This story is part of Forbes’ coverage of Philippines’ Richest 2023. See the full list here.
As Covid-19 worries recede, Philippine conglomerate JG Summit Holdings, led by billionaire Lance Gokongwei, is back in expansion mode. The company has planned capital expenditure of 73 billion pesos ($1.3 billion) this year, a 3% increase from what it spent during 2022 and the highest amount in the past four years. “We envision JG Summit to solidify its position as one of the top Philippine conglomerates in terms of market capitalization,” says Gokongwei, president and CEO of JG Summit, by email in July.
More than half of the capex will be used for buying new aircraft for JG Summit’s listed subsidiary Cebu Air, the owner of carrier Cebu Pacific. It will receive ten new Airbus jets this year, which should increase its fleet size to 76 aircraft, up from 70 last year. “We want it to remain as the leading airline in the Philippines with a strong regional presence, capitalizing on the growth of the Philippines’ economy and growing middle class, its strategic location to serve key destinations in Asia within a four-hour flight radius … and the country’s archipelagic geography to capture domestic travelers,” says Gokongwei.
In the first quarter of 2023, Cebu Air saw revenue triple from the same period in 2022, and flew back into the black for the first time since the pandemic with 1.1 billion pesos in net profit. A year earlier, it suffered a net loss of 7.6 billion pesos. Rachelleen Rodriguez, a transportation analyst at Maybank Securities Philippines, says it’s right to spend the heaviest on aircraft. “It was not only strategic but also necessary for Cebu Air to pursue a re-fleeting program,” she says.
Cebu Pacific received a 188-seat A320neo aircraft in June from Airbus to address the growing demand for air travel.
Xinhua News Agency/Getty Images
Last December, Gokongwei stepped back from the day-to-day operations of Cebu Air and became its chairman. This, he says, “would entail overseeing strategy as we pivot back to sustainable growth and profitability.” Meanwhile, Gokongwei and five other tycoons formed a consortium that proposed spending 267 billion pesos to revamp Manila’s congested Ninoy Aquino International Airport. But their bid was rejected by the government in July.
Lance Gokongwei (left) and his late father John Gokongwei Jr. in 2013.
Jay Directo/Getty Images
Apart from aviation, JG Summit has interests in food and beverage, manufacturing, real estate, retail, banking, telecoms and other sectors. JG Summit says some capex will be allocated for expansions in banking and real estate. In January, through subsidiary Robinsons Retail Holdings Inc. (RRHI), it bought an additional 4.4% stake in Bank of the Philippine Islands, taking its holding in the country’s third-largest bank (by assets) to 10.1%. RRHI paid 19.7 billion pesos for the stake, which made the Gokongwei family the bank’s second-biggest shareholder.
Maybank Securities Philippines expects JG Summit’s revenue to reach 311 billion pesos in 2023, 3% higher than last year’s 301.9 billion pesos. The brokerage pegs net profit this year at 19.3 billion pesos, compared with only 650.6 million pesos in 2022 as Cebu Air has turned profitable. Despite these moves, the net worth of Gokongwei and his siblings dropped slightly to $3 billion this year, putting the family of the late John Gokongwei Jr. at No. 7, down three spots from a year ago.