Cebu Pacific IPO may push through this year

MANILA, Philippines - The aborted plan of low-fare carrier Cebu Pacific to go public may finally take off this year, industry sources said.

The investment banking community is rife with talks that Cebu Pacific is reviving its shelved initial public offering (IPO) plans and has resumed consultation with its financial advisor. Volatile market conditions and high crude prices prompted Cebu Pacific, a member of the Gokongwei flagship firm JG Summit Holdings Inc., to put its listing plans in the back burner.

The Gokongwei-owned Cebu Pacific was originally scheduled to make its trading debut on Feb. 8, 2008 to raise nearly P13 billion.

Based on the registration statement earlier approved by the Securities and Exchange Commission, Cebu Pacific planned to sell new and existing shares totalling up to 135.46 million shares a P95 each share to partly fund an aggressive fleet expansion.

Gross proceeds for the company would be up to P6.8 billion and selling shareholders would have gotten up to P6.03 billion. Before the postponement, Cebu Pacific had said it generated positive feedback on the IPO plan from international and domestic investors in a road show.

The local stock index has been on a downward trend since last week. It closed 2.03 percent or 59.23 points lower at P2,855.64 Friday, the lowest since the 62.11-point drop last Jan. 22.

In spite of this downward spiral, analysts still expect stocks to be the favorite investment instrument of investors. Analysts said while Cebu Pacific could easily secure Export Credit Agency financing, raising cash through the stockmarket would still be the most ideal option to fund its $1 billion expansion plan. 

The budget airline has announced plans to acquire 17 new aircraft over the next five years, doubling its existing fleet. Cebu Pacific has flown over 40 million passengers since its inception in March 1996. It operates from four hubs (Manila, Cebu, Clark and Davao), using the youngest aircraft fleet in the Philippines composed of 21 Airbus A320 and 8 ATR 72-500 aircraft.

Cebu Pacific has a pending application to fly to Brunei and was considering other destinations, like Australia as well as new routes to Japan.

The Gokongwei-owned airline flies to 14 international destinations, including Hong Kong and Singapore (6-times daily services to both), Osaka, Incheon, Pusan (via Cebu), Taipei, Macau, Shanghai, Guangzhou, Kuala Lumpur, Kota Kinabalu, Bangkok, Ho Chi Minh and Jakarta. It has a total of 32 domestic destinations including Caticlan (Boracay), Dipolog, Cebu, Catarman and Calbayog in Samar, Tuguegarao and Cauayan in North Luzon, and Virac in Catanduanes.

 Cebu Pacific was back in the red in the nine months ending September 2009 with its net income hitting P1.78 billion as against a net loss of P1.87 billion the same period a year earlier. Gross revenues reached P16.22 billion, up 16.1 percent over the previous year’s P13.98 billion, mainly due to the opening of additional routes, increase in flight frequencies and capacity.

As of Oct. 31 last year, Cebu Pacific has flown nearly 7.3 million passengers, surpassing the 6.7 million number of passengers flown in 2008. Following a more than P3-billion loss in 2008, the airline expects to post healthy profits this year on the back of its growing passenger base and expanding revenue.