company to all stockholders of record as of July 17. 2013. On June 27. 2014 and 2013.0 million from the unrestricted retained earnings of the Parent Company to all stockholders of record as of July 16. On June 26.220 shares amounting to P =529. Unappropriated Retained Earnings The income of the subsidiaries and JV that are recognized in the statements of comprehensive income are not available for dividend declaration unless these are declared by the subsidiaries and JV.0 million. 2013. which is charged against ‘Capital paid in excess of par value’ in the parent statement of financial position. 2012. Treasury Shares On February 28.283. the BOD of the Parent Company approved the creation and implementation of a share buyback program (SBP) up to P =2.00 per share and a special cash dividend in the amount of P =606. 2013. The registration statement was approved on October 11. = P2. Total dividends declared and paid amounted to P =1. the Parent Company’s BOD approved the declaration of a regular cash dividend in the amount of = P606. Total dividends declared and paid amounted to P =606.000. 30 and 31). 2014 for purposes of the Group’s re-fleeting program. Planned re-fleeting program amount to an estimated = P70.3 million as of December 31.4 million or P = 2. respectively. The appropriated amount was used for the settlement of pre delivery payments and aircraft lease commitments in 2013 and 2014 (Notes 18. The Group has 99 and 96 existing certified shareholders as of December 31. On March 17. the Parent Company’s BOD approved the declaration of a regular cash dividend in the amount of = P606. 2012. The Parent Company’s share in the total transaction costs incurred incidental to the IPO amounting P =100. 99 . the Parent Company’s BOD appropriated = P3. 2014.

The ultimate parent includes within gross debt all interest-bearing loans and borrowings.515 P 2.849.538. Others 2014 P =4.640. Such ratio is currently being managed on a group level by the Group’s ultimate parent.315 1. The Group’s debt-to-capital ratios follow: 2013 2014 P29.804. refunds.241 P 2.006.099.234 =6.253 1.309.391.081.871. etc.944.920.154 2013 =3.882 =5.628.116.604 1.2 million.672 P =33.505. the amount of retained earnings that is available for dividend declaration as of December 31.343.6:1 (a) Long term debt (Notes 18 and 25) (b) Capital (c) Debt-to-capital ratio (a/b) The JGSHI Group’s policy is to keep the debt to capital ratio at the 2:1 level as of December 31. advanced seat selection fee.029. Ancillary Revenues Ancillary revenues consist of: Excess baggage fee Rebooking.490.630. 100 .187 21.727 P Others pertain to revenues from in-flight sales.406. cancellation fees. which composed of paid up capital and retained earnings.837.665 = 21.665. The Group manages its capital structure.202 1.377 2. In order to maintain or adjust the capital structure.701. No changes have been made in the objective. Capital Management The primary objective of the Group’s capital management is to ensure that it maintains healthy capital ratios in order to support its business and maximize shareholder value.766. while capital represent total equity.577. return capital structure or issue capital securities.106.After reconciling items which include fair value adjustments on financial instruments. 2014 amounted to P =2.4:1 1.662. foreign exchange gain and cost of common stocks held in treasury. The Group’s ultimate parent monitors the use of capital structure using a debt-to-equity capital ratio which is gross debt divided by total capital.731.079 P 2012 =2.465. 21. 2014 and 2013.489.908. policies and processes as they have been applied in previous years.064.970 P =8. the Group may adjust the amount of dividend payment to shareholders. reservation booking fees and others (Note 27).233. and makes adjustments to these ratios in light of changes in economic conditions and the risk characteristics of its activities.

434 P 2012 =332. 101 .211.070 30.467.892.012.856 318.686.945.017.929.474 P 1.239 242.518.743 177.045 60.152. 2013 and 2012.203 P 285.982.925 29.619.859 =1.843. The account includes related costs of other contractual obligations under aircraft operating lease agreements (Note 30). repairing and overhauling of all aircraft and engines.406.012 P 2012 =1.542.602.012.944 125.317 1.317 114.889.489 2013 =2.983.785.291.22.079.5 million in 2014. respectively (Note 19).369.807.332 P =17.319 370.759.817.173.694 2013 =339.212.461 405.612 2. Operating Expenses Flying Operations This account consists of: Aviation fuel expense Flight deck Aviation insurance Others 2013 2012 2014 P19.703.830 =21.920 =3.382 P Others include membership dues. Repairs and maintenance Repairs and maintenance expenses relate to the cost of maintaining.305. technical handling fees on pre-flight inspections and cost of aircraft spare parts and other related equipment. employee training cost and allowances.433.875 P =23.982.075.056. rent.051.476.453 111.522.807.091 49.304 182.971.028 187.005 =1.645 442.559.997 54.565 = P20.163.883.0 million.527 P =4.235.720.007 P Aircraft and Traffic Servicing This account consists of: Airport charges Ground handling Others 2014 P =2.047 P 1.805.352.870 310.296.377 270.157.884.210. supplies.911 292.561.374 124.893.298.077 =3.286 P Others pertain to staff expenses incurred by the Group such as basic pay.621. These amounted to P =476.842.833.6 million and = P577.847 P =26.602.873.108 275.860. 23.527 P =1.460.946 P 275.406 = 1.822 2. General and Administrative Expenses This account consists of: Staff cost Security and professional fees Utilities Rent expenses Travel and transportation Others (Note 10) 2014 P =458. bank charges and others.816.716.860 29.658. annual listing maintenance fees.204. P =590.694.725.896.111.034.

771 (6. and 2012 the assumptions used to determine pension benefits of the Group follow: 2014 12 years 4.449 2013 =867.270 P 2014 P =329. Defined Benefit Plan The Parent Company has a funded.50% As of December 31. noncontributory. defined benefit plan covering substantially all of its regular employees.26% 5.463 1.200.200. 2014 and 2013.842. As of January 1.735.463) P =385. which is determined by reference to market yields at the reporting date on Philippine government bonds.535. expense related to defined benefit plans and other employee benefits. consisting of salaries. 2014.342) 2013 =367.680) =538. the discount rate used in determining the pension liability is 4.665.676 P (329. aircraft and traffic servicing.200.149. general and administrative.262 P (1.322.091.79% 5.420. are included in flying operations.680 P Movements in the fair value of plan asset follow: Balance at beginning of year Actual contribution during the year Interest income included in net interest cost Actual return excluding amount included in net interest cost Balance at end of year 102 .992 =329.428.24.59% and 5.302. The benefits are based on years of service and compensation on the last year of employment.680 – 17.50% Average remaining working life Discount rate Salary rate increase 2013 12 years 5.767. Employee Benefits Employee Benefit Cost Total personnel expenses.941.992) =365.680.470) P =339. reservation and sales.592 4.50% 2012 12 years 5.325 = 241.755. and passenger service.253 2013 P80. repairs and maintenance.755.812) 6. The amounts recognized as pension liability (included under ‘Other noncurrent liabilities’ account in the Group’s statements of financial position) follow (Note 19): Present value of defined benefit obligation (PVO) Fair value of plan assets Pension liability at end of year 2014 P =725.59% 5. 2013.912 (339.26%.941.996 P Remeasurement effects recognized in other comprehensive income Actuarial (gain) loss Return assets excluding amount included in OCI Amount to be recognized in OCI 2014 (P =308.767.470 (P =301.227.

350) (29.288 (18.183 P =158.336 1.733 103 .100 P Changes in the present value of the defined benefit obligation follow: Balance at beginning of year Current service cost Interest cost Benefits paid Actuarial loss/gain due to: Experience adjustments Changes in financial assumption Balance at end of year 2014 P =882.247.767 (1.155.771.592) (18. The actual returns on plan assets amounted to P = 10.227.471.435.683.6 million in 2013.055 P =725.900 P =725.510 25.771.400 =67.318 – 329.617 P 2012 =46.755.510 P 20.878 (18.976.436.621.0 million into the pension fund for the year ending 2015.209 29.097) (370.599.270 (241.798 P – – 79.146.420.900 P =230.428.227.014.963 37% 118.700) (370.733 55.267) 158.392 Current service cost Interest cost Total pension expense 2013 =59.222) (1.295.566.827) 311.462 100% P Cash Investment in debt securities Receivables Liabilities % 64% 36% – – 100% The Group expects to contribute about = P100.155.912 P 35.597.149.392 (301.329.030 339.674.617 365.604.996 17.146.912 311.6 million in 2014 and = P6.621.784.604.428.275.305 1.700 P 21.976.136 129.399.420.628.827) 63.449 2013 =353.735.097) =538.471.383.The plan assets consist of: 2013 2014 % P209.529 =867.200.loss (gain) 2013 2012 2011 2010 2014 =867.389 P =212.436 (25.441 63% = 126.665.676 P Amounts for the current and previous periods follow: Present value of retirement obligation Experience adjustments .274.209 46.436.609.535.996 P Components of pension expense included in the Parent Company’s statements of comprehensive income follow: 2014 P =129.114.197.123 P =325.680 P =339.097) P =385.676 P =434.193.650.107 =79.289.329.475.722 (28.180. Movements in the defined benefit liability follow: Balance at beginning of year Pension liability through business combination OCI in business combination Pension expense during year Recognized in OCI Actual contributions Benefits paid during year Balance at end of year 2014 P =538.123 P 59.229.406.260) – =329.097) 2013 =434.342) – (25.683.

524 =298.081.415. The Parent Company’s investment consists of 37% of debt instruments and 63% for cash and receivables.518.) To carry over as a deduction from taxable income any net loss (NOLCO) incurred in any year up to five years following the year of such loss.50% on peso-denominated and foreign currency-denominated short-term placements and cash in banks. an Asset-Liability Matching Study (ALM) is performed with the result being analyzed in terms of risk-and-return profiles.319.The sensitivity analyses that follow has been determined based on reasonably possible changes of the assumption occurring as of the end of the reporting period. A. A. The Group’s major competitor.334. the Group is allowed to benefit from the tax privileges being enjoyed by competing airlines.128 (568. respectively.257.59% (-1. assuming if all other assumptions were held constant.00%) PVO (P =636.746 Salary increase 6. 25.63% (+1.565. In addition. The NIRC of 1997 also provides for rules on the imposition of a 2.311 = 268.704 (36.181. 9517 (TAP’s Congressional Franchise) known as the “ipso facto clause” and the “equality clause”.00% and 7.00%) 4.137. Income taxes include corporate income tax. The principal technique of the Parent Company’s ALM is to ensure the expected return on assets to be sufficient to support the desired level of funding arising from the defined benefit plans. 7151 (Parent Company’s Congressional Franchise) and under Section 15 of R. if applicable.00%) 3. and final taxes paid at the rate of 20.25% (-1. by virtue of PD No. 104 .00% MCIT on the gross income as of the end of the taxable year beginning on the fourth taxable year immediately following the taxable year in which the Parent Company commenced its business operations. including but not limited to the following: a.835 P Provision for income tax pertains to MCIT and deferred income tax.032.766) Each year.391) (P =406.368. as discussed below. which are final withholding taxes on gross interest income. No. is enjoying tax exemptions which are likewise being claimed by the Group.003.) To depreciate its assets to the extent of not more than twice as fast the normal rate of depreciation.936) P =25. Discount rates 5. and b. Any excess MCIT over the RCIT can be carried forward on an annual basis and credited against the RCIT for the three immediately succeeding taxable years.25% (+1. Income Taxes Provision for (benefit from) income tax consists of: Current: MCIT Deferred 2013 2014 P =61. 1590.723) 2012 P30.668 = (452. under Section 11 of R.768 P45. respectively.00%) 827. No.738.188) 833.

710 P 330.379) Net deferred tax assets (liabilities) 105 1.301. The components of the Group’s deferred tax assets and liabilities follow: Deferred tax assets on: NOLCO Unrealized loss on net derivative liability ARO .215 1.636.602 P . As of December 31. On the above registrations.311 45.369 Expired/Applied P =– – – P =– Balance P =1.424.683 Expiry Year 2015 2016 2017 Expired/Applied = – P Balance P =159.636.721.919.926.704 P =136. 2014 and 2013.542.net Deferred tax liabilities on: Double depreciation Business combination (Note 7) Unrealized foreign exchange gain .096.967.984 1.311 45.721.518.645.369 Expiry Year 2017 2018 2019 Amount P =30.473 1.668 61.606.282.710.liability MCIT Accrued retirement costs Allowance for credit losses Unrealized foreign exchange loss .282.735 – 90.084. the Parent Company has complied with externally imposed capital requirements set by the BOI in order to avail the ITH incentives for aircraft of registered activity (Note 32).301.156.038 136.620.668 61.593 The Parent Company has outstanding registrations with the BOI as a new operator of air transport on a pioneer and non-pioneer status under the Omnibus Investments Code of 1987 (Executive Order 226) (Note 32).132.382 =112.Details of the Parent Company’s NOLCO and MCIT are as follows: NOLCO Year Incurred 2012 2013 2014 Amount P =1.468.620.698.904.403.968.704 P =136.086.551 71.518.884 1.530 128.107 (P =129.631.594.647.361.884 1.081.965.768 225.714.385.876 956.319.328 P – 573.389.361.319.728 =677.919.546 185.611.593 Expiry Year 2019 MCIT Year Incurred 2012 2013 2014 Details of TAP’s NOLCO are as follows: Year Incurred 2014 Amount P =159.net Unrealized gain on derivative asset 2014 2013 =1.561 – – 2.876 956.609 P =3.550.279.683 108.919.965.309 161.713.081.499.763 7.406 – 1.683 Expired/Applied = – P – – = – P Balance P =30.411 70.609 P =3.910.160.174 23.594. the Parent Company can avail of bonus years in certain specified cases but the aggregate ITH availment (basic and bonus years) shall not exceed eight (8) years.

Deductible temporary difference: Unrealized loss on derivative asset NOLCO Retirement benefit obligation Taxable temporary differences: ARO Unrealized foreign exchange gain Unrealized gain on derivative asset 2014 2013 P =1. an apportionment formula is used in determining the ceiling on such expenses. EAR expenses are limited to 0.50% of net sales for sellers of goods or properties or 1.00% Statutory income tax rate Adjustments resulting from: Nondeductible items Gain on sale of financial assets Equity in net income loss of JV Interest income subjected to final tax Income subject to ITH Effective income tax rate 2013 30.780.9 million in 2014. Also. The related deferred tax liability on the taxable temporary differences is = P50. respectively. The Parent Company has the following gross deductible and taxable temporary differences which are expected to reverse within the ITH period.030 – P =168. For sellers of both goods or properties and services. The Group recognized EAR expenses (allocated under different expense accounts in the consolidated statements of comprehensive income) amounting = P21.62) 7.17) (18. TAP has temporary differences and carry-forward benefits of NOLCO for which no deferred tax asset was recognized.3 million.441. 2013 and 2012.7 million in 2014 and 2013.032.69% Entertainment.3) (341.82) 17. respectively.628 =275.42) (2.797.465 P The related deferred tax asset on the deductible temporary differences is = P362.0 million and = P10. 106 .654 =362. The Group’s recognized deferred tax assets and deferred tax liabilities are expected to be reversed more than twelve months after the reporting date.407 =– P – – =– P P =167. A reconciliation of the statutory income tax rate to the effective income tax rate follows: 2014 30.5 million in 2014 and 2013.6 million and = P108.408. respectively.Movement in accrued retirement cost amounting P =91.5 million. is presented under other comprehensive income. Movement includes adjustments due to restatements.21) (23.25) 2.158.00% 0. and for which deferred tax assets and deferred tax liabilities were not set up on account of the Parent Company’s ITH.326.45% (58. P =19.190.017.978 2.890.04) (0.6%) (3.759 1.00% 2012 30.73 – (2. Amusement and Recreation (EAR) Expenses Current tax regulations define expenses to be classified as EAR expenses and set a limit for the amount that is deductible for tax purposes.208.0) (0.670 47.598 1.00% of net revenue for sellers of services.06) (0.811 P – 87.6) (386.3 – (34.9 million and P =109.244.

Related Party Transaction Transactions between related parties are based on terms similar to those offered to nonrelated parties. maintenance and administrative service agreements. 2013 and 2012.330 =1.216 P =511.89 P The Group has no dilutive potential common shares in 2014.229 = P3.953. In addition to the related information disclosed elsewhere in the financial statements. the following are the year-end balances in respect of transactions with related parties. to control the other party or exercise significant influence over the other party in making financial and operating decisions or the parties are subject to common control or common significant influence.263 605. Parties are considered to be related if one party has the ability. sale of passenger tickets. regular banking transactions.26.41 P 605.953. Related parties may be individuals or corporate entities. The Group has entered into transactions with its ultimate parent. its JV and affiliates principally consisting of advances. which were carried out in the normal course of business on terms agreed with related parties during the year. reimbursement of expenses.84 P 605. 107 .014.330 =0.946. 27.330 =5.498.953. Earnings Per Share The following reflects the income and share data used in the basic/dilutive EPS computations: (a) Net income attributable to common shareholders (b) Weighted average number of common shares for basic EPS (c) Basic/diluted earnings per share 2014 2013 2012 P =853.572. directly or indirectly.

316.726.247 – 142.214.899 34.213.643.952.913 – 38.928.552.703 37.209 – – – – – – – – – – – – – = 20.092 32.853.810.751 1.742 13.061 158.903 – 27.108 Entities under common control Robinsons Bank Corporation (RBC) Universal Robina Corporation (URC) Robinsons Land Corporation (RLC) Robinsons Handyman. Inc.798 P– = – – – – – – – – – – – 93.324 1.714 370.447 24.899.169.783.504.798 4.926 1.743 664.042.022 244.561.254 25.172 – – – – – – – – – – – – – – – – P– = – Cash and Cash Equivalents (Note 8) Outstanding Amount Balance – – – – – – – – 637.144. Wholly owned subsidiary Tiger Airways.511.690 6.083.304 42.366 6.413 P 785.432.525 1.961.428.749 42.458 – – P– = – 6.775 – – – – – – – – – – – P– = – Trade Receivables (Note 10) Outstanding Amount Balance 9.553.250 45.598.489 29.483 – – – – – – – – – – – – – P2.884 27.073.786 45.063 4.598 10.575 2.535.615.780.077.405 = (2.304.712. Inc.082.374.023 – – 4.248.471 24.620.512 41.341 93.538.294.218 65.863. 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 PAAT.373 547.966 118.040 36.828.482 17.767 3.197 1.436 – – – – – – – – – – – – – – 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 – – P– = – 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 SIAEP JV in which the Company is a venturer A-plus Parent company CPAHI Ultimate parent company JGSHI 1.598 40.130 2.453 705.190.031.270.691 4.222.402 4.347.669. Phils.818.584.591.308.389 – – P– = – Trade Payables (Note 17) Outstanding Amount Balance .833 2.074.906.513.516 522.003 P– = – Due from Related Parties (Note 10) Outstanding Amount Balance 44.158.155) Due to Related Parties (Note 17) Outstanding Amount Balance Consolidated Statement of Financial Position The significant transactions and outstanding balances of the Group with the related parties follow: 2.400 654.800 61.732 121.692.554 6. 78.038.200.451 439.350.354.337.983 1.640.372 36.543.027 – 109.741 4.604.402 1.385.947 2.674.227 2.221.751.628 – – – – – – – – – – – P– = – 47.

909. Inc.751 P =1.341 P =93.161.403 681.594 306.275.524 235.424.226 P 326. Jobstreet.659 = P 5.410.com Phils.283 2. Unicon Insurance Brokers Total 31-Dec-14 31-Dec-13 Summit Publishing.850.316. Inc.832 P =488.242 P =18.183.510 P 139.451 – – = 6.550 P =6.821 P P =32.576 – – 2.710 26.566 P =75.860.561.214.854 505.743 = 13.239.754 P =556.089.136.828.847 – – = P– – – – P = 39.868 94.612 – – – – – – = P– – – – = 134.127 471.955.247.550.354.615 686.570 936.863.470.172 P – – – – – – = P– – Cash and Cash Equivalents (Note 8) Outstanding Amount Balance – – = P840.505 958.584 24.139 21.967 P – – 9.949 Trade Receivables (Note 10) Outstanding Amount Balance – 17.705.109 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 31-Dec-14 31-Dec-13 JG Petrochemical Corporation (JGPC) Robinsons Inc.776.436 P – – – – – – = P– – – – = 1.207 624.198.374 Trade Payables (Note 17) Outstanding Amount Balance .818.334 P – – – – – – = P– – Due from Related Parties (Note 10) Outstanding Amount Balance – – = 76.862.090.325 161.350.734 1.058 – – – – – – 1.872 P = P70.425.849 = 42.653.987.197.258.185..006 3.503 =44.878 235.847 – – = P– – Due to Related Parties (Note 17) Outstanding Amount Balance Consolidated Statement of Financial Position – – = 90.635 2.234 660.591.215 P – – 489. (SPI) – – = 78.019.618 – 68.077.987 96.

337.185.674 P =70.382 – – 2014 2013 2012 2.038 P =290.038 290.060.347.598 10.941.627 Wholly owned subsidiary TAP Entities under common control RSB Jobstreet.659 3.571.884.852 P =2. Inc.207.627 SIAEP 2014 2013 2012 – – 233.620.512.607 – – – – – – – – – SPI 2014 2013 2012 5.862.193 – – PAAT 2014 2013 2012 – – – – – – 26. There have been no guarantees provided or received for any related party receivables or payables.570 936.852 2.538 453.946 24.231.354 – – – – – – – – – RLC 2014 2013 2012 13.092 32.662 624.512 1.232 P = 90.295 – – – – – – P = 26.104.295 – – – – – – URC 2014 2013 2012 41.505 18. 110 .337.571.183.137.941 21.018..283 2.868.089.742 25. Also. these transactions are short-term in nature.868.615 686.113 P =453.946 P =24.038.056.411.666 – – – – – – 116. This assessment is undertaken each financial year through a review of the financial position of the related party and the market in which the related party operates.451 2.com Phils. Total Terms and conditions of transactions with related parties Outstanding balances at year-end are unsecured.408 – – – – – – P = 964.371.619. 2014 2013 2012 2014 2013 2012 2014 2013 2012 26. The Group has not recognized any impairment losses on amounts due from related parties for the years ended December 31.413.JV in which the Company is a venture A-plus Consolidated Statement of Comprehensive Income Sale of Air Transportation Interest Ancillary Repairs and Service Income Revenues Maintenance Amount/ Amount/ Amount/ Outstanding Outstanding Amount/ Year Outstanding Balance Balance Balance Outstanding Balance 2014 2013 2012 P– = – – P– = – – P– = – – P = 605.104.928.628 11.615.969 – – – – – – – – – Robinsons Inc.662 – – – – – – – – – JGPC 2014 2013 2012 958.318 – – 359.207 P =62. 2014 and 2013.710 451.575 2. interest-free and settlement occurs in cash.470 – – – – – – =– P =P– P =359.337.371.186.408 – – – 2014 2013 2012 – – – – – – – – – 242.031.018.

2027 (Note 21). and to maintain and provide aircraft heavy maintenance services which was performed by SIAEP.5 million. The loans are subject two percent (2%) interest per annum. The Group also incurs liabilities to RSB for loan payments of its employees and to URC primarily for the rendering of payroll service to the Group which are recorded as ‘Due to related parties’. 7. the Group shall render routine preventive maintenance services on certain ground support equipment used by A-plus in providing technical GSE to airline operators in major airports in the Philippines.5 million). under the shareholder loan agreement the Group provided a loan to PAAT to finance the purchase of its Full Flight Simulator. Aggregate loans provided by the Group amounted to P = 155. 8. Under the aforementioned agreement. other equipment and other working capital requirements. 2.3 million). 2014. As of December 31. the Group entered into a sub-lease agreement with PAAT for its office space.7 million (US$0. The Group provides air transportation services to certain related parties. Under the GSE Maintenance Services Agreement. Total amount of purchases in 2014. if unpaid. respectively. 2012 until November 19. 111 . The Group also performs repair or rectification of deficiencies noted and supply replacement components.9 million) from PAAT as partial payment of the loan. The Group maintains deposit accounts and short-term investments with RSB which is reported as ‘Cash and cash equivalents’. The Group also entered into a Ground Support Equipment (GSE) Maintenance Services Agreement with A-plus. P =8. In 2014. In 2013 and 2012. The Group entered into a Shared Services Agreement with A-plus.4 million (US$3.The Group’s significant transactions with related parties follow: 1. loan to PAAT amounted to P = 91. In 2012. In 2013. 3. 9.0 million (US$2. Cost of services are recorded as ‘Repairs and maintenance’ in the consolidated statements of comprehensive income and any unpaid amount as of statement of financial position date as trade payable under ‘Accounts payable and other accrued liabilities’. The lease agreement is for a period of fifteen (15) years from November 29. 4. For the aircraft maintenance program. In 2014. light aircraft checks and technical ramp handling services at various domestic and international airports which were performed by A-plus. the Parent Company entered into sublease agreements with TAP for the lease of its five (5) A320 Airbus aircraft. Expenses advanced by the Group on behalf of CPAHI. in the consolidated statement of financial position. the Group collected = P41. the Group sold its 2WRU simulator to PAAT on an “AS IS WHERE IS” basis and shall include the spare parts and accessories.2 million. the Group engaged SIAEC to render line maintenance. the Group will render certain administrative services to A-plus which include payroll processing and certain information technology-related functions. 6.3 million and = P5. The said expenses are subject to reimbursement and are recorded under ‘Receivables’ in the consolidated statement of financial position. 2013 and 2012 amounted to P =9. The Group also purchases goods from URC for in-flight sales and recorded as trade payable. for which unpaid amounts are recorded as trade receivables under ‘Receivables’ in the consolidated statement of financial position. 5. The sublease period for each aircraft is for two years.

The Group’s BOD reviews and approves policies for managing each of these risks and they are summarized in the succeeding paragraphs. Audit Committee The Group’s Audit Committee assists the Group’s BOD in its fiduciary responsibility for the overall effectiveness of risk management systems. other than derivatives. AFS investments. The main purpose of these financial instruments is to finance the Group’s operations and capital expenditures.130.839.022.391 10. such as trade receivables and trade payables which arise directly from its operations.The compensation of the Group’s key management personnel by benefit type follows: Short-term employee benefits Post-employment benefits 2014 P =150.290. and both the internal and external audit functions of the Group.731 P =160. analyzing.122 2013 =135. The Group and the ultimate parent with its other subsidiaries (JGSHI Group) created the following separate board-level independent committees with explicit authority and responsibility for managing and monitoring risks.035 =133. 112 .017 P 2012 =131. 28. The Group has various other financial assets and liabilities. it is also the Audit Committee’s purpose to lead in the general evaluation and to provide assistance in the continuous improvements of risk management.010. financial assets at FVPL.155. control and governance processes. design and implementation of risk management capabilities and appropriate responses. Financial Risk Management Objectives and Policies The Group’s principal financial instruments. The Group has its own BOD which is ultimately responsible for the oversight of the Group’s risk management process which involves identifying. The Group also enters into fuel derivatives to manage its exposure to fuel price fluctuations.721 =137. comprise cash and cash equivalents.590. Each BOD has created the board-level Audit Committee to spearhead the managing and monitoring of risks. except for such benefits to which they may be entitled under the Group’s pension plans.565. monitoring risks and risk management performance. together with the related risk management structure.653 P There are no agreements between the Group and any of its directors and key officers providing for benefits upon termination of employment. Risk Management Structure The Group’s risk management structure is closely aligned with that of its ultimate parent. the identification and assessment of business risks. Furthermore. monitoring and controlling risks. measuring. development of risk management strategies. The risk management framework encompasses environmental scanning.296 P 1. receivables.618 P 1. and identification of areas and opportunities for improvement in the risk management process.011. payables and interest-bearing borrowings.

The ERMG is primarily responsible for the execution of the Enterprise Risk Management (ERM) framework. support to management in implementing the risk policies and strategies. and deviations are explained through the performance of direct interface functions with the internal and external auditors. The ERMG’s main concerns include: · · · · formulation of risk policies.The Audit Committee also aims to ensure that: a. the Group’s BOD is properly assisted in the development of policies that would enhance the risk management and control systems. among others. 4. market. Risk management . framework and limits. and d. Risk-taking personnel . liquidity. The Group’s BOD also shares the responsibility with the ERMG in promoting the risk awareness program enterprise-wide. identifying and monitoring control compliance risks. 2. determining violations. management of the fundamental risk issues and monitoring of relevant risk decisions. Support . and development of a risk awareness program. and crisis management: c. and recommending penalties for such infringements for further review and approval of the Group’s BOD. the day-to-day risk management functions are handled by four different groups. legal and other risks. namely: 1. principles. audit activities of internal and external auditors are done based on plan. pertinent accounting and auditing standards and other regulatory requirements. Day-to-day risk management functions At the business unit or company level. risks are properly identified. the Group’s BOD has designated a Compliance Officer who shall be responsible for monitoring the actual compliance of the Group with the provisions and requirements of good corporate governance. Enterprise Risk Management Group (ERMG) The fulfillment of the risk management functions of the Group’s BOD is delegated to the ERMG. specifically in the areas of managing credit. To assist the Group’s BOD in achieving this purpose. evaluated and managed. ERM framework The Group’s BOD is also responsible for establishing and maintaining a sound risk management framework and is accountable for risks taken by the Group.this group includes line personnel who initiate and are directly accountable for all risks taken. b. 3. strategies. Risk control and compliance . operational.this group includes middle management personnel who perform the day-to-day compliance check to approved risk policies and risks mitigation decisions.this group pertains to the Group’s Management Committee which makes risk mitigating decisions within the enterprise-wide risk management framework. Corporate Governance Compliance Officer Compliance with the principles of good corporate governance is one of the objectives of the Group’s BOD.this group includes back office personnel who support the line personnel. financial reports comply with established internal policies and procedures. 113 .

as well as in the procurement of performance bonds. 3. the CSSB administers enterprise-wide policies affecting physical security of assets exposed to various forms of risks. the CORPSAT administers enterprise-wide procurement policies to ensure availability of supplies and services of high quality and standards to all business units. budgeting and performance review processes of the business units.under the supervision of ERMG. money and fidelity.the identified risks are analyzed relative to the probability and severity of potential loss which serves as a basis for determining how the risks should be managed. and employer compensation insurances. Risk Assessment . public liability. 5. either to avoid. business interruption. This is presented during the strategic planning.the Group’s BOD. 7.relevant risk management information are identified. 3. 114 . 4. Risk management support groups The Group’s BOD created the following departments within the Group to support the risk management activities of the Group and the other business units: 1. 4. transfer or share risk. captured and communicated in form and substance that enable all personnel to perform their risk management roles. 2. and risks which may materially weaken the Group’s earnings and capital. Control Activities .the CMS is responsible for the formulation of enterprise-wide policies and procedures.under the supervision of ERMG. audit reviews. risks that require management’s attention. approves the Group’s responses to mitigate risks. 6. through the oversight role of the ERMG. Corporate Supplier Accreditation Team (CORPSAT) .it involves the review of the overall prevailing risk profile of the business unit to determine how risks are viewed and addressed by management. Corporate Planning and Legal Affairs (CORPLAN) . in order to ensure that management has a process in place to set objectives which are aligned with the Group’s goals. Internal Audit Group.The ERM framework revolves around the following seven interrelated risk management approaches: 1. 2. Corporate Insurance Department (CID) . 5. compliance checks. Internal Environmental Scanning .the CORPLAN is responsible for the administration of strategic planning.the ERMG. revalidation of risk strategies and performance reviews. Corporate Management Services (CMS) . Compliance Office and Business Assessment Team constantly monitor the management of risks through risk limits.the Group’s BOD mandates the Group’s management to set the overall annual targets through strategic planning activities. The risks are further assessed as to which risks are controllable and uncontrollable. Risk Response .policies and procedures are established and approved by the Group’s BOD and implemented to ensure that the risk responses are effectively carried out enterprise-wide. Objective Setting . Information and Communication . Monitoring . annual budgeting and mid-year performance reviews of the business unit. reduce. Corporate Security and Safety Board (CSSB) .the CID is responsible for the administration of the insurance program of business units concerning property. self-insure.

With respect to credit risk arising from the other financial assets of the Group.996.284.480.383 944. Risk concentrations of the maximum exposure to credit risk Concentrations arise when a number of counterparties are engaged in similar business activities.732 4. It is the Group’s policy that all customers who wish to trade on credit terms are being subjected to credit verification procedures.302 1.481 2.031. liquidity risk and market risk.424. creditworthy third parties.214 6. Concentrations indicate the relative sensitivity of the Group’s performance to developments affecting a particular industry or geographical location.Risk Management Policies The main risks arising from the use of financial instruments are credit risk.549. Credit risk Credit risk is defined as the risk of loss due to uncertainty in a third party’s ability to meet its obligation to the Group. Maximum exposure to credit risk without taking account of any credit enhancement The table below shows the gross to credit risk (including derivative assets) of the Group as of December 31.486.536 P ***Excluding cash on hand ***Include nontrade receivables from insurance.445 134. Such credit risk concentrations.591.456. The Group trades only with recognized. In addition. The Group’s policies for managing the aforementioned risks are summarized below. which comprise cash in bank and cash equivalents and certain derivative instruments.008.622 228.229.053. or activities in the same geographic region or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic. commodity price risk and interest rate risk.936.872 2. if not properly managed. may cause significant losses that could threaten the Group’s financial strength and undermine public confidence. 2014 and 2013. 115 .751 =8.754 731.341.473. political or other conditions.904.342.334 547.982 123.302.187 P =6. the Group’s exposure to credit risk arises from default of the counterparty with a maximum exposure equal to the carrying amount of these instruments. receivable balances are monitored on a continuous basis resulting in an insignificant exposure in bad debts. without considering the effects of collaterals and other credit risk mitigation techniques.857.169.254.897 P 3. employees and counterparties ***Included under ‘Other noncurrent assets’ account in the consolidated statements of financial position. In order to avoid excessive concentrations of risk identified concentrations of credit risks are controlled and managed accordingly.774. Financial assets at FVPL Derivative financial instruments not designated as accounting hedges Loans and receivables Cash and cash equivalents* Receivables Trade receivables Interest receivable Due from related parties Others** Refundable deposits*** 2014 2013 P =– =166.565.266 1. namely foreign currency risk.684 556.377.

029 1.424.523.826 – P = 1.568.987. The major industry relevant to the Group is the transportation sector and financial intermediaries.214 345.183.817 – P = 4.480.481 123.187 P = 6.943 – – 433.342.334 345.751 = P8.684 556.754 731.370 10.088 – P =597.031.302 1.121.214 – – – – – P =– 1.165 6.342.445 134.860 4.072.187 P = 5. Cash and cash equivalents* Receivables Trade receivables Interest receivable Due from related parties Others** Refundable deposits*** 2014 Neither Past Due Nor Specifically Impaired High Standard Substandard Grade Grade Grade P = 3.266 697.The Group’s credit risk exposures.187 P = 6.897 5.732 4.838 123.445 134.161 – P =7.787.774.565. before taking into account any collateral held or other credit enhancements are categorized by geographic location as follows: Loans and receivables Cash and cash equivalents* Receivables Trade receivables Interest receivable Due from related parties Others** Refundable deposits*** Philippines Asia (excluding Philippines) P = 3.897 P =– = P166.273 – – 409.008.633.026.591.285 – – – – – P =– 1.641.058 240.341.996.076.171 123.456.008.536 ***Excluding cash on hand ***Include nontrade receivables from insurance.602.936.903 268.383 – – – – – =– P ***Excluding cash on hand ***Include nontrade receivables from insurance.316.916. Credit quality per class of financial assets The Group rates its financial assets based on an internal and external credit rating system.341.656.178.857.317 P = 27.424.302.003 946. 2014 and 2013.857.229.591. employees and counterparties ***Included under ‘Other noncurrent assets’ account in the consolidated statement of financial position.622.904.456.774.728 2014 Europe Others Total P = 447.473. The Group has no concentration of risk with regard to various industry sectors. employees and counterparties ***Included under ‘Other noncurrent assets’ account in the consolidated statement of financial position.709 1.484. Financial assets at FVPL Derivative financial instruments not designated as accounting hedges Loans and receivables Cash and cash equivalents* Receivables Trade receivables Interest receivable Due from related parties Others** Refundable deposits*** 2013 Philippines Asia (excluding Philippines) =P– =P– P =166.133.247 – – 6.450. employees and counterparties ***Included under ‘Other noncurrent assets’ account in the consolidated statement of financial position.706.751 P =591.772.682.623 228.300.187 P = 380.936.687.486.998.042 – – 189.226.480 Past Due or Individually Impaired P =– Total P = 3.872 228.601 P = 12.445 134.302.486. 116 .754 321.363.897 =– P 1.383 Europe Others Total ***Excluding cash on hand ***Include nontrade receivables from insurance.310 – P = 706.377.229.501.754 63.481 123.409.486.034.008.284.610 P =– P = 3.445 134.754 731.008.302 1.313 – – – – – P =– 944.486.424.891.476.904.650 – – 234.573.019 344.261. The table below shows the credit quality by class of financial assets based on internal credit rating of the Group (gross of allowance for impairment losses) as of December 31.188.377.291.424.504.830 – – 12.684 556.908.334 547.

997 – – – P = 150. High grade cash and cash equivalents are short-term placements and working cash fund placed.774. respectively.372.751 P =8.292.151. 2014 and 2013.456.754 433. The following tables show the aging analysis of the Group’s receivables: Trade receivables Interest receivable Due from related parties Others* Neither Past Due Nor Impaired P = 1.031.897 =P– =P– =P– P =166.798 – – 234.831.992.536 ***Excluding cash on hand ***Include nontrade receivables from insurance.754 298.563 P = 2.684 556.052 944.008.444.460 – – – P = 98.225.368 – P =507.996. 117 Over 180 days P = 12. employees and counterparties ***Included under ‘Other noncurrent assets’ account in the consolidated statement of financial position.565. Past due but not impaired receivables are secured by cash bonds from major sales and ticket offices recorded under ‘Accounts payable and other accrued liabilities’ account in the consolidated statement of financial position.904.473.390 Past Due and Impaired Total P = 8.4 million as of December 31.302.256.601.857. invested.684 556.720 – – – P = 58.318 273.720 91-180 days P = 98.460 *Include nontrade receivables from insurance.732 4.862 731.882 4. These accounts show propensity to default in payment despite regular follow-up actions and extended payment terms.997 61-90 days P = 58.034 1.600.982 .973.7 million and = P127.169.334 312. respectively (Note 10).701 P = 1.996. respectively.302 – 1.489.008.390 – – – P = 12.445 134.266 665.8 million and = P235.9 million as December 31.601. The counterparties have a very remote likelihood of default and have consistently exhibited good paying habits.342.481 P = 306.594.458.872 228. These accounts are typically not impaired as the counterparties generally respond to credit actions and update their payments accordingly.424. specific allowance for impairment losses amounted to = P306. Standard grade accounts are active accounts with propensity of deteriorating to mid-range age buckets.857.619 P = 1.852 2014 Past Due But Not Impaired 31-60 days P = 150.591. For the past due and impaired receivables. 2014 and 2013.031.Financial assets at FVPL Derivative financial instruments not designated as accounting hedges Loans and receivables: Cash and cash equivalents* Receivables Trade receivables Interest receivable Due from related parties Others** Refundable deposits*** 2013 Neither Past Due Nor Specifically Impaired High Standard Substandard Grade Grade Grade Past Due or Individually Impaired Total P =166.166 – – – – – =P– 5.4 million as of December 31.591. or deposited in foreign and local banks belonging to the top ten banks in terms of resources and profitability. High grade accounts are accounts considered to be of high value.284.052 – – – – P =5.334 547. employees and counterparties.897 6. and past due and impaired receivables amounting = P306.904.315. 2014 and 2013.865.504 228.266 – – – 6.032.456.489.967. Substandard grade accounts are accounts which have probability of impairment based on historical trend.594.751 P =7.8 million and = P235.480.865. Past due or individually impaired accounts consist of past due but not impaired receivables amounting to = P261.424.445 – 134.549.456.

615.719 = P14.5 million.872 = P235.053.097. The collective assessment evaluates and estimates the impairment of the portfolio in its entirety even though there is no objective evidence of impairment yet on an individual assessment. the Group requires cash bonds from major sales ticket offices or agents ranging from P =50.129 61-90 days = P39.438.684 556. or when there is an inability to pay principal overdue beyond a certain threshold. 118 . As of December 31.244 Past Due and Impaired Total P =6.420 2013 Past Due But Not Impaired 31-60 days = P51.531 = P54. 2014 and 2013.598 – – 3. (e) the availability of other sources of financial support.227. outstanding cash bonds (included under ‘Accounts payable and other accrued liabilities’ account in the consolidated statement of financial position) amounted to = P293. (b) the projected receipts or expected cash flows. allowances are assessed collectively for losses on receivables that are not individually significant and for individually significant receivables when there is no apparent nor objective evidence of individual impairment yet.897 P =1. and (c) the expected receipts and recoveries once impaired. There are no collaterals for impaired receivables.622 *Include nontrade receivables from insurance. infringement of the original terms of the contract has happened. Impairment losses are estimated by taking into consideration the following deterministic information: (a) historical losses/write-offs.405 = P10. Impairment has taken place when there is a presence of known difficulties in the servicing of cash flows by counterparties.664. The two methodologies applied by the Group in assessing and measuring impairment include: (1) specific/individual assessment. if any.229 – – 8. accordingly calculates the required impairment.550.004. in view of favorable or unfavorable developments.689.904. constitute observable events and/or data that meet the definition of an objective evidence of impairment.875 = P944. Liquidity risk Liquidity is generally defined as the current and prospective risk to earnings or capital arising from the Group’s inability to meet its obligations when they become due without recurring unacceptable losses or costs. and where such evidence exists.330. either singly or in tandem.334 229.692. are evaluated as the need arises.591. With regard to the collective assessment of impairment. Collateral or credit enhancements As collateral against trade receivables from sales ticket offices or agents.167 547. employees and counterparties. Under specific/individual assessment.387.473. A particular portfolio is reviewed on a periodic basis in order to determine its corresponding appropriate allowances. (c) the going concern of the counterparty’s business.972.254.850. and (2) collective assessment. the Group assesses each individually significant credit exposure for any objective evidence of impairment. (b) losses which are likely to occur but have not yet occurred.405 Over 180 days = P92.9 million and = P196.684 – 556.153 = P48.284.591.334 281.904.505 4.000 to = P2.542. These and the other factors.107.732 – 4. The impairment allowances.Trade receivables Interest receivable Due from related parties Others* Neither Past Due Nor Impaired = P846. (d) the ability of the counterparty to repay its obligations during financial crises. respectively (Note 17).889.042 = P2. Among the items and factors considered by the Group when assessing and measuring specific impairment allowances are: (a) the timing of the expected cash flows.550. and (f) the existing realizable value of collateral.382 91-180 days = – P – – 10.1 million depending on the Group’s assessment of sales ticket offices and agents’ credit standing and volume of transactions. Impairment assessment The Group recognizes impairment losses based on the results of its specific/individual and collective assessment of its credit exposures.525 – – 14.

054 P = 9.393.243 1. As part of its liquidity risk management.426 123.486.055.540.754 731.653.320 P = 22.081.345.557.771 134.717 – 98.052 – 1.486.004.955.330.833 P = 7.789.719 – P = 235.556.302. Financial liabilities The relevant maturity grouping is based on the remaining period at the statement of financial position date to the contractual maturity date. When an entity is committed to make amounts available in installments.682 1.908.766.302 1.665 P = 44.879.194.260.747 44.662.341.214 .384. The Group maintains a level of cash and cash equivalents deemed sufficient to finance operations.864. and to accommodate any fluctuations in asset and liability levels due to changes in the Group’s business operations or unanticipated events created by customer behavior or capital market conditions.754 51.804 ***Receivable and payable on demand ***Include nontrade receivables from insurance.362.694.008.614 – 338. 2014 and 2013: Financial Assets Loans and receivables Cash and cash equivalents Receivables: Trade receivables Interest receivable Due from related parties* Others ** Refundable deposits Financial Liabilities On-balance sheet Derivative financial instruments not designated as accounting hedges Accounts payable and other accrued liabilities*** Due to related parties* Long-term debt 2014 3 to 12 months Less than one month 1 to 3 months P = 3.772.865.693 9.456.187 P = 6.185.The Group’s liquidity management involves maintaining funding capacity to finance capital expenditures and service maturing debts. Financial assets The analysis of financial assets held for liquidity purposes into relevant maturity grouping is based on the remaining period at the statement of financial position date to the contractual maturity date or if earlier the expected date the assets will be realized.653.769.873 – 3.538.481 123.263 – P = 179.965 – P = 5. Fund raising activities may include obtaining bank loans and availing of export credit agency facilities.849.897 =– P =– P 1.428.163 – 1.445 134.833. It also continuously assesses conditions in the financial markets for opportunities to pursue fund raising activities.649 1.120.383 =– P =– P P = 1.217.377.792.677.820.958 – 229.936. The tables below summarize the maturity profile of financial instruments based on remaining contractual undiscounted cash flows as of December 31.445 150.675 175.215 33.317 P = 27.178.342.187 P = 474.895.905. When counterparty has a choice of when the amount is paid.856.639 – 9.424. each installment is allocated to the earliest period in which the entity can be required to pay.108 – P = 209.034.261 – 20.177 P = 2.650.506 – 12.660.408.215 655.424.202.508 – 725.229. the Group regularly evaluates its projected and actual cash flows.037 2.257. employees and counterparties ***Excluding government-related payables 119 1 to 5 years More than 5 years =– P Total P = 3.130.345 – 5.943 P = 508.028 44.583.582.573.774.467.813. the liability is allocated to the earliest period in which the Group can be required to pay.875.752.929.281 P = 3.664.568.094 P =– P = 2.685 2.877 – 110.008.732.420.

098.073.251 P =1.419.215. interest-bearing instruments and derivatives.029.707 – 667. 2014.565.578.904.897. the Group’s capital expenditures are substantially denominated in US Dollar.215 487. 2014.057.733 – – – P =5.255.904.406. Furthermore.957.536 P =2.222 44. interest rates.542 = P223. 27.334 320. respectively. Foreign currency risk Foreign currency risk arises on financial instruments that are denominated in a foreign currency other than the functional currency in which they are measured.897 = – P = – P = P166.1% and 71.205. approximately 29.368 4.684 – = P144.963 – 24. 2013 and 2012.465.827.827 P =4.591.279.2%.222.082.986. respectively.680.786 – – – – – 5.544 P =4.719. employees and counterparties ***Excluding government-related payables Market risk Market risk is the risk of loss to future earnings.872 228.672 P =38.191 33. The Group has transactional currency exposures.887 P =3.334 547.625.079.758 P =8. of the Group’s total sales are denominated in currencies other than the functional currency.897 2.707.963 195.593.578 – 944. 66. 120 .141.705. The Group does not have any foreign currency hedging arrangements as of December 31.109 ***Receivable and payable on demand ***Include nontrade receivables from insurance. The value of a financial instrument may change as a result of changes in foreign currency exchange rates.599.787.346 44.480.773 2013 3 to 12 months 1 to 5 years More than 5 years Total = P166. During the years ended December 31.473.996.9%. to fair values or to future cash flows that may result from changes in the price of a financial instrument.684 130.069 – 190.445. The Group’s market risk originates from its holding of foreign exchange instruments.653. commodity prices or other market changes.348.935 – 8.751.653. 2013 and 2012. 67.808.165.189.076.206.550 – 2. As of December 31.0%.031.684 – 17.751 = P8.591.2% and 25.578 556.857.471.033.284.108. 2014.193 – 12.0%.217 P =17.901 P =133.458.034 – P =7.266 807.689.456.732 4.493 – – – 6.313.684 556. of the Group’s financial liabilities were denominated in US Dollar.975.693 = P8.215 29.Financial Assets Financial assets at FVPL Derivative financial instruments not designated as accounting hedges Loans and receivables Cash and cash equivalents Receivables: Trade receivables Interest receivable Due from related parties* Others ** Refundable deposits Financial Liabilities On-balance sheet Accounts payable and other accrued liabilities*** Due to related parties* Long-term debt Less than one month 1 to 3 months = – P = – P 6.870.686.456.572.377 = P664. It is the risk that the value of a financial instrument will fluctuate due to changes in foreign exchange rates.326 P =3.957.586.438.852. Such exposures arise from sales and purchases in currencies other than the Parent Company’s functional currency.209 = P386.

570 29.643 33.420.864.611 P =166.491.945 227.236.442 =P– 71.413.504 P = 40.277.00 P =5.763.437.849.897 3.217.896 4.131 – P = 359.516.208 123.922.198 27.069 123.917.910 P =5.858.355.672.228.465. Korean won.377.857.447 P = 47.978 – P =95.869 P =51.893.245.672 280.720 to US$1.561.005 709.087.359.859 243.939 P = 40. 2014 and 2013 follow: US dollar Singapore dollar Hong Kong dollar 2014 P =44. Japanese yen. Australian dollar and Euro ****Included under ‘Other noncurrent assets’ account in the consolidated statement of financial position ****Excluding government-related payables ****Included under ‘Other noncurrent liabilities’ in the consolidated statement of financial position Financial Assets Financial Assets at FVPL Derivative financial instruments not designated as accounting hedges Cash and cash equivalents Receivables Refundable deposits** US Dollar Hong Kong Dollar 2013 Singaporean Dollar Other Currencies* Total P =166.528.942 22.287.317 P =51.486.073.691.708 ****Other currencies include Malaysian ringgit.559.339.990 P = 1.253 – P =44.665 224.049 1.939 4.00 = =35.788 P =200.493.839.122 ****Other currencies include Malaysian ringgit.263.00 P . New Taiwan dollar.841 15.857.386.880 – – – 280.406.00 P =33.186.406.195 =P– 231.794.727 to HKD1.068.437.897 3.850 228.995 – P =402.788 P =200.910 P =35.407 P = 19.187 P = 2.087.691.815.531.013.034.471.413.628.00 121 2013 P44.312 39.486.456.559.576.920.555 P =60.073. New Taiwan dollar.260.696 to SGD1.751 P =4.305.277 24.516.124.187 P = 2.447 47.504 – – – 224.579.295.160.994.036.896 =– P =– P =– P P = 2.662.565.749.151 1.00 P =5.340.288.395 P = 22.465. categorized by currency.880 P =35.749 to HKD1. Japanese yen.301.217.255 =P– 21.652 P = 115.624 228.456.672 – – – 29.444 P = 2.751 P =4.190. Financial Assets Cash and cash equivalents Receivables Refundable deposits** Financial Liabilities Financial Liabilities at FVPL Derivative financial instruments not designated as accounting hedges Accounts payable and other accrued liabilities*** Long-term debt Others**** US Dollar Hong Kong Dollar 2014 Singaporean Dollar Other Currencies* Total P = 1. Australian dollar and Euro ****Included under ‘Other noncurrent assets’ account in the consolidated statement of financial position ****Excluding government-related payables ****Included under ‘Other noncurrent liabilities’ in the consolidated statement of financial position The exchange rates used to restate the Group’s foreign currency-denominated assets and liabilities as of December 31.945 P = 227.000 to SGD1.503 Financial Liabilities Accounts payable and other accrued liabilities*** Long-term debt Others**** P =5.395 to US$1.236.170 490.616 171.670.453.849.665 – – – 33.695.377 P = 39.829.018.811 – P = 37.197 – P = 47.436.The tables below summarize the Group’s exposure to foreign currency risk.670.260.662.555 P =60. Korean won. Included in the tables are the Group’s financial assets and liabilities at carrying amounts.559.528.

The following table sets forth the impact of the range of reasonably possible changes in the US dollar . assuming no change in volume of fuel is consumed.414. Commodity hedging allows stability in prices. Commodity price risk The Group enters into commodity derivatives to manage its price risks on fuel purchases.164) P =1. 2014. 2013 and 2012.102) P =1.086. there is no other effect on equity. thus offsetting the risk of volatile market fluctuations. A change in price by US$10. 122 . The Group does not expect the impact of the volatility on other currencies to be material. the price changes on the commodity derivative positions are offset by higher or lower purchase costs on fuel.687.102 2012 =P2 (P = 2) (P = 1..711 P 2013 =P2 (P = 2) (P = 1. Interest rate risk Interest rate risk arises on interest-bearing financial instruments recognized in the consolidated statement of financial position and on some financial instruments not recognized in the consolidated statement of financial position (i.164 Other than the potential impact on the Group’s pre-tax income. 2013 and 2012 (in thousands).258.3 million and = P1.e. 2014.Philippine peso exchange value on the Group’s pre-tax income for the years ended December 31.371.711) = 1. The Group’s policy is to manage its interest cost using a mix of fixed and variable rate debt (Note 18).778. Depending on the economic hedge cover. if any).371. some loan commitments. = P1. Changes in foreign exchange value Change in pre-tax income 2014 P2 = (P = 2) (P = 1. respectively.9 million as of December 31.086.5 million.00 per barrel of jet fuel affects the Group’s fuel costs in pre-tax income by P =1.687. in each of the covered periods.

441.334.558.712.988 US$149.086 P = 6.051 Total (in Philippine Peso) 8.062.074 US$15.043 US$15.544 US$15.197 US$19.696 US$19.211.108 Total (In US Dollar) 192.111.326 US$15.282.747.251.686.749 US$36.249 = 15.889.998 >2-3 years 19.187 >3-4 years 20.384.166.721.328 US$19.770.614.614.745.713 US$16.231 P Total (in Philippine Peso) 1.413 >4-5 years December 31.129 P P = 6.336 P = P7.360.199.345.494 >3-4 years 3.139 =9.819.231.058.243 US$16.333.489 19.117 >1-2 years <1 year 3.380 >5 years 36.361.179 >4-5 years December 31.512.290.024.663.045.340.880 Fair Value The following tables show information about the Group’s long-term debt that are exposed to interest rate risk and are presented by maturity profile (Note 18): .251 US$15.562 US$162.438.921.376 US$16.071 >2-3 years 3.945 US$35.303.490.013.785 Total (In US Dollar) 1.695.161.322.871.203 US$342.855 = 15.912 US$165.795.512 US$18.263 Fair Value 8.496.123 ECA-backed loans from banks (Note 18) Floating rate US Dollar LIBOR Commercial loans from banks (Note 18) Floating rate ECA-backed loans from banks (Note 18) Floating rate US Dollar London Interbank Offering Rate (LIBOR) Commercial loans from banks (Note 18) Floating rate 3.191 US$35.928.300 US$36.884.007 US$105.204. 2014 18.584 >5 years 93.706.987.456 US$35.347.555 >1-2 years <1 year 4.480.720.253.778.684.591 US$86.527 US$16.402 P = P7. 2013 20.942 US$69.441.735.608.813 19.883 US$15.064 US$19.954.285 =8.569.634.480.645.804 US$201.611.950.548.

849. The Group used discount rates of 3% to 4% in 2014 and 2013. The discount curve used range from 2% to 6% as of December 31.223 2013 1.223) P = 183. Fair Value Measurement The carrying amounts approximate fair values for the Group’s financial assets and liabilities due to its short-term maturities except for the following financial asset and other financial liabilities as of December 31. 29.733 P =29.50%) (P =113.099 2012 1.855. derivative financial instruments and AFS investments by valuation techniques: (a) Level 1: quoted (unadjusted) prices in an active market for identical assets or liabilities.751 P =224.486.939.074.059.382 P **Included under ‘Other noncurrent assets’ account in the consolidated statements of financial position. 2014 and 2013: Financial Assets Loans and receivables Refundable deposits* (Note 16) Financial Liabilities Other financial liability Long-term debt** (Note 18) 2014 Carrying Value Fair Value 2013 Carrying Value Fair Value P =123.50% (1. 124 .bearing refundable deposits The fair values are determined based on the present value of estimated future cash flows using prevailing market rates.228 P =33.144) P =91.50%) (P =91. either directly or indirectly. with reference to the Group’s current incremental lending rates for similar types of loans.197 P =228.100.50%) (P = 183.50% (1.857. Long-term debt The fair value of long-term debt is determined using the discounted cash flow methodology.665 P =35.099) P =113. (b) Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable.187 P =121.465.855. The Group uses the following hierarchy for determining and disclosing the fair value of financial assets designated at FVPL.The following table sets forth the impact of the range of reasonably possible changes in interest rates on the Group’s pre-tax income for the years ended December 31.50% (1.088. The methods and assumptions used by the Group in estimating the fair value of financial asset and other financial liabilities are: Noninterest .144 Fair value interest rate risk Fair value interest rate risk is the risk that the value/future cash flows of a financial instrument will fluctuate because of changes in market interest rates.672 =31.088. The Group’s exposure to interest rate risk relates primarily to the Group’s financial assets designated at FVPL. **Includes current portion. 2014.309.662. Changes in interest rates Changes in pre-tax income 2014 1.500.406.939. 2013 and 2012.791. and (c) Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. 2014 and 2013.

and with CIT Aerospace International for the lease of four Airbus A320 aircraft. Commitments and Contingencies Operating Aircraft Lease Commitments The Group entered into operating lease agreements with certain leasing companies which cover the following aircraft: A320 aircraft The following table summarizes the specific lease agreements on the Group’s Airbus A320 aircraft: Date of Lease Agreement Lessors April 2007 Inishcrean Leasing Limited (Inishcrean) GY Aviation Lease 0905 Co. Ltd Wells Fargo Bank Northwest National Assoc.260.The table below shows the Group’s financial instruments carried at fair value hierarchy classification: Financial Assets Financial assets at FVPL (Note 9) Derivative financial instruments not designated as accounting hedges Financial Liabilities Financial liabilities at FVPL (Note 9) Derivative financial instruments not designated as accounting hedges 2014 Level 1 2013 Level 1 Level 2 Level 2 P =– P =– = – P P =166. of Units Lease Expiry 1 October 2016 2 1 1 January 2017 October 2019 October 2019 July 2011 2 February 2018 SMBC Aviation Capital Limited Note: The lease agreements were amended. to effect the novation of lease rights by the original lessors to new lessors as allowed under the lease agreements.897 P =– P =2. which was delivered in 2007. the Group entered into operating lease agreement with Inishcrean for the lease of one Airbus A320. respectively. which were delivered in 2008.559. 30.896 = – P = – P There are no financial instruments measured at Level 3.456. 125 . In 2007. 2014 and 2013. March 2008 March 2008 No. There were no transfers within any hierarchy level of fair value measurements for the years ended December 31. when applicable. Limited APTREE Aviation Trading 2 Co.

The lease term of the aircraft is 12 years with an early pretermination option.991 13. (RBS) for the lease of two Airbus A320 aircraft. which were delivered in March 2012. 2013.688. the Group has five (5) Airbus A330 aircraft under operating lease (Note 13). Lease expenses relating to aircraft leases (included in ‘Aircraft and engine lease’ account in the consolidated statements of comprehensive income) amounted to P =3. advancing the delivery of the two Airbus A320 aircraft to 2011 from 2012.960. Future minimum lease payments under the above-indicated operating aircraft leases follow: Within one year After one year but not more than five years Over five years 2014 Philippine peso US dollar equivalent US$88. 126 . The lease agreement with RBS was amended to effect the novation of lease rights by the original lessors to new lessors as allowed under the existing lease agreements. In July 2011.094.430. the Group entered into a lease agreement with CIT Aerospace International for four Airbus A330-300 aircraft. which were delivered in 2009. Three A330 aircraft were delivered in February 2014.480 = P37.9 million and = P2.245.098 = P2. 2014. wherein three Airbus were delivered in 2014.828 US$797. 2013 and 2012.684.223.829.314.551. the Group entered into an aircraft operating lease agreements with Intrepid Aviation for the lease of two Airbus A330-300 aircraft.503 20.742 14. ticketing stations and certain equipment.279.0 million in 2014.100.496 2013 Philippine peso US dollar equivalent US$73.649 395. the Group entered into an operating lease agreement with RBS Aerospace Ltd. of Units Lease Term February 2012 CIT Aerospace International 4 July 2013 Intrepid Aviation 2 12 years with pre-termination option 12 years with pre-termination option On February 21. The first two A330 aircraft were delivered in June 2013 and September 2013.312.869. the Group entered into operating lease agreements for the lease of two Airbus A320 aircraft.444 Operating Non-Aircraft Lease Commitments The Group has entered into various lease agreements for its hangar.949.588 258.645 P = 35.265 P = 3.012.475.601 2012 Philippine peso US dollar equivalent US$54.833 US$646.042.302 10.475. 2012.637.027.681.00%.202.In March 2008. office spaces. which are scheduled to be delivered from 2014 to 2015.417.184. the Group received As of December 31.942 463. respectively.00% to 10.371 333. On July 19. P =2. These leases have remaining lease terms ranging from one to ten years.413.453.618 307.171.248 US$844. A330 aircraft The following table summarizes the specific lease agreements on the Group’s Airbus A330 aircraft: Date of Lease Agreement Lessors No. In 2014.591.5 million.017. May 2014 and September 2014.723.577 314.610. and two Airbus A320 aircraft which were received in 2012.699.274 17.034.865 = P26. the Group signed an amendment to the operating lease agreements.522. In November 2010.503.380.439 = P3.474.629 13.108. Certain leases include a clause to enable upward revision of the annual rental charge ranging from 5.

948. Service Maintenance Commitments On June 21.163. the Group turned into firm orders its existing options for the seven Airbus A320 aircraft which are scheduled to be delivered in 2015 to 2016. which provided the Group the right to purchase up to five additional option aircraft. 2012. 2013 and 2012.970. 2012. 127 . = P304.568 =1.7 million in 2014. Further. an amendment to the purchase agreement was executed. RollsRoyce will provide long-term Total Care service support for the Trent 700 engines on up to eight A330 aircraft.795. In 2009. On June 22.114 P 487. Ltd.809.300 2. On August 2011. On July 12.A. the Group has entered into service contract with Rolls-Royce Total Care Services Limited (Rolls-Royce) for service support for the engines of the A330 aircraft.242.733. Aircraft and Spare Engine Purchase Commitments In 2007.Future minimum lease payments under these noncancellable operating leases follow: Within one year After one year but not more than five years Over five years 2014 P =127.199 P Lease expenses relating to both cancellable and non-cancellable non-aircraft leases (allocated under different expense accounts in the consolidated statements of comprehensive income) amounted to = P337.619.198 =862. On May 2011.830 799.825 2013 =114. Six of these aircraft were delivered between September 2011 and December 2013.021.620 665. for the maintenance.495 P =2.065.S covering the purchase of ten A320 aircraft and the right to purchase five option aircraft. the Company has entered into an agreement with Messier-Bugatti-Dowty (Safran group) to purchase wheels and brakes for its fleet of Airbus A319 and A320 aircraft.795 P 539. the Group exercised its option to purchase five additional option Airbus A320 aircraft and entered into a new commitment to purchase two Airbus A320 aircraft to be delivered between 2011 and 2014.1 million. 2012.875. In 2010.206 266. These agreements remained in effect as of December 31. the Group entered in a new commitment to purchase firm orders of thirty new A321 NEO Aircraft and ten addition option orders.700. 2014. The contract covers the current fleet. the Group exercised its option to purchase the five additional aircraft.716 P 2012 =108. the Company has entered into a maintenance service contract with SIA Engineering Co. respectively. repair and overhaul services of its A319 and A320 aircraft.692. These aircraft are scheduled to be delivered from 2017 to 2021.110.579. as well as future aircraft to be acquired.8 million and = P263. the Group entered into a purchase agreement with Airbus S.

662.946 Philippine peso equivalent P =11.447 P 1.188 Philippine peso equivalent =10.546 62. 2015 (Notes 22 and 23).101.707 1.4 million and = P34. As of December 31.156.322 =73.259 P =76. 2014 and 2013.1 million. the Group has entered into an agreement with United Technologies International Corporation Pratt & Whitney Division to purchase new PurePower® PW1100G-JM engines for its 30 firm and ten options A321 NEO aircraft to be delivered beginning 2017.458. Capital Expenditure Commitments The Group’s capital expenditure commitments relate principally to the acquisition of aircraft fleet.794. These agreements remained in effect as of December 31. 2012.400.795.982. 2013 and 2012. on the ground that it might prejudice the Group’s position (Notes 7 and 17).769 P 2013 Within one year After one year but not more than five years Contingencies The Group has pending suits. On December 31. 2014 Within one year After one year but not more than five years US dollar US$260. 2014. claims and contingencies which are either pending decisions by the courts or being contested or under evaluation.647. is not disclosed until final settlement.413.380.309.970.206. 2014.869. The agreement also includes an engine maintenance services program for a period of ten years from the date of entry into service of each engine. the Group will take delivery of 9 more Airbus A320. aggregating to P =70.23 billion as of December 31. The CAB assessed the Group with the amount of = P52.On June 28.472.443. respectively. The information required by PAS 37. The amount was settled in January 29. 1 Airbus A330 and 30 Airbus A321 NEO aircraft. These incurred costs are 128 . Supplemental Disclosures to the Consolidated Statements of Cash Flows The principal noncash investing activities of the Group were as follows: a.728 US$1. The above-indicated commitments relate to the Group’s re-fleeting and expansion programs. 31.07 billion and = P68.674 65.718.358 US$1. the outcome of which are not presently determinable.897.103. Contingent Liabilities and Contingent Assets.966 US dollar US$247.852. the Group recognized a liability based on the schedule of pre-delivery payments amounting P =514. Provisions.1 million recognized mainly in the operating and general and administrative expenses.173.

6 million for the acquisition of TAP (Note 7). 2011 November 16. 13 and 25): Date of Registration November 3. 2012 October 4. Importation of capital equipment. The liability was paid the following year. 2011 November 16.Feb 2016 Oct 2012 .Jun 2014 Jan 2012 . 2013 September 13. 2012 February 11. 2013 October 3. spare parts and accessories at zero (0%) duty from date of effectivity of Executive Order (E.July 2017 Sept 2013 .Jan 2020 Feb 2014 .7 million. 2012 January 17. 2012 December 6.Nov 2014 Mar 2012 .Nov 2015 Nov 2011 . Employment of foreign nationals. Cash flows used to acquire TAP after the cash attributable to the business combination of = P256.O.Dec 2018 Feb 2013 . 2014 May 21. The Parent Company paid = P488.) No. 2013 January 17. 2013 July 29. 2013 September 13.2013 April 11.Mar 2014 Dec 2012 .O.May 2018 May 2014 . This may be allowed in supervisory. general manager and treasurer of foreign-owned registered firms or their equivalent shall be subject to the foregoing limitations.Nov 2017 Nov 2011 .Oct 2017 Jan 2014 . Registration with the BOI The Parent Company is registered with the BOI as a new operator of air transport on a pioneer status on one (1) ATR72-500 and sixteen (16) A320 and non-pioneer status for six (6) Airbus A320 aircraft and two (2) Airbus A330 aircraft. 70 and its Implementing Rules and Regulations for a period of five (5) years reckoned from the date of its registration or until the expiration of E. 2011 November 16.Nov 2015 Dec 2011 . Registration Number 2010-180 2011-240 2011-241 2011-242 2011-243 2012-012 2012-013 2012-014 2012-208 2012-261 2012-262 2013-045 2013-089 2013-166 2013-185 2013-186 2013-201 2014-012 2014-037 2014-080 2014-081 ITH Period Jan 2011 .Feb 2020 May 2014 .Jul 2014 Dec 2012 . Under the terms of the registration and subject to certain requirements.Feb 2019 Apr 2013 .May 2018 An ITH for a period of four (4) years for non-pioneer status and six (6) years for pioneer status.recognized under the ‘Construction-in progress’ account. 2010 November 16. b.Sept 2019 Oct 2013 . The president. 129 . technical or advisory positions for five (5) years from date of registration. 32.Feb 2016 Mar 2012 . b. c. amounted to = P231.Dec 2016 Nov 2011 . 2011 January 17. 70. 2014 February 19.8 million. 2014 a. 2014 May 21. the Parent Company is entitled to the following fiscal and non-fiscal incentives (Notes 1. 2012 December 6. 2012 January 17.Sept 2019 Sept 2013 . whichever is earlier.Apr 2019 July 2013 .

or · The net foreign exchange savings or earnings amount to at least US$500. Access to Customs Bonded Manufacturing Warehouse (CBMW) subject to the customs rules and regulations provided the Parent Company exports at least 70% of production output. Simplification of customs procedures for the importation of equipment. any export tax. employment and sales pertaining to the registered project. This may be availed of for the first five (5) years from date of registration but not simultaneously with ITH. if the project meets the prescribed ration of capital equipment to the number of workers set by the BOI. · The ratio of total of imported and domestic capital equipment to the number of workers for the project does not exceed the ratio set by the BOI. 130 . Tax credit equivalent to the national internal revenue taxes and duties paid on raw materials and supplies and semi-manufactured products used in producing its export product and forming part thereof for a ten (10) years from start of commercial operations. 2014 and 2013. Exemption from taxes and duties on imported spare parts and consumable supplies for export producers with CBMW exporting at least 100% of production. i. e. Request for amendment of the date of start of commercial operation for purposes of determining the reckoning date of the 10-year period. Exemption from wharfage dues. · The indigenous raw materials used in the manufacture of the registered product must at least be fifty percent (50%) of the total cost of raw materials for the preceding years prior to the extension unless the BOI prescribes a higher percentage. f. k. Additional deduction from taxable income of fifty percent (50%) of the wages corresponding to the increment in number of direct labor for skilled and unskilled workers in the year of availment as against the previous year. spare parts. g. duties. The Parent Company shall submit to the BOI a quarterly report on the actual investments. The report shall be due 15 days after the end of each quarter.d. Importation of consigned equipment for a period of ten (10) years from date of registration subject to posting of re-export bond.000 annually during the first three (3) years of operation. the Parent Company has complied with externally imposed capital requirements set by the BOI in order to avail the ITH incentives for aircraft of registered activity. h. raw materials and suppliers. j. As of December 31. shall be filed within one (1) year from date of committed start of commercial operation. imports and fees for a ten (10) year period. Avail of a bonus year in each of the following cases but the aggregated ITH availment (regular and bonus years) shall not exceed eight (8) years.

the Group signed a forward sale agreement with a subsidiary of Allegiant Travel Company (collectively known as “Allegiant”). 2015.33. 34. Approval of the Consolidated Financial Statements The accompanying consolidated financial statements were approved and authorized for issue by the BOD on March 24. 131 . 2015. The delivery of the aircraft to Allegiant is scheduled to start on various dates in 2015 until 2016. covering the Group’s sale of six (6) Airbus A319 aircraft. Events After the Statement of Financial Position Date On February 23.

2014. 4751320. Doña Juanita Marquez Lim Building Osmeña Boulevard. 2nd Floor. January 5. fairly state in all material respects the information required to be set forth therein in relation to the basic consolidated financial statements taken as a whole. included in this Form 17-A and have issued our report thereon dated March 24. valid until December 31. The schedules listed in the Index to Consolidated Financial Statements and Supplementary Schedules are the responsibility of the Group’s management. Michael C. Inc. December 28. 2014. 2012. SYCIP GORRES VELAYO & CO.com/ph BOA/PRC Reg. 2015 132 . November 15. 2017 Tax Identification No. 89336 SEC Accreditation No. Inc. 0001. 6760 Ayala Avenue 1226 Makati City Philippines Tel: (632) 891 0307 Fax: (632) 819 0872 ey. 2012. Cebu City We have audited in accordance with Philippine Standards on Auditing the consolidated financial statements of Cebu Air. 2015 INDEPENDENT AUDITORS’ REPORT ON SUPPLEMENTARY SCHEDULES The Stockholders and the Board of Directors Cebu Air. Our audits were made for the purpose of forming an opinion on the basic consolidated financial statements taken as a whole. 2012. and its Subsidiaries (the Group) as at December 31. valid until March 25. These schedules have been subjected to the auditing procedures applied in the audit of the basic consolidated financial statements and. in our opinion. April 11. 160-302-865 BIR Accreditation No. 2015 PTR No. 0664-AR-2 (Group A).SyCip Gorres Velayo & Co. schedules are presented for purposes of complying with Securities Regulation Code Rule 68. valid until November 16. March 26. valid until April 10. 2015. No. 2015. 08-001998-73-2012. Makati City March 24. as amended (2011) and are not part of the basic consolidated financial statements. 2015 SEC Accreditation No. 2014 and 2013 for each of the three years in the period ended December 31. Sabado Partner CPA Certificate No. Thus. 0012-FR-3 (Group A).

not applicable or the information required to be presented is included/shown in the related parent company financial statements or in the notes thereto. Indebtedness of Unconsolidated Subsidiaries and Affiliates* E. Other Long-Term Investments in Stocks and Other Investments* D. have been omitted because they are either not required. Intangible Assets and Other Assets* H. INC. Related Parties and Principal Stockholders (Other than Related Parties) C. Employees. Capital Stock *These schedules. Amounts Receivable from Directors. Accumulated Depreciation G. Long-Term Debt I. AND SUBSIDIARIES INDEX TO CONSOLIDATED COMPANY FINANCIAL STATEMENTS AND SUPPLEMENTARY SCHEDULES CONSOLIDATED COMPANY FINANCIAL STATEMENTS Statement of Management’s Responsibility for Financial Statements Report of Independent Auditors Consolidated Company Statements of Financial Position as of December 31. 2014 and 2013 Consolidated Company Statements of Comprehensive Income for the Years Ended December 31.CEBU AIR. *SGVFS011188* 133 . which are required by SRC Rule 68. Officers. 2014 and 2013 Consolidated Company Statements of Cash flows for the Years Ended December 31. Noncurrent Marketable Equity Securities. Property. 2014 and 2013 Consolidated Company Statements of Changes in Equity for the Years Ended December 31. 2014 and 2013 SUPPLEMENTARY SCHEDULES Report of Independent Auditors on Supplementary Schedules I. Supplementary schedules required by Annex 68-E A. Plant and Equipment F. Financial Assets (Current Marketable Equity and Debt Securities and Other Short-Term Cash Investments) B. Indebtedness to Affiliates and Related Parties* J. Guarantees of Securities of Other Issuers* K.

4C. 4J) III. Map of the relationships of the companies within the group (Part 1. Reconciliation of Retained Earnings Available for Dividend Declaration (Part 1. 4H) V. Schedule of Financial Ratios *SGVFS011188* 134 . Annex 68-C) IV.II. Schedule of all of the effective standards and interpretations (Part 1.

AND SUBSIDIARIES SCHEDULE A .965 37.851 – – – = – P = P2.925.518 P 2.518 P 2.FINANCIAL ASSETS (CURRENT MARKETABLE EQUITYAND DEBT SECURITIES AND OTHER SHORT-TERM CASH INVESTMENTS) DECEMBER 31.212. 2014 .352. Derivative Assets (Fuel Hedge) Various / Equity Securities Various / Private Bonds Various / Government Bonds Various / USD Short-term cash investments Various / PHP Short-term cash investments Name of Issuing Entity and Description of Each Issue = 712.212.333 Amount Shown in the Balance Sheet/ Notes = – P – – – = P75.909.443.925.333 = P2.135 See Notes 8 and 9 of the Consolidated Financial Statements. INC.946 = P37.851 – – – = – P Value Based on Market Quotations at Balance Sheet Date = 712.909.054.145.145.054.909.019 Income Received and Accrued CEBU AIR.

RELATED PARTIES AND PRINCIPAL STOCKHOLDERS (OTHER THAN RELATED PARTIES) DECEMBER 31. 2014 .667 Balance at Beginning of Period = P118. EMPLOYEES.980 Additions = P97.598.562. OFFICERS.722. INC.438.696 Total CEBU AIR. AND SUBSIDIARIES SCHEDULE B AMOUNTS RECEIVABLE FROM DIRECTORS.136 Various employees Name and Designation of Debtor = P20.951 Collections Write Offs =P– Current =P– =P– Noncurrent Balance at End of Period = P41.

887 876.500 – Additions through Business Combination (237.736.217 4.631 90.214) Reclassification CEBU AIR.PROPERTY AND EQUIPMENT DECEMBER 31.053) (42.189.899. Mainframe and Peripherals Ground Support Equipment Leasehold Improvements Transportation Equipment Furniture.135) (16.321 12.908 474.748 675.161 8.650 12.054 209.719.616 6.398) (140.090 1.339 1.769.389.255 1.878 – =3.771.856 – 107.702.909.516.612.933.285 766.775.731.681.191 439.930.293) – – – (222.137 53.630.003 – = P2.758.503.258.594.411. 2014 (198.393 11. Fixtures and Office Equipment Special Tools Communication Equipment Maintenance and Test Equipment Other Equipment Construction In-progress Classification Balance at Beginning P– = – – 350.455.991.233.209.155.575.030 1.634) – (239.676 = P72.412 = P13. Passenger Aircraft Engines Rotables EDP Equipment.071 (3.681.662.785) 116.552.967 of Period Additions = P55.294 963.654.616.141 2.162) (1.925.215 – – – 3.833.253) Others Disposals and 152.103) 628.115.128.589) – (P =24.469.015 475.819.630.411) – – 241.631 81.979 (P =307.767 See Note 13 of the Consolidated Financial Statements.745.504 3.710) (16.125 – (1.105.946 = P65.586 54. INC.524.300.217.542.955.549 14.886 978.482.240.316.400 – 13.913.885 98.091.281 6.467.241.788.939 = P85.988.614.315.618 187.522 22.629.748.166.501 6.569.128) (P =18.053.267 of Period Balance at End .037.993 P 102.121.829 8.123.210.798 6.008.750.598.198 at Cost = P7.766. AND SUBSIDIARIES SCHEDULE E .

986.255 305.466 1. Passenger Aircraft Engines Rotables EDP Equipment.513) (1.138 See Note 13 of the Consolidated Financial Statements. INC.782.101.219.652) (P =10.271) – (69.264.474 11.548 1. AND SUBSIDIARIES SCHEDULE F .054 343.997 Expenses Additions Charged to Costs and = P13.371.363.042) (1.914.398) – – (P =2.178 = P16.591 62.528.390.146.319 3.991.099.646.376 451.743.980.498.060 21.070.442 167.339 – = P20.290.494 473.376 69.988 438.300.785) – (P =91.225.423.277 – = P343.435.071.057 150.704 69.577 6. 2014 (175. Mainframe and Peripherals Ground Support Equipment Leasehold Improvements Transportation Equipment Furniture.984.194.564 64.738.794 – (39.098) Reclassification CEBU AIR.521.777.318 7.213 71.999.649 1.560.483.855 207.803.259 – = P16.720 129.414) – – 278.926.140 50.649 7.432 6.503.072 169.366.265 12.276.623.842 230.547.917 618.422 374.029.009.888) (16.431 of Period Balance at Beginning – – – – – =– P – – – – P– = – – – Additions Charged through Business Combination (319.542.337) – – – (222.281.656 11. Fixtures and Office Equipment Special Tools Communication Equipment Maintenance and Test Equipment Other Equipment Construction in-progress Description = P3.074.546 (3.494.ACCUMULATED DEPRECIATION DECEMBER 31.172 (11.551.550.109.793) 6.525.210) 104.018 566.257.125 of Period Balance at End .652 = P4.584) Others Disposals and 81.836.895.370 9.

2014 .563 5.040. AND SUBSIDIARIES SCHEDULE H .743.937 = P8.00% 1.927.559. INC.735. Total Commercial Loans from banks Export Credit Agency-Backed Loans Title of Issue and Type of Obligation – = P4.927.314 Amount Shown under Caption " Finance Lease Obligation" in Related Balance Sheet = P2.537.00% (US Dollar LIBOR) Various dates through 2023 Maturity Dates 2.137.139 Various dates through 2017 4.00% to 2.847.465.00% to 2.994.291 7.836.712.374 6.354 Amount Shown under Caption "Current Portion of Finance Lease Obligation" in Related Balance Sheet CEBU AIR.576.00% Interest Rates See Note 18 of the Consolidated Financial Statements.784.655 = P29.842 – 1.00% to 6.00% (US Dollar LIBOR) 1.197.00% to 6.LONG-TERM DEBT DECEMBER 31.

Common Stock Title of Issue Number of Shares Authorized 605.140 1. Warrants.290 Others .531. AND SUBSIDIARIES SCHEDULE K CAPITAL STOCK DECEMBER 31.412.340.000 See Note 20 of the Consolidated Financial Statements. Conversion and Other Rights CEBU AIR. Officers and Employees Number of Shares Held by 198.000. 2014 407.953.031 Affiliates 10.330 Balance Sheet Caption and Outstanding as Shown under Related Number of Shares Issued – Number of Shares Reserved for Options. INC.009 Directors.

CEBU AIR, INC. AND SUBSIDIARIES
SCHEDULE OF ALL THE EFFECTIVE STANDARDS AND INTERPRETATIONS

List of Philippine Financial Reporting Standards (PFRSs) [which consist of PFRSs, Philippine
Accounting Standards (PASs) and Philippine Interpretations] and Philippine Interpretations
Committee (PIC) Q&As effective as of December 31, 2014
PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of December 31, 2014

Adopted

Framework for the Preparation and Presentation of Financial
Statements
Conceptual Framework Phase A: Objectives and qualitative
characteristics

P

PFRSs Practice Statement Management Commentary

P

Philippine Financial Reporting Standards

P

PFRS 1
(Revised)

First-time Adoption of Philippine Financial Reporting
Standards
Amendments to PFRS 1 and PAS 27: Cost of an
Investment in a Subsidiary, Jointly Controlled Entity or
Associate

PFRS 2

Not
Adopted

Not
Applicable

P
P

Amendments to PFRS 1: Additional Exemptions for Firsttime Adopters

P

Amendment to PFRS 1: Limited Exemption from
Comparative PFRS 7 Disclosures for First-time Adopters

P

Amendments to PFRS 1: Severe Hyperinflation and
Removal of Fixed Date for First-time Adopters

P

Amendments to PFRS 1: Government Loans

P

Share-based Payment

P

Amendments to PFRS 2: Vesting Conditions and
Cancellations

P

Amendments to PFRS 2: Group Cash-settled Share-based
Payment Transactions

P

PFRS 3
(Revised)

Business Combinations

PFRS 4

Insurance Contracts

P

Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts

P

PFRS 5

Non-current Assets Held for Sale and Discontinued
Operations

P

PFRS 6

Exploration for and Evaluation of Mineral Resources

P

PFRS 7

Financial Instruments: Disclosures

P

Amendments to PFRS 7: Transition

P

Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets

P

P

141

PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of December 31, 2014
Amendments to PAS 39 and PFRS 7: Reclassification of
Financial Assets - Effective Date and Transition

Adopted

Not
Adopted

Not
Applicable

P

Amendments to PFRS 7: Improving Disclosures about
Financial Instruments

P

Amendments to PFRS 7: Disclosures - Transfers of
Financial Assets

P

Amendments to PFRS 7: Disclosures – Offsetting Financial
Assets and Financial Liabilities

P

Amendments to PFRS 7: Mandatory Effective Date of
PFRS 9 and Transition Disclosures

P

PFRS 8

Operating Segments

P

PFRS 9

Financial Instruments

P

Amendments to PFRS 9: Mandatory Effective Date of
PFRS 9 and Transition Disclosures

P

PFRS 10

Consolidated Financial Statements

P

PFRS 11

Joint Arrangements

P

PFRS 12

Disclosure of Interests in Other Entities

P

PFRS 13

Fair Value Measurement

P

Philippine Accounting Standards
PAS 1
(Revised)

Presentation of Financial Statements

P

Amendment to PAS 1: Capital Disclosures

P

Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation
Amendments to PAS 1: Presentation of Items of Other
Comprehensive Income

P

PAS 2

Inventories

P

PAS 7

Statement of Cash Flows

P

PAS 8

Accounting Policies, Changes in Accounting Estimates and
Errors

P

PAS 10

Events after the Balance Sheet Date

P

PAS 11

Construction Contracts

PAS 12

Income Taxes

P

Amendment to PAS 12 - Deferred Tax: Recovery of
Underlying Assets

P

PAS 16

Property, Plant and Equipment

P

PAS 17

Leases

P

PAS 18

Revenue

P

PAS 19

Employee Benefits

P

P

P

142

PHILIPPINE FINANCIAL REPORTING STANDARDS AND
INTERPRETATIONS
Effective as of December 31, 2014
Amendments to PAS 19: Actuarial Gains and Losses,
Group Plans and Disclosures
Employee Benefits
PAS 19
(Amended)

Adopted

Not
Adopted

Not
Applicable

P
P

PAS 20

Accounting for Government Grants and Disclosure of
Government Assistance

PAS 21

The Effects of Changes in Foreign Exchange Rates

P
P

Amendment: Net Investment in a Foreign Operation

P

PAS 23
(Revised)

Borrowing Costs

P

PAS 24
(Revised)

Related Party Disclosures

PAS 26

Accounting and Reporting by Retirement Benefit Plans

P

Separate Financial Statements
PAS 27
(Amended)

P
P

Investments in Associates and Joint Ventures
PAS 28
(Amended)

P

PAS 29

Financial Reporting in Hyperinflationary Economies

PAS 31

Interests in Joint Ventures

P

PAS 32

Financial Instruments: Disclosure and Presentation

P

P

Amendments to PAS 32 and PAS 1: Puttable Financial
Instruments and Obligations Arising on Liquidation

P

Amendment to PAS 32: Classification of Rights Issues

P

Amendments to PAS 32: Offsetting Financial Assets and
Financial Liabilities

P

PAS 33

Earnings per Share

P

PAS 34

Interim Financial Reporting

P

PAS 36

Impairment of Assets

P

PAS 37

Provisions, Contingent Liabilities and Contingent Assets

P

PAS 38

Intangible Assets

PAS 39

Financial Instruments: Recognition and Measurement

P

Amendments to PAS 39: Transition and Initial Recognition
of Financial Assets and Financial Liabilities

P

P

Amendments to PAS 39: Cash Flow Hedge Accounting of
Forecast Intragroup Transactions

P

Amendments to PAS 39: The Fair Value Option

P

Amendments to PAS 39 and PFRS 4: Financial Guarantee
Contracts

P

Amendments to PAS 39 and PFRS 7: Reclassification of

P

143

PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as of December 31.Group and Treasury Share Transactions P IFRIC 12 Service Concession Arrangements P IFRIC 13 Customer Loyalty Programmes P IFRIC 14 The Limit on a Defined Benefit Asset. Restoration and Similar Liabilities IFRIC 2 Members' Share in Co-operative Entities and Similar Instruments P IFRIC 4 Determining Whether an Arrangement Contains a Lease P IFRIC 5 Rights to Interests arising from Decommissioning. Prepayments of a Minimum Funding Requirement P P IFRIC 16 Hedges of a Net Investment in a Foreign Operation P IFRIC 17 Distributions of Non-cash Assets to Owners P IFRIC 18 Transfers of Assets from Customers P IFRIC 19 Extinguishing Financial Liabilities with Equity Instruments P IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine P SIC-7 Introduction of the Euro P 144 . Minimum Funding Requirements and their Interaction P Amendments to Philippine Interpretations IFRIC. 2014 Adopted Not Adopted Not Applicable Financial Assets Amendments to PAS 39 and PFRS 7: Reclassification of Financial Assets – Effective Date and Transition P Amendments to Philippine Interpretation IFRIC–9 and PAS 39: Embedded Derivatives P Amendment to PAS 39: Eligible Hedged Items P PAS 40 Investment Property P PAS 41 Agriculture P Philippine Interpretations IFRIC 1 Changes in Existing Decommissioning.14. Restoration and Environmental Rehabilitation Funds P IFRIC 6 Liabilities arising from Participating in a Specific Market Waste Electrical and Electronic Equipment P IFRIC 7 Applying the Restatement Approach under PAS 29 Financial Reporting in Hyperinflationary Economies P IFRIC 8 Scope of PFRS 2 IFRIC 9 Reassessment of Embedded Derivatives P Amendments to Philippine Interpretation IFRIC–9 and PAS 39: Embedded Derivatives P P P IFRIC 10 Interim Financial Reporting and Impairment IFRIC 11 PFRS 2.

2013 and 2012. P SIC-31 Revenue .Non-Monetary Contributions by Venturers P SIC-15 Operating Leases .Changes in the Tax Status of an Entity or its Shareholders P SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease P SIC-29 Service Concession Arrangements: Disclosures.Barter Transactions Involving Advertising Services P SIC-32 Intangible Assets .12: Scope of SIC 12 P SIC-13 Jointly Controlled Entities .PHILIPPINE FINANCIAL REPORTING STANDARDS AND INTERPRETATIONS Effective as of December 31.Recovery of Revalued Non-Depreciable Assets P SIC-25 Income Taxes .Special Purpose Entities P Amendment to SIC .Incentives P SIC-21 Income Taxes . 2014.Web Site Costs P P Not applicable standards have been adopted but the Group has no significant covered transactions as of and for the years ended December 31.No Specific Relation to Operating Activities SIC-12 Consolidation . 2014 Adopted Not Adopted Not Applicable SIC-10 Government Assistance . 145 .

2014 The table below presents the retained earnings available for dividend declaration as of December 31.544. INC.953.000.989 (3.181 .855) (1. 2014 146 =8.157.790.309.000.602.091 447.000.619.321) (3.000 553.759) (529.CEBU AIR.220.386) 5.953.964.805.319.522.908 P (P =393.330) P =2. as adjusted to available for dividend distribution.102 605.931. AND SUBSIDIARIES SUPPLEMENTARY SCHEDULE OF RETAINED EARNINGS AVAILABLE FOR DIVIDEND DECLARATION FOR THE YEAR ENDED DECEMBER 31. beginning Adjustments: Fair value adjustment arising from fuel hedging gains Unrealized foreign exchange gain Recognized deferred tax assets Treasury stock Unappropriated Retained Earnings.605.451) (1.245.522 1.361.330 3. 2014: Unappropriated Retained Earnings.927.007.878. beginning Add: Net income actually earned/realized during the year: Net income during the period closed to Retained Earnings Less: Non-actual/unrealized income net of tax: Recognized deferred tax asset Less: Dividend declaration during the year Appropriations of Retained Earnings during the year Total Retained Earnings available for dividend declaration as of December 31.

AND SUBSIDIARIES MAP OF THE RELATIONSHIPS OF THE COMPANIES WITHIN THE GROUP . INC.147 CEBU AIR.

39 2. AND SUBSIDIARIES SCHEDULE OF FINANCIAL RATIOS FOR THE YEARS ENDED December 31.20 2.11 1.53 4. 2014 and 2013 The following are the financial ratios that the Group monitors in measuring and analyzing its financial soundness: Financial Ratios Liquidity Ratios Current Ratio Quick Ratio 2014 2013 35% 24% 55% 44% Capital Structure Ratios Debt-to-Equity Ratio (x) Net Debt-to Equity Ratio (x) Adjusted Net Debt-to Equity Ratio (x) Asset to Equity Ratio (x) Interest Coverage Ratio (x) 1.57 1.CEBU AIR.39 1.58 3. INC.10 1.78 Profitability Ratios EBITDAR Margin EBIT Margin Pre-tax core net income margin Return on asset Return on equity 24% 8% 6% 1% 4% 21% 6% 5% 1% 2% 148 .99 3.

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