MANILA - Philippine budget carrier Cebu Air Inc said Thursday it planned to raise $500 million (P12 billion) to fund its business as the aviation industry continues to face "significant challenges" due to the COVID-19 pandemic.
Cebu Air which operates Cebu Pacific will seek approval for the issuance of up to $250 million in convertible preferred shares and raise another $250 million in privately placed convertible bonds, it said in a disclosure to the stock exchange.
"Travel restrictions imposed by various governments, both local and abroad, have led to abrupt reduction in passenger traffic for the corporation and cast uncertainty over the near term prospects," Cebu Air said.
"The proceeds from this Business Transformation Fundraising Plan shall be used to strengthen the balance sheet of the Corporation and for general corporate purposes," the airline added.
The transformation also involves right-sizing of network and fleet to meet new demands and improvement of operations through digitalization, among others which "places the Corporation in a better position to respond to this harsh reality."
“We need to create a longer runway for CEB so that we can continue providing affordable and accessible air transport services for everyjuan,” said Cebu Pacific and JG Summit Holdings, Inc president and CEO Lance Gokongwei in a separate statement.
The Philippines' largest budget carrier, which operates a fleet of 76 aircraft, most of them Airbus, cut a quarter of its workforce of about 4,000 in August. It now operates only about 15 percent of its pre-pandemic operations.
Its revenues for the first 6 months of 2020 declined by 61.2 percent to P17.3 billion from P44.7 billion during the same period last year. Some 44,000 flights were canceled from March 15 to June 30, 2020 affecting at least 2.1 million, the airline said.
-- with a report from Reuters