The Philippines' leading carrier, Cebu Pacific (PSE: CEB), reports a P 22.2B net loss for full year 2020, following the heavy impact of the unprecedented COVID-19 crisis. With health and safety concerns resulting in the decrease of passenger confidence and heightened travel restrictions, CEB's operational and financial performance were severely affected. For 2020, CEB flew five (5) million passengers, 78% lower than 2019; and a total of 41,804 flights, 71% lower than 2019.
When the country was placed in Enhanced Community Quarantine (ECQ) in March 19, 2020, CEB's commercial operations were grounded. Commercial operations resumed on June, 3 albeit gradually, with most of the Philippines still in General Community Quarantine (GCQ). This resulted in various requirements and processes from local government units, which continue to be a challenge not only for CEB and other airlines, but for the traveling public as well.
Pre-COVID, CEB flew about 400 flights a day. It flew an average of 47 flights a day in the third quarter, to 76 flights a day by December, about 20% of pre-Covid levels. This growth was primarily domestic-driven and supplemented by cargo operations, which performed better than expected.
CEB revenues posted at P22.6B for 2020, 73% lower than 2019. Cargo operations contributed P5.4B, or 24% of CEB's total revenues in 2020, as cargo freighter and charter flights contributed to higher yield. In addition to two ATR 72-500 cargo freighter aircraft, CEB began utilizing its first A330 cargo converted aircraft in November 2020, which allowed it to carry more cargo on long-range flights.
Total operating expenses reduced by 40% to Php43.4B. Fuel showed the steepest decline, as less flights were coupled with lower fuel cost. Other operating expenses likewise reduced as CEB continues its rigorous cost reduction initiatives, including the right-sizing of its network, fleet, and manpower, while improving operational efficiencies through various digitalization efforts.
CEB closed Full year 2020 with Operating Loss of P20.77B, and negative EBITDAR of Php932M.
Cebu Pacific is unique among its peers as it entered the COVID pandemic with a historically strong ability to generate free cash flow. End-2019, its net debt-to-equity ratio was 1.26x. With its fleet of 74 aircraft, CEB had total assets of P128.46B by end-2020, and its net debt-to-equity ratio was still at a strong 3.17x, enough to support CEB in this challenging environment.
Amidst severe losses incurred in 2020, CEB is pleased to announce the successful completion of two significant fundraising initiatives. CEB's Convertible Preferred Shares were successfully listed on the Philippine Stock Exchange on March 29, providing CEB with P12.5B in fresh capital. In addition, last March 5, CEB signed a P16B, ten-year term loan facility with a syndicate of domestic banks, including the Development Bank of the Philippines, Land Bank of the Philippines, Asia United Bank Corporation, Bank of the Philippine Islands, Metropolitan Bank & Trust Company, and Union Bank of the Philippines.
These fundraising initiatives not only provide CEB with a cash runway of up to P28.5B, but also represent the confidence of its shareholders and these banking institutions in CEB playing a vital role in the recovery of the travel industry, and the Philippine economy as a whole.
All these ongoing endeavors are necessary steps to ensure CEB stays formidable and committed to provide safe, reliable, and affordable air transport services for everyJuan. 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.