In a first for low-cost airlines in Southeast Asia, Philippine carrier Cebu Pacific has secured a sustainability-linked loan ( SLL ) to fund its fleet modernization drive.

The airline completed a Japanese operating lease with call option ( Jolco ) for a brand-new Airbus A321neo, marking its debut in sustainable aircraft financing. The financing arrangement was facilitated by Crédit Agricole CIB, which served as the sole sustainability adviser, Jolco arranger and lead arranger.

The loan incorporates carbon reduction targets that, if met, will reward the airline with financial incentives. These targets align with Cebu Pacific’s goal to fully transition to a more fuel-efficient, all-NEO fleet by 2028.

The Airbus A321neo is 20% more fuel-efficient than earlier models, positioning Cebu Pacific to make substantial progress toward reducing carbon emissions. The aircraft's enhanced efficiency and lower environmental impact will directly contribute to Cebu Pacific’s sustainability-linked targets.

The airline’s move is expected to encourage more carriers in the region to adopt similar sustainability-linked financing models.

“The delivery of this new A321neo on December 23 2024, is a significant milestone in our decarbonization journey,” says Mark Cezar, the carrier’s chief financial officer. “It underpins our strategy of operating one of the most modern and fuel-efficient fleets in Asia.”

Bertrand Rovetto, head of Crédit Agricole CIB’s aviation group, adds: “This transaction underscores our commitment to helping clients transition towards net-zero emissions through innovative financing mechanisms.”