CEBU Air, Inc. (CEB), operator of budget carrier Cebu Pacific, announced on Wednesday its board’s approval of a restructuring plan to use the company’s paid-in capital of P20.66 billion to address its earnings deficit.
This follows the company’s commitment to purchase up to 152 A321 new engine option (NEO) aircraft from Airbus.
Cebu Air Chairman Lance Y. Gokongwei has said the company aims to secure financing for its P1.4-trillion Airbus aircraft order through a combination of loans and equity injections.
In a regulatory filing on Wednesday, Cebu Air said the company has approved the proposal to eliminate its deficit amounting to P16.27 billion by infusing a portion of its paid-in capital, leaving it with a capital of P4.39 billion.
“After the deficit is completely eliminated, the corporation’s additional paid-in capital as of Dec. 31, 2023, will be reduced to P4.389 billion,” Cebu Air told the stock exchange.
“[This] will put the company in a position to start accumulating retained earnings that can be used for dividend payments or share buybacks,” Chinabank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message on Wednesday.
“This should improve investor sentiment towards the stock,” he added.
Cebu Air reported a P2.24-billion attributable net income for the first quarter, more than doubling last year’s P1.08 billion.
First-quarter revenues surged to P25.3 billion, representing a 21.2% increase from P20.88 billion previously.
The airline previously said that its aircraft order would enable it to increase capacity and passenger volume.
For the first quarter, Cebu Pacific’s passenger revenues increased to P17.83 billion, up by 24.8% from the P14.29 billion a year ago, due to the overall increase in travel demand.
The company saw a significant increase in its passenger volume to a total of 5.5 million in the first three months of the year from only 4.8 million previously.
At the local bourse on Wednesday, shares in the company gained 15 centavos or 0.52% to end at P29.25 apiece. — A.E.O. Jose