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Cebu Air, Allegiant Travel aircraft purchase talks collapse

January 2, 2013 1:15pm

Gokongwei-led Cebu Air Inc., operator of budget airline Cebu Pacific, on Wednesday said the deal to sell its 10 Airbus A319 aircraft to US-based low-cost carrier operator Allegiant Travel Company has fallen through.  
 
In a disclosure to the Philippine Stock Exchange, Cebu Pacific said talks between Allegiant Travel, owner of Allegiant Air which serves domestic tourism routes in the US, were terminated after the two parties failed to agree on certain terms of the transaction. 
 
“It’s unfortunate that we were not able to finalize the sale agreement,” Cebu Pacific president and chief executive officer Lance Gokongwei noted in the disclosure. 
 
“We have been unable to agree on certain conditions that would have made the transaction workable, both operationally and financially,” he added. 
 
Last week, Allegiant announced the cessation of the deal with Cebu Pacific after the former was “unable to come to terms on some of the economic provisions of the transaction.”
 
“Our disciplined approach in asset purchases is a core competency that we will not compromise,” Allegiant president Andrew Levy was quoted by The Wall Street Journal on Dec. 28 as saying in a statement. 
 
Even without the deal, Gokongwei claimed optimism about the near-term growth prospects of Cebu Pacific.
 
“Without the A319 sale, our current fleet expansion plan, which includes delivery of eight Airbus A320 aircraft over the next 2 years will enable us to grow seat capacity by an average of 10-15 percent per year,” Gokongwei said.
 
This is still “in line with our demand outlook for air travel in the Philippines, allowing Cebu Pacific the flexibility to accommodate the growing demand for air travel in the Philippines,” he claimed. 
 
Last July, Cebu Pacific publicly announced the potential sale  of its airbuses to Allegiant. 
 
Cebu Pacific is the largest carrier in the Philippines, offering low-cost services to the most number of destinations and routes within the archipelago. — SOA/VS, GMA News
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