Cebu Pacific is supported by international companies
CLARK FREEPORT – Cebu Pacific (CEB) has taken another big step forward to secure its future as a key low-cost provider of domestic and international travel after raising new funds from the International Finance Corporation (IFC), IFC Emerging Asia Fund and Indigo Philippines LLC, a subsidiary of Indigo Partners LLC.
IFC, the IFC Emerging Asia Fund, a private equity fund managed by IFC Asset Management Company, and Indigo Partners, a private equity firm specializing in global air transport investments, have invested US $ 250 million in CEB in the form of convertible bonds.
This investment will provide the CEB with a longer liquidity trail to help the company withstand the effects of the pandemic until economic activity and travel demand recover.
The funds will also help maintain the trade and competitiveness necessary to provide affordable transport in an island country where maritime transport alone cannot meet the connectivity needs of people, goods and services.
“We view Indigo, IFC and IFC Emerging Asia Fund not only as providers of capital, but also as long-term partners to drive improvements in the business, as well as to accelerate our sustainability agenda,” said Lance. Gokongwei, President and CEO of CEB. “This will further strengthen the CEB as we recover, so that we can continue to fulfill our commitment to improving the lives of people in the communities we serve for a long time.”
As an archipelago of over 7,600 islands and a major tourist destination, the Philippines is heavily dependent on air travel.
Tourism generated 12.7% of the country’s gross domestic product in 2019, while remittances, which depend on the movement of Filipino workers abroad, generated an additional 8.9%.
As the Philippines’ largest domestic airline and one of its main international carriers, the CEB will play a critical role in the country’s recovery from Covid-19.
Air transport is a major contributor to the global economy.
Air transport supported 87.7 million jobs worldwide before the pandemic, including 11.3 million direct jobs and 44.8 million tourism-related jobs, according to a report by the Air Transport Action Group.
The industry contributed $ 3.5 trillion to the global economy in 2018, while air freight accounts for 35% of global trade by value.
However, Covid-19 has had a devastating impact on the industry, resulting in stranded fleets, significant financial losses and loss of customer confidence.
This makes long term and experienced partners essential in helping airlines get back on track.
“We are delighted to partner with CEB, a leading carrier in the market and one of the most successful airlines in the region,” said Jean-Marc Arbogast, Country Director for the Philippines at IFC.
Maintaining low-cost travel services is essential in an island nation like the Philippines, and airlines will play a vital role in the country’s economic recovery, Arbogast added.
The CEB will play a leading role in this recovery, providing connectivity and jobs, preventing disruptions in supply chains and supporting the tourism sector at a time when it is most needed, the IFC executive said. .
“Indigo is delighted to invest in CEB and to work with its team to take advantage of the many growth opportunities to come as travel demand increases following the pandemic,” said Bill Franke, Managing Partner of Indigo Partners. “We have great respect for what the Gokongwei family has accomplished with the airline, and we look forward to a strong partnership.”
IFC is an active investor in private sector airlines in emerging markets around the world, with 19 investments since 2000.
Projects with low cost carriers include supporting the expansion of GOL Airlines in Brazil and helping launch Volaris in Mexico.
Indigo Partners specializes in investing in the aviation sector. Its current airline investments include Frontier Airlines in the United States, Volaris in Mexico, Wizz Air in Europe and JetSMART in Chile.