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Cebu Pacific [CEB 36.90, down 0.3%; 24% avgVol] [link] reported that it flew 13.91 million passengers in H1 2025, representing a year-on-year increase of 20.8%. The budget carrier disclosed that domestic passenger volume grew by 20.4% to 10.36 million, while international passenger traffic went up by 22.3% to 3.55 million. When total passenger volume is divided by the number of seats available, CEB said the seat load factor (SLF) increased by 0.1 percentage point to 85.4% in the first 6 months, even as seat capacity grew by 20.6% to 16.28 million. The SLF measures how efficiently a carrier fills its available seating capacity. CEB President and Chief Commercial Officer Xander Lao said such a performance “reflects the continued strength of air travel demand within our network.” Moving forward, Mr. Lao said “[c]apacity for the second half of June was reduced due to the commencement of the leaner season.” “This also aligns with ongoing proactive management of engine and supply chain issues and as such we would expect capacity growth levels to stay at similar levels through the third quarter before rising again in the fourth quarter,” he added.
MB bottom-line: All of these metrics are great, but the “praise release” ignores the fundamental issue, which is CEB’s cratering profitability. It’s not drawing dead. It’s not losing money, but it's earning far less than it used to, for a variety of reasons, despite these legitimate improvements in operations. That said, the stock is up significantly off its lows in January 2024 and the return to those lows that it experienced in January 2025. It’s even 10% above its COVID-crash low. Operationally, these results are nearly perfect. They added capacity and still managed to fly planes that were (on average) fuller than before. Financially, though, P0.5 billion in quarterly profit on P30 billion in revenues doesn’t leave much room for error. I think CEB (and airlines in general) are a great example of the “bell curve meme” in action: the only people who invest in airlines are the drooling goobers and the cloaked wizards at either end of the curve. The vast majority of investors are probably best served looking elsewhere.
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