Cebu Pacific expects to weather pandemic
CEBU PACIFIC remains hopeful that it will survive the crisis despite the expected long period of recovery.
The budget carrier, operated by Cebu Air, Inc., said it anticipates its recovery to “take longer than expected,” similar to Fitch Ratings’s recent forecast that local airlines will not bounce back to their pre-pandemic passenger volume next year, as the pandemic situation in the Philippines remains a “high risk.”
“However, we continue being hopeful as we see there is still an inherent and latent demand for travel,” Candice A. Iyog, Cebu Pacific vice president for marketing and customer service, told BusinessWorld in a phone message on Monday.
She said the Gokongwei-led carrier is “still well-placed” to weather the crisis.
“To note, our net debt to equity ratio as of end of 1H (first half of) 2020 is only 1.9x, still very low in the industry, thus allowing us to raise more capital. While we are in the process of doing this, we cannot disclose further details as the transactions are not done and it is breach of confidentiality to name the counterparties,” Ms. Iyog explained.
To recall, the listed operator of Cebu Pacific swung to a net loss in the second quarter, hit by the ongoing pandemic.
The company reported a net loss of P7.96 billion for the quarter, reversing a profit of P3.79 billion in the same period last year.
The government-imposed travel restrictions during the period resulted in a nearly 93% decline in the company’s gross revenues to P1.42 billion from P23.53 billion in the year-earlier period.
The company saw a 60.1% decline in passenger traffic from 11.2 million to 4.5 million in the first semester, as the number of flights was lower by 55.6%.
The budget carrier ferried a total of 22.5 million passengers last year.
Airline trade group International Air Transport Association (IATA) has said airlines expect a 55% decline in 2020 air traffic.
While aviation faces a long-haul recovery, continued aid and assistance for the sector is desperately needed, IATA said in a recent statement.
According to the Air Carriers Association of the Philippines, about P700 million had been allocated for local airlines in the Republic Act No. 11494, or the Bayanihan to Recover as One Act (Bayanihan II). The group also expects state financial institutions to lend or invest P10 billion in the industry. — Arjay L. Balinbin