Cebu Pacific operator eyes P16B in recapitalization to fund reboot

CEBU Air Inc., operator of Cebu Pacific, may not see operations of its airline business returning to pre-pandemic levels this year but now prepares for another round of fund-raising activities that may provide it with another P16 billion in fresh capital for its expected reopening of the market.

Trina E. Asuncion, the company’s director for investor relations, financial planning and analytics, said the group is tapping the debt market through syndicated loans with commercial banks. The plan is to raise between P12.5 billion and P16 billion in fresh capital.

Asuncion said commercial banks have expressed their support for this activity, as Cebu Pacific’s net debt to equity ratio is “quite low.”

She added that the company will “hopefully” close this within the quarter.

Asuncion noted this is part of the company’s recapitalization efforts, which also includes its P12.5-billion stock rights offering. These, she said, will provide the company “cash for the runway” as it focuses on implementing longterm strategies.

Candice Iyog, a vice president at the company, noted that these efforts will help the company gear up for its expected revitalization of the market.

She said her group is now operating at 23 percent of its pre-covid network, flying to 32 local destinations and five international cities. This is a jump from last year’s 16-percent network operations.

Iyog noted that her group may not see its operations returning to prepandemic levels this year.

“We won’t see recovery to precovid levels in 2021. But we do want to be agile enough to scale up operations should the lifting of these restrictions start to show people travel again. We want to be able to pivot quickly and address the demand,” she said.

She noted that the earliest possible time the airline will return to normal operations may be in 2022.

“But we don’t know for sure yet. What we can see, though, is we are seeing more people searching for flights. You will see it in terms of how fast we are now growing the network,” she said.

Currently, only half of Cebu Pacific’s 73 planes are flying. The other half are parked in Australia.

Cebu Air Inc. reported an operating loss of P13.72 billion in the first nine months of 2020, a 241.7-percent nosedive from the P9.69-billion operating income in the same period of 2019.