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Thursday, May 25, 2006
AEV holds on to transport arm despite loss
Despite the losses it has incurred in its transport business, the Aboitiz Equity Ventures (AEV) has not given up hope on one of the company’s core businesses.
“No. We will not let it (the business) go. We are going to continue to look for ways to improve our efficiency, especially with regard to fuel usage,” AEV president and chief executive officer Jon Ramon Aboitiz said.
In 2005, Aboitiz Transport System (ATS) incurred a loss of P126 million, 30 percent more than the loss it suffered in 2004.
Costly fuel
High fuel costs and the inability to fully pass these on to end-users brought down the operating margins for the business, Aboitiz said.
ATS—which include Superferry, Supercat and Cebu Ferries—contributed P34 million, or only one percent to AEV’s total profits in 2005.
Aboitiz said ATS’ passage and freight volumes were also lower versus the first quarter of 2004 because of a smaller fleet, stiffer competition and weaker market that has resulted in a 12-percent drop in revenue.
“Higher fuel costs squeezed away ATS’ margins while stiff competition did not allow the company to recover all of the increases in its costs,” he said.
Cutting cost
“In 2005, ATS focused on cutting costs wherever possible, reducing its fleet by selling its less efficient vessels, even at the cost of sacrificing market share for higher operating income,” he said.
However, the efforts to improve efficiency were still not enough to offset the burden of rising fuel prices, with a market incapable of absorbing all the cost increases in a timely manner through rate adjustments, he said.
“Competition from airline promos, buses and short ferry roll-on and roll-off operators also put pressure on passage rates,” Aboitiz said.
Supercat had temporarily stopped plying the Cebu-Bohol and Cebu-Dumaguete routes due to decreasing volume of passengers.
Edgardo Nicolas of Supercat told Sun.Star Cebu earlier that the increasing number of direct flights from Manila to some tourist destinations, such as Bohol, affected their passenger volume.
Supercat reduced the number of its vessels to five from 14. (JBN)
For Bisaya stories from Cebu. Click here. (May 25, 2006 issue)
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