Cebu Pacific to clear P16-B deficit

Cebu Pacific to clear P16-B deficit

Cebu Pacific

Budget carrier Cebu Pacific is preparing its balance sheet to make space for its mammoth P1.4-trillion purchase of new aircraft, beginning with a clean deficit balance.

In a stock exchange filing on Wednesday, Cebu Air Inc., the operator of the Gokongwei-led airline, said its board of directors had approved a restructuring plan to use part of the company’s P20.66-billion paid-in capital to eliminate a P16.27-billion deficit.

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Paid-in capital refers to money injected by investors into the firm in exchange for its shares.

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READ: Airbus wins Cebu Pacific 152-aircraft purchase order worth $24B

Once Cebu Pacific erases its deficit, its remaining paid-in capital will be P4.39 billion.

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This comes just two weeks after the airline announced that it would buy 151 A321neo (new engine option) planes from European plane maker Airbus for P1.4 trillion in hopes of augmenting fleet capacity amid the travel boom.

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Airbus bested rival Boeing in securing the deal with Cebu Pacific after an “intensive” selection process, according to Cebu Air chair Lance Gokongwei.

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Gokongwei also said they would tap both debt and equity to fund the purchase order, the largest such deal in Philippine aviation history.

Cebu Pacific is set to receive the first batch of aircraft under this deal by 2028. The new aircraft will add to the company’s current fleet consisting of eight Airbus 330s, 37 Airbus 320s, 22 Airbus 321s, and 15 ATR turbopop aircraft.

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READ: Cebu Pacific income soared in Q1 to P2.24B

Neo aircraft are seen to be more fuel-efficient, as these burn 15 percent less fuel per flight, resulting in less carbon emissions. Cebu Pacific aims to have an all-neo fleet by 2027 as part of its sustainability agenda.

On June 30, Cebu Pacific received another A321neo, its seventh aircraft delivery this year.

The airline plans to spend most of its P60-billion budget this year on aircraft.

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Cebu Pacific’s first-quarter earnings more than doubled to P2.24 billion on higher passenger revenues—up by 25 percent to P18 billion—as more people traveled.

In the January to March period, volume grew by 14 percent to 5.5 million passengers. Cebu Pacific currently serves at least 35 domestic and 24 international destinations.

TAGS: Cebu Pacific, deficit

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