“The COVID-19 pandemic has disrupted the business of the group in 2020, resulting in significant deterioration of earnings and cash flows, and may continue to significantly disrupt the business activities of the group,” said Gokongwei in a report by Cebu Air, the parent of Cebu Pacific.
Cebu Pacific reported that its current liabilities exceeded its current assets by a staggering P21.65 billion. The cash shortage is as big as the P22.24 billion net loss it suffered in 2020 when it burned P13.22 billion in net cash to cope with the travel lockdown and pay off maturing loans.
But Gokongwei assured Cebu Air stockholders that the airline “will have sufficient financial resources to enable the group to continue as a going concern for at least the next twelve months from December 31, 2020”
“Based on management’s cash flow projections for the next twelve months, the group will maintain sufficient cash and cash equivalents from internally generated cash flows and available credit facilities to finance the Group’s operations and pay its debts as and when they fall due,” Gokongwei said.
To boost its liquidity, Cebu Air raised P12.5 billion from the issuance of convertible preferred shares last February.
In March, Cebu Air signed a P16 billion, 10-year loan facility from the Development Bank of the Philippines, Land Bank of the Philippines, Asia United Bank Corporation-Trust and Investments Group, BPI Capital Corporation, Metropolitan Bank & Trust Company and Union Bank of the Philippines.
The loan will be used to bankroll Cebu Pacific’s capital expenditures.
In the same month, Cebu Air borrowed $87.5 million (P4.3 billion) from a subsidiary of its affiliate, JG Summit Holdings Inc. to support its working capital requirements.