CEBU AIR, Inc. (CEB), the listed operator of budget carrier Cebu Pacific, announced on Tuesday that it is investing $5.61 million to buy the 51% stake of SIA Engineering Co. Ltd. (SIAEC), the aircraft maintenance, repair, and overhaul (MRO) unit of Singapore Airlines, in their joint venture company Aviation Partnership (Philippines) Corp. (APPC).
APPC is currently 51% owned by SIAEC and 49% by CEB, the listed airline operator said in a disclosure to the stock exchange. CEB is acquiring 905,641 shares in APPC at $6.19 each.
Citing its quarterly financial statement ending June 30, CEB said APPC’s net asset value is P447.47 million, and SIAEC’s 51% ownership is equivalent to $4.50 million.
“The acquisition is in line with CEB’s overall strategy to more closely align its line maintenance operations and strategic objectives with CEB’s network and service requirements, for significant operational efficiencies and optimization of resources for an even stronger competitive advantage,” it said.
APPC was established in 2005 to provide line maintenance, light aircraft checks, technical ram handling and other MRO services to the budget carrier and other airlines. It is based in Manila, Cebu, Davao, and Clark, among others.
CEB said its ownership of APPC is not going to have a material impact on its net assets or earnings per share for 2020.
In a separate disclosure, CEB said it had also signed a share sale and purchase agreement with SIAEC to divest its 35% shareholding in SIA Engineering (Philippines) Corp. (SIAEP).
It will sell 4,883,424 shares in SIAEP priced at $1.58 each, which will generate $7.74 million in cash for CEB.
SIAEP, which is currently 65% owned by SIAEC, provides airframe maintenance, repair, de-lease checks, cabin retrofits and overhaul services for 737, A320, and A330 aircraft, as well as line maintenance services in Clark, Pampanga, CEB said.
The airline operator noted the divestment is in line with its strategy to “streamline its fleet management and rationalize its aircraft base maintenance, repair and overhaul offerings to optimize its operational efficiency and further strengthen its core competencies.”
SIAEC and CEB established SIAEP in 2008 as a joint venture firm. CEB said the net carrying value of its 35% investment in SIAEP is $7.50 million as of June 30.
Shares in CEB on Tuesday closed 4.05% lower at P39.05 apiece. — Arjay L. Balinbin