Listed Cebu Air Incorporated is raising about $500 million to keep budget carrier Cebu Pacific afloat, as the company navigates through the effects of the coronavirus pandemic.
In a disclosure to the local bourse on Thursday, October 8, Cebu Air said it is seeking approval for the following:
The approval, according to a separate Cebu Air disclosure, will be taken up in a special stockholders' meeting on November 20.
Details of the stock offer have yet to be announced, but Cebu Air said the pricing could be P38 to P45 apiece, based on the stock's 30-day price average as of Wednesday, October 7.
"The proceeds from this Business Transformation Fundraising Plan shall be used to strengthen the balance sheet of the corporation and for general corporate purposes," Cebu Air said.
"Due to this exceptional change in market conditions and industry dynamics, the corporation saw the urgent need to fast-track its transformation," it added.
Aside from capital raising activities, Cebu Air said it is implementing a transformation scheme that includes "rightsizing of network and fleet" to meet the current aviation demand. Over 1,000 Cebu Pacific employees have been laid off since March.
"This places the corporation in a better position to respond to this harsh reality," it said.
During the 1st half of 2020, Cebu Pacific losses deepened to P9 billion. Currently, the budget carrier is operating only 15% of its pre-lockdown routes. Before the pandemic, Cebu Pacific operated 78 domestic routes and 25 international routes, for a total of 2,717 weekly flights.
On Thursday, Cebu Air closed at P36.65 apiece, declining 1.21% from Wednesday.