CEB To Raise $500M For Survival

 9 October 2020

Low cost carrier Cebu Pacific (CEB) has announced on Thursday that it will be raising up to $500 million in additional capital to provide fresh liquidity to the ailing airline by selling preferred shares and bonds in the stock market as it undertakes a restructuring strategy that seeks to cut its fleet and network to cope with reduced travel demand post covid19 pandemic.

“This capital raising exercise will provide the airline with the needed runway to withstand the financial challenges it faces as it slowly goes back to pre-Covid business levels and settles into the ‘new normal’,” says CEB Chief Executive Officer Lance Gokongwei.

CEB discloses that it will raise up to $250 million in new convertible preferred shares and another $250 million in private placement of convertible bonds subject to shareholder approval by November as it endeavors to strengthen the airline’s balance sheet.

The airline said it is was operating about 15% of pre-pandemic capacity, a far cry from their previous projections of 30%. Cebu Pacific started operating in June at about 2% capacity versus a normal 75%. 

For the first six months of the year, Cebu Pacific reported a 61% year-on-year decline in revenue, at ₱ 17.3 billion ($357 million). It also reported an operating loss of ₱6.29 billion for the second quarter ending June 30, widening the ₱693 million loss incurred in 2020’s first quarter.