Cebu Air seeks US$500 million fresh capital to come through pandemic

Cebu Pacific Air is seeking to ensure that it is ready to operate whenever the recovery from the impact of Covid-19 comes around.

The Philippines’ largest carrier has notified the Philippines’ stock exchange that it will be seeking approval for the issuance of up to US$250 million in new convertible preferred shares.

The carrier will also offer another US$250 million in privately placed convertible bonds.

It is hoped the deal will be completed by Nov 20.

The new convertible preferred shares will be made available to all stockholders, giving the opportunity for all investors to participate; while the privately placed convertible bonds, will be made available to a limited number of reputable international investors.

“We need to create a longer runway for Cebu Air so that we can continue providing affordable and accessible air transport services for everyone,” said Lance Gokongwei, chief executive of Cebu Pacific and JG Summit Holdings.

“The airline industry faces significant challenges as a result of the pandemic. Travel restrictions imposed by various governments, both local and abroad, have led to abrupt reduction in passenger traffic and casts uncertainty over the near term prospects of the company,” he said.

“Due to this exceptional change in market conditions and industry dynamics, the corporation saw the urgent need to fast-track its transformation.”

The airline is a subsidiary of JG Summit Holdings and is a member of the Value Alliance, the world’s only budget airline alliance.

In 2010, Cebu Pacific became the Philippines’ largest airline based on number of passengers flown on domestic and international routes.