Philippine low-cost carrier Cebu Pacific Air swung to an operating loss of Ps20.8 billion ($428 million) for 2020 amid the impact of the coronavirus pandemic.

Revenues fell 73% year on year to Ps22.6 billion, says the carrier in a statement. It also swung to a net loss of P22.2 billion for 2020, and cited the “heavy impact of the unprecedented Covid-19 crisis.”

Cebu Pacific A320

Source: Wikimedia Commons

A Cebu Pacific A320 in October 2020

During the year, the airline flew just five million passengers, a 78% decline from 2019, while total flights were 41,804, a 71% decrease.

“When the country was placed in Enhanced Community Quarantine (ECQ) in March 19, 2020, [Cebu Pacific’s] commercial operations were grounded. Commercial operations resumed on June 3, albeit gradually with most of the Philippines still in General Community Quarantine (GCQ),” it says.

“This resulted in various requirements and processes from local government units, which continue to be a challenge not only for Cebu Pacific and other airlines, but for the public as well.”

In response to the crisis, the carrier reduced operating expenses by 40% during the year to Ps43.4 billion, with fuel costs showing a big decline owing to fewer flights and lower fuel costs. Cost savings initiatives included reducing its network, fleet, and manpower, in addition to booting efficiency.

To shore up its cash position, the carrier had two successful fundraisings during 2020. An issue of convertible preferred shares generated Ps12.5 billion in fresh capital, and it also secured a Ps16 billion ten-year loan facility with a syndicate of banks.

At the end of 2020 cash and cash equivalents stood at Ps5.4 billion, compared with Ps 18.2 billion a year earlier.

“All these ongoing endeavours are necessary steps to ensure Cebu Pacific stays formidable and committed to provide safe, reliable, and affordable air transport services for everyone,” says the carrier.

“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.”

Updated with paragraph describing cash and cash equivalents