Cebu Pacific posts US$457 million net loss for 2020

Airline raises US$587 million in fresh capital to meet challenges of COVID-19

Pacific ATR
A Cebu Pacific ATR. (PHOTO: Matt Driskill)

Use this oneCebu Pacific (CEB) said on Tuesday (30 March) that it lost 22.2 billion pesos (about US$457 million) for the full year of 2020, following the heavy impact of the unprecedented COVID-19 crisis. With health and safety concerns resulting in the decrease of passenger confidence and heightened travel restrictions, CEB’s operational and financial performance were severely affected. For 2020, CEB flew 5 million passengers, a 78 percent decrease from 2019, and a total of 41,804 flights, a 71 percent decrease compared to 2019.

When the country was placed in Enhanced Community Quarantine (ECQ) in March 2020, CEB’s commercial operations were grounded. Commercial operations resumed on 3 June, albeit gradually with most of the Philippines still in General Community Quarantine (GCQ). 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 public as well.

Pre-COVID-19, CEB flew about 400 flights a day. In the third quarter of 2020, CEB flew an average of 47 flights a day, to 76 flights a day by December, about 20 percent of pre-COVID levels. The increase was primarily driven by domestic demands and supplemented by cargo operations, which performed better than expected.

CEB revenues were about 22.6 billion pesos (about US$466 million) for 2020, a 73 percent decrease from 2019. Cargo operations contributed 5.4 billion pesos (approximately US$111 million), or 24 percent of CEB’s total revenues in 2020, as cargo freighter and charter flights contributed to higher yield. In addition to two ATR 72-500 cargo freighter aircraft, CEB began utilising its first A330 cargo converted aircraft in November 2020, which allowed it to carry more cargo on long-range flights.

Total operating expenses were reduced by 40 percent to 43.4 billion pesos (US$894 million). Fuel showed the steepest decline, as less flights were coupled with lower fuel cost. Other operating expenses likewise reduced as CEB continues its rigorous cost reduction initiatives, including the rightsizing of its network, fleet, and manpower, while improving operational efficiencies through various digitalisation efforts. CEB closed the full year with an operating loss of 20.77 billion pesos (US$428 million), and negative EBITDAR of 932 million pesos (US$19 million).

Amidst severe losses incurred in 2020, CEB completed two significant fundraising initiatives. CEB’s Convertible Preferred Shares were successfully listed on the Philippine Stock Exchange on 29 March, providing CEB with 12.5 billion pesos (US$257 million) in fresh capital. In addition, last March, CEB signed a 16 billion peso (US$329 million), 10-year term loan facility with a syndicate of domestic banks, including the Development Bank of the Philippines, Land Bank of the Philippines, Asia United Bank Corporation, Bank of the Philippine Islands, Metropolitan Bank & Trust Company, and Union Bank of the Philippines. These fundraising initiatives gave the airline 28.5 billion pesos (US$586 million).

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