Cebu Pacific, the country’s biggest budget carrier, saw huge financial losses in 2020 with the collapse of air travel demand and confusing government polices amid the COVID-19 pandemic.
This also forced Cebu Pacific to slash a third of its workforce, cut spending and send unused planes overseas for long-term storage.
From a 2019 profit of P9.12 billion, Cebu Pacific operator Cebu Air Inc. said on Tuesday it recorded a net loss of P22.2 billion last year.
Cebu Pacific flew just five million passengers in 2020—a 78-percent drop from 22.5 million in 2019.
This dragged revenues lower by 73 percent to P22.6 billion last year. Cargo revenues accounted for nearly a quarter or P5.4 billion.
Alongside other airlines, Cebu Pacific’s fleet was grounded from March 19 to June 3 when strict COVID-19 lockdown measures were imposed last year to halt the spread of the virus.
“This resulted in various requirements and processes from local government units, which continue to be a challenge not only for CEB and other airlines, but for the traveling public as well,” Cebu Pacific said.
As of December 2020, the company was operating just 20 percent of prepandemic levels.
The reduction in flights and cost-cutting measures caused operating expenses to fall by 40 percent to P43.4 billion.
But while the industry suffered collectively, Cebu Pacific said it was “unique among its peers as it entered the COVID pandemic with a historically strong ability to generate free cash flow.”
This helped the carrier raise about P28.5 billion from equity and debt sources to survive the crisis.
Cebu Pacific raised P12.5 billion from the sale of convertible preferred shares earlier this month. At the same time, it sealed a P16-billion term loan facility from banks such as Development Bank of the Philippines, Land Bank of the Philippines, Asia United Bank Corp., Bank of the Philippine Islands, Metropolitan Bank & Trust Co. and Union Bank of the Philippines.
“Proceeds of these fundraising activities will be used to strengthen Cebu Pacific’s balance sheet by providing liquidity to address its financial liabilities and working capital for general corporate purposes,” the company said. INQ