Philippine Tycoon Gokongwei Eyes Post-Pandemic Recovery With $1.3 Billion Bet On Airline, Hotels And Banks (2024)

Billionaire Lance Gokongwei is spending 73.6 billion pesos ($1.3 billion) this year to ready his sprawling conglomerate to reap the fruits of a post-pandemic recovery. His family’s JG Summit is stepping up investments in each of its major businesses—airline, hotels and banking—to tap resurgent demand in the Philippines and key markets across Southeast Asia.

More than half of the planned capital expenditure will go toward buying new aircraft for, Cebu Air, the Philippines’ largest airline, which witnessed a more than four-fold increase in passenger traffic last year as domestic and international travel resumed following the relaxation of movement restrictions around the region. The rest of the spending will be on expanding the conglomerate’s banking footprint and accelerating property development.

Gokongwei faced the worst crises in JG Summit’s 33-year history as the pandemic grounded almost the entire fleet of Cebu Air, which accumulated net losses of about 60 billion pesos ($1.1 billion) in the three years since the Covid-19 outbreak. While the airline remains in the red, losses have narrowed significantly in 2022 (Cebu Air is due to announce full-year results later this month) and analysts expect the company to return to the black this year amid a tourism boom.

“Covid lasted longer than we had anticipated but we talked to our banks and our suppliers and told them [that the airline] can get through this without declaring bankruptcy,” Gokongwei, 56, chairman of Cebu Air, tells Forbes Asia on the sidelines of the Wharton Global forum held in Singapore earlier this month. Several Asian airlines declared bankruptcy during the pandemic, including billionaire Lucio Tan’s Philippine Airlines, which has turned profitable since exiting insolvency in December 2021.

Cebu Air—which runs budget carrier Cebu Pacific—raised fresh capital of $250 million by issuing convertible bonds to the International Finance Corp. and Indigo Partners during the depth of the pandemic in 2021, and convinced creditors and suppliers to agree to longer payment terms. “Since we were able to find a route that was acceptable to everybody, it raised the platform of credibility for us to bounce back stronger,” Gokongwei says.

“We’re growing [Cebu Air] in a very manageable fashion.”

The airline survived the pandemic by slashing jobs, downsizing operations and shelving expansion plans. Now, Cebu Air is ready to soar again. It plans to lease five new aircraft on top of the 10 new Airbus Neo planes that will be delivered this year.

With the new deliveries and lease expiry on some aircraft, Cebu Air will have a fleet of 76 planes by the end of this year, up from 70 in 2022. To support the expansion, it has earmarked 42 billion pesos for capital expenditure this year. “Given the speed at which local and global travel is recovering, Cebu Air’s proactive refleeting is not only strategic, but necessary,” Jacqui de Jesus, an analyst at Maybank Securities in Manila, says via email. The expansion will help the budget carrier increase flights and boost operating cashflow, she adds.

Cebu Air transported 14.8 million passengers to domestic and international destinations in 2022, up from 3.4 million the previous year, but below the pre-pandemic peak of 22.5 million passengers set in 2019. “We’re growing [Cebu Air] in a very manageable fashion,” Gokongwei, who is also president and CEO of JG Summit, says. That’s a stark contrast when Forbes Asia previously interviewed him in 2020, when the airline was operating at 2% capacity and losses were mounting.

With the airline recovering, Gokongwei in December stepped up as chairman and relinquished his roles as the company’s president and CEO. Cebu Air promoted chief commercial officer Alexander Lao to president and named Michael Szucs—an industry veteran who has been advising the management for the past seven years—as CEO. The revamp allows Gokongwei to step back and focus on repositioning the broader family business empire for growth.

Since revamping Cebu Pacific, which he has helmed since its inception in 1996, Gokongwei has made big moves in the banking industry. In January, the group, through Robinsons Retail, bought Singapore sovereign wealth fund GIC’s 4.4% stake in Bank of Philippine Islands (BPI)—the country’s oldest lender—for 19.7 billion pesos, four months after agreeing to merge Robinsons Bank with bigger rival BPI in exchange for shares in the merged entity. The Gokongwei group will own over 10% of the combined entity once the merger is completed later this year, making it the second-largest shareholder in BPI next to Ayala Corp. “This signifies our confidence in the Philippine economy and the shared value we’re going to create at BPI,” Gokongwei says.

Investors view the merger positively. “BPI has among the most developed digital banking platforms in the Philippines, which in our view would further be enhanced and expanded by integrating into JG Summit’s well-developed consumer-centric ecosystem of suppliers, tenants and customers,” Maybank’s De Jesus says.

To support the group’s expansion plans, Gokongwei has been strengthening the balance sheet of JG Summit, which Maybank says had 26.5 billion pesos in cash as of September 2022. Last July, the company sold 36 million shares of Manila Electric for 12.4 billion pesos, paring its stake in the Philippines’ largest electric utility to about 26%. The opportunistic sale was meant to shore up the group’s coffers in case the pandemic drags on, Gokongwei says, adding that there are no plans to further trim the stake.

Elsewhere, JG Summit’s real estate arm Robinsons Land is busy building new shopping malls, office buildings, hotels and residential projects. The company’s net profit climbed 21% to 9.75 billion pesos in 2022 from a year earlier, surpassing pre-pandemic levels, bolstered by housing sales and soaring hotel revenue, the fastest-growing segment.

“This growth looks sustainable, it’s not just pent up demand.”

After completing three new hotels last year, Robinsons Hotels this month opened the 32-story Westin Manila in downtown Ortigas, north of the Makati financial district. Managed by U.S. hotel chain Marriott, the skyscraper boasts of 303 rooms, including 57 suites. It adjoins a 50-story residential tower with 344 private apartments, 85% of which have already been sold by developer Robinsons Land.

With over 4,000 rooms in 26 properties across the country, Gokongwei believes Robinsons Hotels will continue to benefit from the country’s post-pandemic tourism boom. “This growth looks sustainable, it’s not just pent up demand,” he says.

JG Summit, one of the biggest and most diversified conglomerates in the Philippines, also has interests in food manufacturing, petrochemicals and telecommunications. The business was founded by the late billionaire John Gokongwei in 1954 as a corn starch factory. After their father passed away in 2019, Lance and his sisters—Robina, Lisa, Faith, Hope and Marcia—inherited his fortune. The siblings had a combined net worth of $3.1 billion, placing them at No. 4 on the most recent list of the Philippines’ 50 Richest published last September.

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Philippine Tycoon Gokongwei Eyes Post-Pandemic Recovery With $1.3 Billion Bet On Airline, Hotels And Banks (2024)

FAQs

Philippine Tycoon Gokongwei Eyes Post-Pandemic Recovery With $1.3 Billion Bet On Airline, Hotels And Banks? ›

Philippine Tycoon Gokongwei Eyes Post-Pandemic Recovery With $1.3 Billion Bet On Airline, Hotels And Banks. B illionaire Lance Gokongwei is spending 73.6 billion pesos ($1.3 billion) this year to ready his sprawling conglomerate to reap the fruits of a post-pandemic recovery.

Who is Gokongwei owner of Robinsons? ›

Lance Gokongwei
OccupationBusinessman
TitleHead of the Gokongwei Group President and CEO of JG Summit Holdings Inc. Chairman of Robinsons Retail Holdings, Vice Chairman of Manila Electric Company Chairman of the Gokongwei Brothers Foundation, Inc.
ParentsJohn Gokongwei (father) Elizabeth Yu Gokongwei (mother)
4 more rows

What are the businesses of Lance Gokongwei? ›

He is the Chairman of Robinsons Supermarket Corporation, Universal Robina Corporation, Robinsons Land Corporation, Altus Property Ventures, Inc., JG Summit Olefins Corporation, and Robinsons Bank Corporation. Effective January 1, 2023, he became the Chairman of Cebu Air, Inc.

What is the successful story of John Gokongwei? ›

John Gokongwei started his career at age 15 selling peanuts from a bicycle. Through hard work traveling between islands selling various goods, he was able to build his business. After World War 2, he had opportunities to import goods from the US to sell at high profits.

How did Lance Gokongwei become rich? ›

Lance Gokongwei (pictured) and his siblings, Robina, Lisa, Faith, Hope and Marcia, inherited their fortune from their late father John Gokongwei Jr. Their combined fortune is derived largely from stakes held in JG Summit, which has interests in airlines, telecom, banking, food, power and property.

What hotel does Gokongwei own? ›

Go Hotels is a Philippine chain of budget hotels owned and operated by Robinsons Land Corporation, a subsidiary of JG Summit Holdings conglomerate of Filipino-Chinese entrepreneur John Gokongwei Jr. As of January 2021, the company has 17 hotels, all located in the Philippines.

Which bank is owned by Gokongwei group? ›

The creation of GoTyme Bank was planned in 2021 by the Gokongwei Group as a joint venture with South African-owned TymeBank. The Gokongwei Group secured a certification to operate a digital bank from the Bangko Sentral ng Pilipinas in 2022. On October 20, 2022, GoTyme Bank was formally launched.

How rich is Gokongwei? ›

Gokongwei, whose control of JG Summit had helped make him Philippines' third-wealthiest person, had a net worth of $5.8 billion at the time of his death.

Is Cebu Pacific Filipino owned? ›

The Cebu Pacific Group is a Filipino airline group headquartered in Manila that operates subsidiary low cost-carriers; Cebu Pacific and Cebgo (formally Tigerair Philippines). The group aims to create the largest budget airline network between Asia and the Philippines.

What are the struggles of John Gokongwei? ›

The family fortune was lost after the death of his father in 1939 when Gokongwei was 13 years old and World War II (1939–1945) was just broke out. During these difficult years, he had to make ends meet by initially supporting his family by peddling items along the streets of Cebu from his bicycle.

What is the business strategy of John Gokongwei? ›

Most marketers practice market-driven strategies, i.e., satisfying customers to gain market shares. John Gokongwei, on the other hand practiced market-driving strategies— focusing on tapping noncustomers to gain market penetration, revealing his consistent pioneering spirit in driving new categories.

What is the nickname of John Gokongwei? ›

If you ask any Filipino to name the country's top business tycoons, John Gokongwei Jr. will undoubtedly make the list each time. We look up to Mr. John, as he was fondly called, for many reasons.

Who is the owner of Cebu Pacific? ›

JG Summit Holdings

Who is the owner of Blend 45? ›

JG Summit Holdings founder and Chairman Emeritus John Gokongwei Jr. enjoying a cup of his first successful coffee product, Blend 45.

Who owns Robinsons group? ›

Robinsons Retails Holdings Inc. was founded by the late entrepreneur John Gokongwei Jr. back in 1980. What started as a small department store in Robinsons Place Manila, now stands as one of the largest multi-format retailers in the country.

Who is the owner of Gokongwei Brothers Foundation? ›

Our Foundation

Gokongwei brothers John, Johnson, Henry, and James, established the Gokongwei Brothers Foundation in 1992 with the goal of having a lasting impact on education in the Philippines.

Who is the founder of Robinsons Land Corporation? ›

The company was founded by John L. Gokongwei, Jr. on June 4, 1980 and is headquartered in Quezon City, Philippines.

Who bought Robinsons Bank? ›

Merger Information

The Bank of the Philippine Islands (BPI) and Robinsons Bank Corporation have agreed to a merger and have secured all regulatory approvals, with BPI emerging as the surviving entity effective January 1, 2024.

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