Cebu Air raising P15 B from fresh bond issue

MANILA, Philippines - Gokongwei-owned budget carrier Cebu Air is planning to issue P15 billion worth of corporate bonds before the end of the year.

Proceeds would be used for the continued expansion of the airline, an industry source said yesterday.

“They want to expand their fleet. They’ve been profitable because of falling oil prices,” the source added.

The bonds would have a maturity of seven and 10 years.

“The target (for the offering) is before the end of the year,” the same source said.

Ayala-led Bank of the Philippine Islands, BDO Unibank and First Metro Investment Corp. will serve as the lead underwriters for the bond issue.

Cebu Air is on an expansion mode and has an ongoing fleet renewal program.

Last June, the budget carrier  operating under the Cebu Pacific brand, announced it ordered 16 ATR72-600 from European Turboprop aircraft manufacturer ATR.

The order includes an option to acquire an additional 10 ATR72-600, valuing the total aircraft order at $673 million.

Cebu Pacific currently operates a fleet of eight ATR 72-500 aircraft, which will be retired with the arrival of new aircraft.

ATR aircraft is known for their versatility and their ability to operate on short runways.

Officials said this would allow Cebu Pacific to expand its operations not only in main airports but also to several other airports around the country.

The move would also allow Cebu Pacific to continue playing a leading role in the development of regional transport, tourism, and local economy in the Philippines.

 According to Cebu Pacific, the ATR 72-600 will be equipped, for the first time, with the high-density Armonia cabin, the widest cabin in the turboprop market.

These new technological innovations further enhance space and comfort for passengers, the airline said.

About 330 ATRs – including more than 100 ATR 72-600s – are currently operated by 55 airlines in the Asia-Pacific region, where for many years now, they have been seen as the reference regional aircraft.

Lance Y. Gokongwei, president and CEO of Cebu Pacific, said the company has been using ATR aircraft since 2008 and has enabled the company to transport to smaller cities and islands throughout the Philippines.

In the first half of the year, Cebu Pacific reported a 63 percent jump in net income to P5.2 billion.