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Cebu Pacific says balance sheet strong despite short-term losses
November 13th 2020
Cebu Pacific Air (CEB) said this week its balance sheet was in a strong position to survive the coronavirus pandemic although it reported a net loss of 5.5 billion pesos for third quarter of calendar 2020. Read More »
In October, CEB proposed a US$500 million capital raising – to be put to shareholders for approval on November 20 – with US$250 million through new convertible preferred shares and US$250 million through private placed convertible bonds.
The company's fundraising plan also included the potential to raise up to US$400 million via debt facilities.
"The fund raising exercise aims principally at covering a potential cash shortfall in the business should the COVID-19 crisis last longer than initially expected," CEB said. "It should also allow for a minimum cash position to be kept at the airline.
"There are ongoing discussions with all stakeholders from lessors, creditors including the commercial banks to support CEB’s endeavours during this period of pandemic.
"The proceeds from this business transformation fundraising plan shall be used to strengthen the balance sheet of the corporation and for general corporate purposes."
COVID-19 and government imposed travel restrictions, particularly in Metro Manila. hammered its bottom line, the LCC said. Revenue fell 89%, to two billion pesos, CEB said in a regulatory filing to the country’s stock exchange. The company declined to offer financial guidance for the full year “given the volatile nature of this situation and the uncertainty as to when operating and demand conditions will improve".
In the September quarter, CEB said its cargo business represented 66% of total revenue, compared with 8% a year ago.
Cargo volumes fell 54% in the September quarter and cargo revenue was down by 10%. But average cargo yield was 53% higher for the three months.
"Decline in cargo volumes were offset by higher yields, driven by hybrid and charter flights," CEB said in its results slide presentation.
CEB said its consolidated balance sheet remained strong, adding it was actively engaged in working to mitigate the impact of COVID-19, including negotiations with key suppliers on its capital expenditure commitments and related cash flows.
"As of September 30, 2020, the group anticipates the COVID-19 global pandemic will have a material impact on its liquidity," CEB said in its financial accounts.
"However, the group is confident it can raise cash for liquidity needs even if there were unprecedented losses incurred as a result of an expected slow recovery from this crisis.
"The group remains in a strong balance sheet and equity position at the end of the period.”
At September 30, CEB’s flew to 34 domestic and eight international destinations and operated 372 weekly flights. It has a fleet of 46 A320 family aircraft, eight A330-300s and 21 ATR 72-500/600 turboprops.
