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Cebu Air Inc., the operator of budget airline Cebu Pacific, announced on Wednesday that its board has approved a restructuring plan in preparation for a massive aircraft purchase valued at P1.4 trillion ($24 billion).
According to a regulatory filing, Cebu Air’s board sanctioned the restructuring to utilize its P20.658-billion paid-in capital, as reflected in its audited financial statements from December 31, 2023, to offset a P16.269-billion retained earnings deficit. Post-restructuring, the company’s paid-in capital will stand at P4.389 billion.
This restructuring comes in the wake of Cebu Pacific’s recent memorandum of understanding (MOU) with Airbus, which includes firm orders for up to 102 A321neo and 50 A320neo Family aircraft, all to be equipped with Pratt & Whitney GTF engines.
“The order is designed to provide Cebu Pacific with maximum flexibility to adapt fleet growth to market conditions, with the ability to switch between the A321neo and A320neo,” said Cebu Pacific CEO Michael Szucs. “When finalized, the deal will be a significant milestone for the local airline industry and a testament to CEB’s unwavering commitment to support the Philippine growth story,” he added.
Earlier this year, Cebu Pacific projected it would close 2024 with a fleet of 95 aircraft, increasing its seat capacity for the year by 12% to 15% compared to 2023. This fleet will comprise 16 ATRs, 51 Airbus NEOs, and 28 Airbus CEOs.
In the first quarter of the year, the carrier reported net earnings of P2.24 billion, doubling its P1.08 billion from the same period last year, driven by a 21% rise in total revenues to P25.3 billion.
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