UPDATE1: Japan Airlines to raise 167.9 bil. yen to survive coronavirus impact

Japan Airlines Co. said Friday it will raise 167.9 billion yen ($1.6 billion) via a public stock offering this year to survive the harsh business environment amid the coronavirus pandemic and cover replacement costs for its fleet.

The first capital increase since its relisting in 2012 comes as airlines have been battered by a slump in air travel due to the pandemic. JAL has a stronger financial foundation than some of its peers such as ANA Holdings Inc. but still expects to post a record net loss for the current business year through March.

After securing the funds by issuing 100 million shares, JAL aims to use about 100 billion yen for investment and the rest to repay debts.

JAL plans to spend some of the raised funds to replace Boeing 777s with more fuel efficient Airbus 350s. It will also help budget airline subsidiaries Zipair Tokyo Inc. and Jetstar Japan Co. bolster their businesses.

As the pandemic reduced air travel demand, particularly for international flights, JAL expects to post a net loss of 240 billion to 270 billion yen in fiscal 2020, in what would be its first red ink since relisting on the Tokyo bourse in 2012.

When JAL went bankrupt in 2010, it received debt waivers from financial institutions and an injection of public funds, paving the way for the airline to develop a stronger capital adequacy ratio, the gauge of financial health, than ANA.

ANA is also struggling to ride out the pandemic, expecting a record net loss of 510 billion yen for the current business year through March. The parent company of All Nippon Airways Co. last month secured 400 billion yen in subordinated loans from major Japanese banks, including the state-affiliated Development Bank of Japan.

A senior JAL official did not rule out the possibility of taking out subordinated loans, which have a lower repayment priority than other loans and can largely be treated as capital.

"We will consider various options. We will do so in a flexible manner," the official told an online press briefing.

==Kyodo

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