Cebu Pacific Acquires Majority Stake in 1AV Groundhandler

Cebu Pacific Air is set to enhance its operational capabilities by acquiring an additional 20% stake in 1Aviation Ground Handling Services (1AV) through a strategic debt-to-equity conversion. This move, announced in a stock market filing on October 29, will increase Cebu Pacific’s ownership in 1AV from 40% to 60%, positioning the airline for more integrated and efficient ground handling operations.

As part of the agreement, Cebu Pacific will convert PHP113 million (approximately USD1.94 million) in outstanding debts into equity for this additional stake. This conversion is part of a broader strategy to enhance 1AV’s financial stability, allowing the ground handling service provider to reduce its debt load. The deal involves the conversion of loans totaling PHP150 million (USD2.57 million), with Cebu Pacific’s contribution being PHP113 million. Other creditors, including Philippine Airport Ground Support Solutions Inc. (PAGSS) and Jefferson G Cheng, will also convert their outstanding loans into equity, facilitating a stronger financial foundation for 1AV.

1AV is recognized as one of the Philippines’ leading ground handling service providers, operating across 34 airports nationwide and employing over 6,200 personnel. The company plays a vital role in supporting not only Cebu Pacific but also other airlines such as Sunlight Air (2R, Manila Ninoy Aquino International) and PAGSS, particularly at Manila’s Ninoy Aquino Airport, where it offers a range of essential ground services.

The debt-to-equity transaction is expected to bolster 1AV’s financial health, providing it with the necessary capital to operate more effectively. According to the filing, this conversion will significantly enhance Cebu Pacific’s influence over 1AV’s management, allowing for better integration of ground handling services with the airline’s operations. The strategic alignment aims to reduce operational costs while simultaneously improving service quality, a critical factor in enhancing customer satisfaction and loyalty.

This acquisition follows Cebu Pacific’s recent strategic move to purchase a 100% stake in AirSWIFT (T6, Manila Ninoy Aquino International) for USD31 million, indicating the airline’s aggressive growth strategy in the competitive Philippine aviation market. By consolidating its position in ground handling services, Cebu Pacific aims to streamline its operations, making it more agile and responsive to market demands.

The agreement, while promising, is still subject to approval from the Philippines Securities and Exchange Commission. Once finalized, this deal will not only solidify Cebu Pacific’s control over ground handling services but will also enhance its ability to manage costs effectively and improve overall service delivery.

As Cebu Pacific continues to navigate the challenges of the post-pandemic travel landscape, this acquisition represents a strategic step towards operational resilience and enhanced competitiveness. By increasing its stake in 1AV, Cebu Pacific is well-positioned to leverage improved ground handling efficiencies, ensuring that it can deliver high-quality service to its passengers across its expanding network.

This move is part of Cebu Pacific’s broader strategy to strengthen its operational capabilities and ensure a seamless travel experience for its customers, ultimately aiming to contribute positively to the recovery and growth of the Philippine aviation sector.

Sources: AirGuide Business airguide.info, bing.com, ch-aviation.com