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MANILA – The Philippines’ largest low-budget airline, Cebu Air, said Thursday that it seeks to raise $ 500 million to repair a balance sheet that has been hit by the coronavirus pandemic.
The move comes a day after the Philippine government hinted that it might offer some help to airlines while making it clear that the private sector would have to lead the revival of the industry.
Cebu Air told the stock exchange that the fresh capital will be raised through the issuance of convertible preference shares and a private placement. “Due to this exceptional change in market conditions and industry dynamics, the corporation saw an urgent need to accelerate its transformation,” the company said.
The convertible bonds are expected to be priced between 38 and 45 pesos, he said. Cebu Air’s shares stood at 37.10 pesos each on Wednesday, giving it a market capitalization of around 22.3 billion pesos ($ 460 million).
The day before the announcement, Philippine Finance Secretary Carlos Domínguez said the government could help the ailing aviation industry, but stressed that the private sector must do the heavy lifting.
“Let me point out that any assistance we have or are going to provide will be just one part of the whole process,” Domínguez said during a business forum Wednesday. “Private sector banks have to disburse most of the aid.”
Cebu Air, which laid off 800 employees in August, said the fundraising is part of a broader business transformation program that involves “right-sizing” its network and fleet to meet new demand and improve efficiency through digitization.
“This puts the corporation in a better position to respond to this harsh reality,” said the company, controlled by JG Summit Holdings, part of the Gokongwei Group.
Cebu Air said that revenue in the first half, which saw the Philippines impose one of the longest and toughest roadblocks in the world, fell 61.2% to 17.3 billion pesos, while they fell to a net loss of 9.14 billion pesos. pesos from a gain of 7.14 billion pesos a year ago.
Its larger pair, Philippine Airlines, has also struggled. The company has received billions of pesos in capital injection from its controlling shareholder, billionaire Lucio Tan, to keep it afloat. Last week, the country’s largest airline began a major layoff process that covered about 2,700 employees, or about 35% of its workforce.
Philippine Airlines said it operated only 15% of its flights and that the job reduction program was necessary for its survival.
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