MikeLigalig.com

by Jenniffer B. Austria
Manila Standard Today

The Securities and Exchange Commission approved Thursday the P32.2-billion initial public offering of Cebu Pacific Air Inc., the budget airline of conglomerate JG Summit Holdings Inc.

The airline said in a filing with the SEC it planned to list its shares under the first board of the Philippine Stock Exchange on Oct. 25 under the trading symbol “CEBU.”

Cebu Air, which operates Cebu Pacific, will offer 214.632 million shares, consisting of 30.66 million in primary shares, 155.97 million in secondary stocks and up to 27.99 million in optional securities to cover overallotment. It will sell the shares at a maximum price of P150 apiece.

Cebu Air tapped Citigroup Global Markets Ltd., Deutsche Bank AG (Hong Kong Branch) and J.P. Morgan Securities Ltd. as joint global coordinators and international lead managers and ATR Kim Eng Capital Partners Inc. as the local underwriter for the offering.

“The company intends to use the majority of net proceeds from the offer for pre-delivery payments for aircraft,” the airline said.

The company plans to spend P4.46 billion for pre-delivery payment of aircraft between 2011 and 2012.

Cebu Air in May increased its Airbus A320 orders by seven in a bid to double its seat capacity over the next five years and increase the fleet to 51 by 2014.

Twenty-two Airbus A320 orders, including the additional seven, will require an investment of some $1.4 billion.

The 22 brand new aircraft are set to be delivered from 2010 until 2014, with the first 180-seat aircraft arriving next month.

The additional orders will enable the company to achieve its target of flying 10 million passengers by 2010, 13 million by 2012 and 15.1 million by 2015.

The airline deferred the planned IPO twice due to the extreme volatility in the global equities market in 2007 and the uncertainty that prevailed during the May elections this year.

Cebu Air registered a net profit of P3.09 billion in the first half of the year, up 56 on the back of a 30.9-percent growth in revenues. The increased number of passengers and additional flight frequencies also boosted first-half revenues to P14.91 billion from P11.39 billion year-on-year.

The airline operates a young fleet of 29 aircraft with an average age of 2.5 years as of end-December 2009. It runs an extensive network serving 50 domestic routes and 21 international destinations with a total of 1,710 weekly flights.

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