Cebu Pacific’s refunds payable hit P1.43 billion in 2020

BUDGET CARRIER Cebu Pacific said its customer refunds payable reached P1.43 billion last year due to a surge in refund requests amid a public health crisis.

Cebu Air, Inc., the listed operator of the low-cost carrier, said in its annual report released on Thursday that it saw a “1,938.7% increase” in its refunds payable last year “due to a surge in refund requests with the increase in flight cancelations brought about by the COVID -19 (coronavirus disease 2019) outbreak.”

Its refunds payable last year totaled P1.43 billion, a significant increase from the previous year’s P70.17 million.

“In light of the significant increase in flight cancelations due to the COVID-19 outbreak and consequent to the grounding of the group’s commercial operations, customers were given options for their canceled flights which included, among others, conversion to a full travel fund which is a virtual wallet equivalent to the amount paid for an existing booking. A travel fund is valid for two years and can be used as payment for future bookings,” the budget carrier said.

Cebu Pacific has said processing of refunds could take up to seven months due to the high volume of requests.

It reported a net loss of P22.2 billion, owing primarily to the effect of the pandemic on its operations.

Cebu Air’s revenues for 2020 dropped 73% to P22.6 billion. Cargo business contributed P5.4 billion or 24% of the total.

The number of passengers it carried last year dropped 78% to five million, while the number of flights was 71% lower at 41,804.

It closed the year with P20.77-billion operating loss and negative EBITDAR (earnings before interest, taxes, depreciation, amortization, and restructuring or rent costs) of P932 million.

Cebu Air said it expects a slow recovery from the crisis due to the losses it has suffered.

“The group remains in a strong balance sheet and equity position at the end of the period,” it noted.

“The group is actively engaged in planning and executing various measures to mitigate the impact of the COVID-19 global pandemic on its business operations. These include negotiations with key suppliers on capital expenditure commitments and related cash flows, as well as with other suppliers and stakeholders as they impact the group’s cash flows. It is further engaged in the planning of staff rightsizing in addition to further optimization and digitalization of processes,” it added.

Cebu Air shares closed 2.06% higher at P47 apiece on Thursday. — Arjay L. Balinbin