Cebu Pacific’s (CEB) plan to acquire its smaller peer, AirSwift, might be value accretive to the company but its impact will likely just be a drop in the bucket, a market observer said.
Stockbroker Abacus Securities Corp. said the plan to acquire the much smaller AirSwift is seen to be “strategic” for Cebu Pacific “as it would be able to penetrate the famous El Nido market in Palawan, where AirSwift is the only carrier with a direct flight from Manila.”
“The acquisition isn’t expected to be a large one for Cebu Pacific given its scale and AirSwift’s fleet of only five aircraft with an average age of six years. So while this should be positive for CEB, it’s unlikely to mark the stock move in a big way,” Abacus told investors in a note.
Cebu Pacific said it is currently engaged in “exploratory talks” with AirSwift owner Ayala Land Inc., though it was quick to add that “nothing definitive” has been agreed.
“Cebu Pacific is always on the lookout for opportunities to grow and expand its network, including partnership with other parties. Cebu Pacific’s track record of success means other businesses do prefer partnering with Cebu Pacific when it comes to aviation initiatives,” Abacus said.
AirSwift operates a fleet of ATR 42-600 and 72-600 which it uses to ferry passengers going to El Nido, Cebu, Boracay and Bohol.
Last year, AirSwift ferried 355,458 passengers, up 68 percent from last year, according to data from the Civil Aeronautics Board.
The airline was originally founded for chartered flights for guests going to the resorts of what was formerly known as Ten Knots Resorts Development Corp., now El Nido Resorts, in Northern Palawan.
The Ayala Group acquired Ten Knots in 2012.
