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Wednesday, Jun 04, 2025
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Cebu Pacific's Aircraft Acquisition Amid US-EU Trade Tensions
The Philippine airline navigates potential impacts from new US tariffs on its significant Airbus deal.
Cebu Pacific, the Philippines' leading low-cost airline, is currently evaluating the implications of the United States' recent tariff policy on its ₱1.4 trillion agreement to purchase aircraft from Airbus SE. This acquisition, finalized in October 2022, is marked as the largest in Philippine aviation history, entailing an order for up to 152 A321neo aircraft, in collaboration with Pratt & Whitney for engine supply.
The airline is scheduled to commence receiving jets from Airbus by 2029. Cebu Pacific's President and Chief Commercial Officer, Xander Lao, conveyed that Airbus has not yet communicated any adverse effects stemming from the tariff adjustments.
"It's a developing situation...So let's see what happens.
But so far, we've not seen any impact to deliveries or operations," Lao stated.
In a significant policy shift, the U.S. government, under President Donald Trump, announced a new tariff regime that includes a baseline ten percent tariff on goods imported from most countries, impacting various sectors including aviation.
The announcement also included plans for higher reciprocal tariffs on nations with which the U.S. has a trade deficit.
U.S. aviation industry representatives have expressed concerns regarding potential delays in aircraft shipments, although such deliveries are typically scheduled years ahead of time.
Given that Airbus is based in Europe, the tariffs could influence the global aviation market, especially with further reciprocal tariffs set to be reimplementation in July.
Despite these uncertainties, Lao assured that Cebu Pacific has contractual safeguards included in their agreements concerning the aircraft orders.
"We do have contractual protections in our contracts for those orders.
So we're not worried at this time," he added.
Traffic volume for Cebu Pacific has shown significant growth, with a 26 percent increase in the first quarter of the year; the airline reported handling seven million passengers, up from 5.5 million during the same period last year.
In 2024, the airline achieved the delivery of 17 aircraft, ending the year with a fleet totaling 98. An additional seven aircraft deliveries are anticipated in the current year, pushing the fleet beyond the 100-aircraft milestone.
Cebu Pacific operates a comprehensive network that includes 37 domestic and 26 international destinations across Asia, Australia, and the Middle East.
The airline is scheduled to commence receiving jets from Airbus by 2029. Cebu Pacific's President and Chief Commercial Officer, Xander Lao, conveyed that Airbus has not yet communicated any adverse effects stemming from the tariff adjustments.
"It's a developing situation...So let's see what happens.
But so far, we've not seen any impact to deliveries or operations," Lao stated.
In a significant policy shift, the U.S. government, under President Donald Trump, announced a new tariff regime that includes a baseline ten percent tariff on goods imported from most countries, impacting various sectors including aviation.
The announcement also included plans for higher reciprocal tariffs on nations with which the U.S. has a trade deficit.
U.S. aviation industry representatives have expressed concerns regarding potential delays in aircraft shipments, although such deliveries are typically scheduled years ahead of time.
Given that Airbus is based in Europe, the tariffs could influence the global aviation market, especially with further reciprocal tariffs set to be reimplementation in July.
Despite these uncertainties, Lao assured that Cebu Pacific has contractual safeguards included in their agreements concerning the aircraft orders.
"We do have contractual protections in our contracts for those orders.
So we're not worried at this time," he added.
Traffic volume for Cebu Pacific has shown significant growth, with a 26 percent increase in the first quarter of the year; the airline reported handling seven million passengers, up from 5.5 million during the same period last year.
In 2024, the airline achieved the delivery of 17 aircraft, ending the year with a fleet totaling 98. An additional seven aircraft deliveries are anticipated in the current year, pushing the fleet beyond the 100-aircraft milestone.
Cebu Pacific operates a comprehensive network that includes 37 domestic and 26 international destinations across Asia, Australia, and the Middle East.
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