Cebu Pacific reports a loss for 4Q2013 but strengthens its position in domestic Philippines market

Cebu Pacific Air incurred a net loss of PHP152 million (USD3.5 million) in 4Q2013, marking its second consecutive quarter in the red. The Philippine carrier saw its full year profit drop by 86% to only PHP512 million (USD12 million), providing yet another indication of the challenging market conditions facing Southeast Asia's low-cost carrier sector.

Profits at every publicly traded LCC in Southeast Asia were down in 4Q2013 and are likely to fall further in 2014 due to overcapacity and intensifying competition. But Cebu Pacific's medium to long term outlook remains bright as it enjoy a leading position and first mover advantage in its home market

Cebu Pacific has a particularly strong and improving position in the Philippine domestic market. Of the five main domestic markets in Southeast Asia, only the Philippine market is now seeing some rationalisation of competition and capacity. The acquisition of Tigerair Philippines will boost Cebu's market share at the same time as reducing competition - but there will be some short-term pain as Tigerair Philippines is expected to remain unprofitable for at least another year.