MANILA, Philippines — Cebu Pacific has become Southeast Asia’s first low-cost carrier to secure a sustainability-linked loan (SLL), reinforcing its commitment to reduce carbon waste across the business.
The Gokongwei-owned airline yesterday announced it has received an SLL, arranged by Credit Agricole CIB and structured as a Japanese Operating Lease with Call Option (JOLCO).
Although the amount is undisclosed, Cebu Pacific said the loan mandates it to commit to a set of performance targets, all in line with the industry guidance to decarbonize flights.
As a whole, Cebu Pacific has to cut carbon emissions by making its aircraft fuel efficient. In the process, the airline will receive financial incentives under the loan if it meets its goals.
Cebu Pacific chief financial officer Mark Julius Cezar said the SLL supports the carrier’s push to upgrade its fleet to fuel-efficient jets. Cebu Pacific is working on achieving a fleet all made up of new engine options (neo) by 2028.
Airbus neo aircraft are equipped with efficiency solutions that enable them to reduce their fuel consumption by up to 20 percent compared to previous generation engines.
As a first use of the SLL, Cebu Pacific used proceeds from the loan to pay for the acquisition of an Airbus A321neo that was delivered to its fleet before the end of 2024.
Cezar said the airline wants to take advantage of financing opportunities like the SLL to lead the aviation industry in Southeast Asia in decarbonization efforts.
Credit Agricole CIB, the investment banking arm of Credit Agricole, is the sole advisor, JOLCO arranger and lead arranger for the debt. Credit Agricole CIB said the SLL availed by Cebu Pacific would only be the first of many for the most aggressive airline in the Philippines.
Cebu Pacific received 17 aircraft last year, and it will receive seven more this year. The airline is also prepared for the long run, having signed a firm order for 152 aircraft with Airbus, valued at $24 billion, the largest jet order in Philippine aviation.
In spite of this, the budget carrier is also moving to cut its carbon footprint by adopting sustainability measures, from fuel efficiency to ground handling.
In 2022 Cebu Pacific agreed to buy 25,000 tons of sustainable aviation fuel from Shell Aviation, to be supplied between 2026 and 2031, as part of measures to decarbonize its flights.