Budget carrier Cebu Pacific has approved an equity restructuring plan to eliminate its P16.27 billion deficit, according to an official disclosure to the Philippine Stock Exchange (PSE) on July 17, 2024.
The board of directors of Cebu Air, Inc., the airline’s parent company, authorized the use of a portion of its P20.66 billion additional paid-in capital to clear the deficit. This move is seen as a strategic step to strengthen the company’s financial position.
“After the deficit is completely eliminated, the Corporation’s additional paid-in capital as of December 31, 2023, will be reduced to P4.39 billion,” the company stated in its PSE disclosure.
This financial restructuring comes on the heels of Cebu Pacific’s recent announcement of a historic P1.4 trillion ($24 billion) purchase agreement with Airbus for up to 152 A321neo aircraft. The order, the largest in Philippine aviation history, is set to more than double the airline’s current fleet size.
The airline has been capitalizing on the post-pandemic travel rebound, with its first-quarter earnings for 2024 more than doubling to P2.24 billion, driven by a 25% increase in passenger revenues.
Cebu Pacific currently serves 35 domestic and 25 international destinations. The airline aims to have an all-neo fleet by 2028 as part of its sustainability efforts, with the new A321neo aircraft expected to burn 15% less fuel per flight.
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