Philippine Carrier Cebu Pacific Receives $250 Million

Cebu Pacific has raised US$250 million to help buttress against the travel downturn. The funds come in the form of convertible bonds. Cebu Pacific says the cash will provide the airline with a “longer liquidity runway.” But the really interesting part of this story is unpicking who is behind the funding.

Cebu Pacific has just picked up a US$260 million capital injection. Photo: Cebu Pacific

IFC and Indigo Partners step in to financially support Cebu Pacific

The $250 million investment comes from the International Finance Corporation (IFC) via its Emerging Asia Fund and Indigo Partners. The IFC is a sister organization of the World Bank. It is a global development institution concentrating on the private sector in developing countries. Its Emerging Asia Fund is a private equity fund that invests in developing markets in Asia.

“Maintaining low-cost travel services is essential in an island nation like the Philippines, and airlines will play a critical role in driving the country’s economic recovery,” said IFC country manager Jean-Marc Arbogast in a statement accompanying the investment.

The IFC has been an active investor in private-sector airlines in emerging markets worldwide. They’ve made 19 airline investments since 2000. Among the airlines benefitting from IFC capital are Avianca, Buddha Air, Jetair, Kenair, Lan-Chile, Siberia Airlines, Air taxi, Vuela, GOL, and AirBlue

Cebu Pacific is one of many airlines the IFC has invested in. Photo: Cebu Pacific

Indigo Partners sees potential at Cebu Pacific

The other party pitching in with cash is Indigo Partners. The Arizona-based private equity firm is headed by Bill Franke. Indigo Partners maintains controlling interests and minority stakes in various low-cost airlines worldwide. Indigo’s current stable of airlines includes Wizz Air, Volaris, JetSMART, and Frontier Airlines.

“Indigo is excited to invest in Cebu Pacific and work with their team to take advantage of the many growth opportunities ahead as travel demand increases post-pandemic,” said the normally media-shy Bill Franke, “We have a great deal of respect for what the Gokongwei family has achieved with the airline, and we look forward to a strong partnership.” 

Indigo’s interest in Cebu Pacific is telling on many levels. Indigo Partners run lean and mean low-cost airlines around the world. In an industry littered with loss-making airlines, Indigo’s airlines make money. That Indigo is putting money into Cebu Pacific says a lot about Cebu Pacific’s future prospects and the future of the Philippine aviation industry. One senior aviation industry figure said this to Simple Flying last year about Bill Franke:

“They take a very clinical approach to which markets they enter – or not.”

Whether it is an even split or what percentage of the $250 million both Indigo Partners and the IFC are investing was not disclosed. But the IFC and Indigo Partners have worked together before on airline investments, including at Volaris.

Indigo Partners don’t invest in airlines unless they think they can make them work. Photo: Cebu Pacific

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The third round of successful capital raising for Cebu Pacific

In calendar 2020, Cebu Pacific posted a loss of about $465 million. However, this is the third successful significant capital raising finalized by Cebu Pacific since the onset of the travel downturn. Last year, the airline raised approximately $262 million via a share issuance on the Philippine Stock Exchange. Cebu Pacific also signed a 10 year $330 million loan facility with a consortium of Philippine banks.

“The fundraising activities not only provide Cebu Pacific with a cash runway,” said an airline spokesperson. “They also represent the confidence of its shareholders and those banking institutions in the airline playing a vital role in the recovery of the travel industry and the Philippine economy as a whole.”

Cebu Pacific has a fleet of 66 aircraft running from ATR72s to Airbus A330-300. According to, 26 of those 66 planes are parked. Its wings clipped by the travel downturn, Cebu Pacific currently flies to 32 domestic destinations, mainly from its hubs in Manila and Cebu.

Referring to the most recent cash injection from the IFC and Indigo Partners, Cebu Pacific President and CEO Lance Gokongwei said;

“This will further strengthen Cebu Pacific as we recover, so we may continue fulfilling our commitment to improving the lives of people in the communities we serve for a long time to come.

“We view Indigo, IFC, and IFC Emerging Asia Fund not only as capital providers but also long-term partners in driving improvements in the business, as well as accelerating our sustainability agenda.”