Cebu Pacific is expecting return to profit citing capital raising activities and resurgence of air travel. In a recent filing, the airline said: “has already put into place certain initiatives since 2021 which would bring its stockholders’ equity from negative to positive.”
“We intend to wipe out its capital deficiency this year by maximizing the use of the fleet to raise additional revenue, with the demand for flight services recovering,” the filing read.
Cebu Air targets to operate an average of 3,000 flights per week within the Q2 of 2023 from just 2,600 flights a week in end-2022.
The airline is also banking on certain macroeconomic conditions to pave its flight path back to profit, especially with decreasing fuel prices.
In 2022, jet fuel prices averaged $126.65 per barrel with the supply chain pressured by Russia’s invasion of Ukraine. Since then, jet fuel prices have gone down to $106.49 per barrel in the Q1 of 2023. Cebu Air also benefits from the peso’s recovery to the 55 to $1 level after hitting an all-time low of 59 to $1 in October 2022
“Higher utilization of existing aircraft, together with improvement in both capacity and seat load factors driven by higher bookings, support the outlook for improvements in Cebu Air’s revenues and profitability margins,” the company filing read.
The airline maintains a pool of financing sources where it can draw from to support the recovery of stockholders’ equity back to positive territory. In 2021, Cebu Air issued 328.95 million convertible preferred shares at an offer price of P38 per piece. At least 313.04 million of those shares remain outstanding as of 2022.
Besides the International Finance Corp. made a $250-million investment in Cebu Air in 2021 through the issuance of convertible bonds. To date, the securities remain with no conversion yet from any of the bondholders.
“With all these initiatives, Cebu Air is confident that recovery to positive stockholders’ equity is imminent and forthcoming,” Cebu Air said.