CEB taps 3 banks to arrange bond sale
Cebu Air Inc., the airline unit of conglomerate JG Summit Holdings Inc., plans to raise as much as P15 billion through the issuance of fixed-rate corporate bonds in November, a banking source said Tuesday.
The company, which operates budget carrier Cebu Pacific, plans to use proceeds from the fund raising activity to finance the airline’s fleet expansion program.
The source said the Cebu Air bonds would have tenors of seven and 10 years and be sold to both retail and institutional investors.
“They want to expand their fleet. They’ve been profitable because of the falling oil price,” the banking source said.
The airline has tapped First Metro Investments Corp., BDO Capital and Investments Corp. and BPI Capital Corp. to handle the transaction.
Cebu Air in July announced it was acquiring 26 turboprop jets for $673 million, as a part of the budget airline’s fleet renewal program for inter-island services.
Cebu Air said it placed orders for 16 ATR 72-600, with options to acquire another 10 ATR 72-600 from ATR, the European turboprop aircraft manufacturer, for $673 million, based on current list prices.
Cebu Pacific operates a fleet of eight ATR 72-500 aircraft, which will be retired as the new aircraft enter the service.
The entry of the new ATR 72-600 into service will provide Cebu Pacific with new generation aircraft to meet the growing demand in the Philippines for inter-island services.
The new planes will also allow Cebu Pacific to expand its operations not only on main airports but also to several other airports around the country, contributing to the development of regional transportation, tourism and local economy.
Cebu Pacific operates a fleet of 55 aircraft comprising of 10 Airbus A319, 31 Airbus A320, six Airbus A330 and eight ATR-72 500 aircraft.
Cebu Pacific expects to take delivery of seven more brand-new Airbus A320 and 30 Airbus A321neo aircraft between 2015 and 2021.
Cebu Air’s net income in the first semester of the year jumped 64 percent to P5.2 billion form P3.18 billion on year on higher passenger traffic and lower fuel expenses.
First-half revenues stood at P29.51 billion, up 10 percent from P26.72 billion on year.
The airline attributed the higher revenues to the 8.2-percent rise in passenger volume to 9.2 million from 8.5 million in 2014, driven by the increased number of flights in 2015.