MANILA, Philippines — Cebu Pacific, the country’s largest budget carrier, is bound to end a pandemic-plagued year with losses of almost P25 billion, its top official said.
“The airline sector is really under severe stress. This year we will lose almost P25 billion. But I think that’s a part of doing business,” Cebu Pacific president and CEO Lance Gokongwei said in a virtual briefing yesterday.
This year’s losses will be a reversal of the P9.12 billion in net income the airline posted in 2019.
Cebu Pacific has already incurred a net loss of P14.69 billion in the nine months ending September as revenues plunged by 70 percent compared to last year’s level.
Given the mounting losses, the budget carrier’s publicly listed operator Cebu Air Inc. had earlier announced plans to raise up to $500 million in fresh capital through the issuance of convertible preferred shares and private placement of convertible bonds to strengthen its balance sheet as the aviation industry continues to face the challenges brought about by the pandemic.
The fundraising exercise, which is seen to “enable the company to navigate the current environment and thrive in the new normal,” will involve the issuance of up to $250 million in new convertible preferred shares, as well as another $250 million in privately placed convertible bonds.
“We’re a volume business. People have to gain confidence back in flying, and that’s the only way our business will recover. So we have to work with the government and the local government units (LGUs) in that respect,” Gokongwei said.
The tycoon said the company’s main priority at present is to operate the airline in a safe and secure manner for both its passenger and employees.
“This whole crisis, Cebu Pacific and the entire aviation and tourism sector have of course been severely affected, but this whole time we never forgot our responsibility as a public utility even during the worst part of the crisis. Even without passengers, we operated cargo flights,” he said.
“Slowly, we’re beginning to see an opening up of domestic traveling in the Philippines as it has already been opened in up our other neighbors such as Vietnam, Thailand, etc. so I think slowly it will return as we do recognize that tourism is a vital part of the economy and a lot of our countrymen depend on tourism. We just have to assure different LGUs and governments that this tourism is safe, secure, and does not promote COVID,” Gokongwei said.
Cebu Pacific is piloting a test before boarding or TBB initiative in partnership with the local government of General Santos City as part of efforts to rejuvenate air travel.
Cebu Pacific’s TBB initiative will enable passengers to undergo antigen testing conveniently at the airport just before their flight.