Philippines’ Cebu Pacific plans $250mn share issue

Cebu Pacific Air (5J, Manila Ninoy Aquino Int’l) parent Cebu Air Inc. will stage a USD250 million share offering on the Philippine Stock Exchange from February 26 to March 4 to help the loss-making carrier pay debts, payments to lessors, and passenger refunds, the company announced in a disclosure. “Due to [the Covid-driven] exceptional change in market conditions and industry dynamics, the corporation saw the urgent need to fast-track its business transformation [which] involves right-sizing of network and fleet to meet new demand, and improvement of operations efficiency through process and policy enhancements and digitalization, among others. This places the corporation in a better position to respond to this harsh reality,” the January 22 filing said. The fundraising initiative will involve the sale of convertible preferred shares to existing stockholders, offered at a price range of between USD0.74 and USD0.84 per share. The move is one half of a larger USD500 million package the airline announced on October 8 last year, which also includes raising USD250 million by offering convertible bonds. The company intends to use the proceeds, it said in the filing, by allocating USD100 million for the repayment of an advance by Manila-based parent JG Summit Holdings; USD71.3 million for aircraft lease payments due in 2021; USD72.3 million for principal debt repayments due in 2021; and USD6.4 million for general corporate purposes, primarily Covid-related passenger refunds. In May 2020, Cebu Pacific said it would halve its spending during that year, mainly by cutting back on the acquisition of new aircraft. It currently has a fleet of 72 aircraft, down from 76 six months ago. Previously, it had planned to expand its fleet with 61 new aircraft by 2026. According to the ch-aviation fleets advanced module, the current fleet includes twenty-four A320-200s, five A320-200neo, seven A321-200s, seven A321-200NX, and eight A330-300s, plus six ATR72-500s, two ATR72-500(F)s, and thirteen ATR72-600s operated by regional unit Cebgo (DG, Manila Ninoy Aquino Int’l). Of this total, 23 aircraft are leased from ten lessors while the rest are owned.