MANILA, Philippines - Budget airline Cebu Air Inc., the carrier of the Cebu Pacific brand, said it may raise up to P22.38 billion from a primary and secondary offering of shares to bankroll its massive fleet expansion.

In a new filing with the Securities and Exchange Commission, Cebu Air, the airline unit of tycoon John Gokongwei, said it is offering up to 235.562 million shares at an indicative price of P95 each,125.25 million of which will be issued though an initial public offering (IPO) while the remaining 110.309 million shares to be issued by selling shareholders.

Of the total offered shares, up to 164.89 million shares will be sold in the international market while a maximum of 70.668 million shares will be issued domestically.

The company has allotted up to 35.334 million shares for the greenshoe option, which would raise an additional P3.36 billion in proceeds.

The much-awaited market debut of Cebu Pacific is touted to be the country’s biggest IPO this year.

Deutsche Bank AG and JP Morgan Ltd. are the lead managers for the international issue while ATR Kim-Eng Capital Partners Inc. is the domestic lead underwriter.

BJ Sebastian, senior vice-president of Cebu Air’s parent firm JG Summit Holdings Inc., said the final offer price shall be determined based on a book-building process and discussions between the company and its underwriters.

Cebu Air has also set aside 20.39 million shares for its employees stock option plan which will be sold at a discount to the IPO price.

The airline has earmarked P9.11 billion of the total proceeds for pre-delivery payments of new Airbus A320 aircraft for the period 2010 to 2013. It has firm orders for 15 Airbus A320 aircraft, options for five Airbus A320 aircraft, two operating lease contracts and plan to acquire two additional Airbus A320 aircraft through lease or purchase. This should expand Cebu Air’s fleet from 29 to 47 by 2014.

Cebu Air is the country’s leading domestic airline by passengers carried with a market share of 48.7 percent as of end-December 2009. It intends to capitalize on its leading position in the domestic passenger market by growing its international passenger traffic, flight frequencies and introducing new international destinations to capture the under-served markets.

In particular, Cebu Air intends to further penetrate the three North Asian markets of the People’s Republic of China, Japan and the Republic of Korea. In the next two years, the airline plans to launch new services to Beijing, Brunei, Denpasar, Nagoya and Fukuoka. 

Aside from this, Cebu Air intends to capitalize on its consolidated terminal operations at NAIA 3 as well as Manila’s unique geographic location, to increase its share of low-cost air travel between North Asia and Southeast Asia by promoting Manila as a hub for Asia-wide low-cost air travel.

Locally, Cebu Air plans to add new domestic destinations including Pagadina and Marinduque over the next two years. It is currently working with local airport authorities to improve and increase provincial airport capacities. 

As of end-December last year, Cebu Air operated an extensive network serving 50 domestic routes and 21 international routes with a total of 1,710 weekly fights. Total passengers carried have increased to 8.8 million.

Cebu Air ended in positive territory last year with a net income of P3.18 billion as against a net loss of P3.26 billion in 2008. Revenues grew 18 percent to P23.31 billion from P19.68 billion the previous year.