Bilyonaryo Lance Gokongwei declared that his family’s budget airline, Cebu Pacific, can withstand the worst economic turbulence in its 32-year existence.
“The group believes that it remains a resilient airline despite the adverse impact of the COVID-19 outbreak,” said Gokongwei in a report to stockholders.
Cebu Pacific is a member of the Air Carriers Association of the Philippines (ACAP) which is asking the government for an P8.6 billion monthly dole outs to save the country’s corona-stricken carriers including Philippine Airlines and Air Asia Philippines.
Gokongwei admitted the COVID crisis would have a “material impact” in Cebu Pacific’s liquidity but was confident its strong balance sheet would withstand the stressful environment.
“The group is confident on its ability to raise cash for liquidity needs even if there were unprecedented losses incurred as a result of an expected slow recovery from this crisis,” said Gokongwei.
“The group is actively engaged in planning and executing various measures to mitigate the impact of the COVID-19 global pandemic on its business operations. These include negotiations with key suppliers on capital expenditure commitments and related cash flows, as well as with other suppliers and stakeholders as they impact the group’s cash
flows. It is further engaged in the planning staff right-sizing in addition to further optimization and digitalization of processes,” he added.
Cebu Pacific implemented management pay cuts, reduced work days and froze non-essential recruitment and consultancy work in the first half.
Cebu Pacific lost P9.141 billion in the first six months of 2020, a sharp fall from its P7.145 billion profit during the same period last year. Its debt-to-equity ratio deteriorated to 218 percent in the first half this year from 166 percent a year ago.