Cebu Pacific reports P22.2-billion net loss for 2020

Aviation Updates Philippines – After an unanticipated downturn in the aviation industry brought by the COVID-19 pandemic, the Philippines' largest budget carrier Cebu Pacific Air reported a swooping net loss of Php 22.2 billion for the fiscal year 2020 — a relatively unusual financial result at Cebu Pacific.

Photo from Cebu Pacific.

Citing loss of consumer confidence over health and safety concerns, and strict travel restrictions due to the COVID-19 pandemic, Cebu Pacific said its operational and financial performance was "severely affected." 

For 2020, the budget carrier dismally carried only 5 million passengers, a 78 percent drop in passenger numbers compared to the year before. Moreover, the number of flights it operated also dropped by 71 percent to a total of only 41,804 flights.

Prior to the pandemic, Cebu Pacific revealed it flew over 400 flights a day. Now, that number seems ambitious as it only flew an average of 47 flights a day in the third quarter, to 76 flights a day by December, about 20% of pre-COVID levels.

As it operated fewer flights, the airline saw a decrease in operating expenses by as much as 40 percent. Fuel showed the steepest decline, as fewer flights were coupled with lower fuel cost. The reduced operating expenses can also be attributed to Cebu Pacific's rigorous efforts to cut costs.

Meanwhile, Cebu Pacific's revenues stood at Php 22.6 billion for 2020, 73 percent lower than 2019. As an innovation for the downed travel and tourism demand, the airline ramped up the freighter and cargo-only flights. As a result, cargo revenues resulted to Php 5.4 billion, or 24 percent of the total revenues in 2020.

On the brighter side, the budget carrier announced it has completed two significant fundraising initiatives. Cebu Pacific raised Php 28.5 billion in funding: Php 12.5 billion from Convertible Preferred Shares listed on the Philippine Stock Exchange, and Php 16 billion as a ten-year loan from local banks.

Cebu Pacific said the additional funding "...represent the confidence of its shareholders and these banking institutions in CEB playing a vital role in the recovery of the travel industry, and the Philippine economy as a whole."

"All these ongoing endeavors are necessary steps to ensure CEB stays formidable and committed to provide safe, reliable, and affordable air transport services for everyJuan. Proceeds of these fundraising activities will be used to strengthen Cebu Pacific's balance sheet by providing liquidity to address its financial liabilities, and working capital for general corporate purposes," the airline said.