Cebu Air, Inc., operator of budget carrier Cebu Pacific, on Friday said its board approved a P16-billio, ten-year loan from local banks.
In a disclosure to the stock exchange on Friday, the company said that its board of directors approved the loan from state banks Development Bank of the Philippines and Land Bank of the Philippines, in partnership with private banks.
The private banks include Asia United Bank Corporation, Bank of the Philippines Islands, Metropolitan Bank & Trust Company, and Union Bank of the Philippines.
The loan will be used to fund the firm’s capital expenditures and other general corporate purposes.
“The loan will also provide a cushion against unexpected working capital requirements that may stem from fuel price and foreign exchange rate volatility,” Cebu Air said.
The commercial airline industry was hit hard by the pandemic. Cebu Pacific currently operates less than a quarter of its pre-pandemic network at 32 domestic destinations as it runs half of its 73 aircraft.
The budget carrier said that it sustained severe revenue declines during the pandemic, but its net debt-to-equity ratio was still at 2.34x as of the end of September.
“Cebu Pacific remains focused on its business transformation to reduce its unit cost so as to continue to offer affordable flights,” Cebu Air President and Chief Executive Officer Lance Y. Gokongwei said.
The company swung to a net loss of P14.69 billion for the first nine months of 2020 from the P6.77-billion profit in the same period a year earlier.
The fundraising adds to the company’s convertible preferred shares offering, where it plans to raise around P12.5 billion, Cebu Pacific Director for Financial Analytics and Investor Relations Trina E. Asuncion said on Wednesday.
Shares in Cebu Air went up 1.01% or 45 centavos to close at P45 each on Friday. — Jenina P. Ibanez