MANILA, Philippines — Low-cost carrier Cebu Pacific has increased its ownership stake to majority control in a company that extends ground handling services to several airports nationwide.
In a disclosure to the Philippine Stock Exchange, Cebu Pacific’s parent Cebu Air Inc. said it has entered into a debt-to-equity conversion with 1Aviation Groundhandling Services Corp.
The swap will wipe out previous advances and loans issued by Cebu Air to 1Aviation, amounting to P113 million, by converting them into equity, as approved by shareholders.
Cebu Air will then raise its ownership stake in 1Aviation to 60 percent once the Securities and Exchange Commission (SEC) approves the conversion. Currently, Cebu Air owns 40 percent of 1Aviation.
Moreover, other 1Aviation lenders have agreed to follow Cebu Air’s suit, converting debt into equity. Both Jefferson Cheng and the Philippine Airport Ground Support Solutions Inc. (PAGSS) will turn their outstanding collectibles from 1Aviation into shares.
Cheng and PAGSS together will control the remaining 40 percent in 1Aviation in replacement of the P34.23 million owed to Cheng and P2.78 million borrowed from PAGSS.
For Cebu Air, getting SEC’s approval for this debt-to-equity conversion would mean improving its management influence in 1Aviation, which is its source of manpower for ground handling.
Likewise, Cebu Air plans to integrate 1Aviation’s services into Cebu Pacific’s to cut operational costs and enhance service quality on ground handling and logistical support.
As for 1Aviation, the conversion of debt into equity will reduce its outstanding liability and solidify its financial position to prepare it for further expansion
1Aviation is one of the largest service providers for ground handling in the Philippines. Since its founding in 2018, it has grown its presence in the country, operating in 34 airports, including the Ninoy Aquino International Airport, through its 6,224 employees.
Based on 1Aviation’s website, its clients include Cebu Pacific and Sunlight Air, and its business covers even the busiest gateways outside of Manila such as Cebu, Davao, Caticlan and Iloilo.
Apart from ground handling, 1Aviation offers cargo services, from handling to warehousing and loading of in-flight catering into the aircraft.