Cebu raises $542 in largest LCC public offering

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Philippine carrier Cebu Pacific has raised 23.3 billion Philippine Pesos in its initial public offering (IPO) on the Philippine Stock Exchange, in the largest listing globally by a low-cost carrier.

This comes in lower than the 32.19 billion pesos that JG Summit, its parent company, said in September that it aimed to raise through the IPO. The Philippine conglomerate sold a 30.4% stake, or 186.6 million shares at 125 peso each, to both domestic and international investors.

It is, however, the largest amount raised by a low-cost carrier globally through a public offering, says Cebu Pacific. Other low-cost airlines with high profile IPOs in recent years include RyanAir (which raised $159.6 million), AirAsia ($220.316 million), and Tiger Airways ($175.939 million).

"The primary proceeds will be used for aircraft acquisition. By 2014, the airline will have taken delivery of 22 brand-new Airbus A320 aircraft, and operate one of the largest Airbus aircraft fleet in Southeast Asia," says Cebu Pacific.

In the six months to 30 June, its net income rose 55.6% to 3.09 billion pesos on strong traffic growth. Revenues rose 30.9% to 14.9 billion pesos, mainly due to an increase in passenger on additional flights to existing destinations. The airline says that it had a load factor of 85.4%, an on-time performance of 89.4%, and net income margin of 21.2% during those six months.

Cebu Pacific, which was started up in 1996, says that it has "focused on expanding its market base" since its inception. It adds that its major turning point was in late 2005, when it fully adopted the low-cost model. It operates out of four hubs: Manila, Cebu, Clark and Davao. It says that it has the youngest aircraft fleet in the Philippines, and flies to 33 domestic and 16 international destinations.

"The airline became the largest domestic carrier in 2007, and the largest national flag carrier for the six months ended 2010 in terms of passengers carried locally and abroad," says Cebu Pacific, which adds that it is Asia's third-largest low-cost carrier.