Less than three years after it collapsed into bankruptcy, Japan Airlines made a modest market return on Wednesday, with its shares closing 1 percent above the price set for the IPO.
The USD$8.5 billion initial public offering had been priced conservatively to take account of the airline industry's tough outlook, with full-service carriers such as JAL under threat from low-cost operators in an already weak economy.
JAL's stock opened around 3 percent above the IPO price of JPY¥3,790 (USD$48), but soon eased back to close 1.1 percent higher at JPY¥3,830 - ranking it alongside Air China as Asia's second-biggest airline by market value behind Singapore Airlines. Trading volume topped 40 million shares.
"Listing our stock is just the starting line for us as a private company," JAL President Yoshiharu Ueki told a briefing at the Tokyo Stock Exchange. "I'm not going to get caught up in where the stock is today. We will focus on boosting our corporate value through sound management and work to gain the trust of our shareholders."
Traders had suggested JAL, which emerged from bankruptcy with the highest level of operating profits in the industry, might climb as much as 10 percent on its market return given trading indications on the unofficial grey market.
Brokers had warned that Japanese retail investors, who took up 70 percent of the IPO, might be quick to take profits given uncertainty over whether JAL's earnings may have already peaked.
"I'm not too bullish on JAL. Low-cost carriers have a larger market share now and competition is fiercer. It's unclear whether they can maintain their current level of profit," said Masato Futoi of Tokai Tokyo Securities.
Budget airlines currently make up less than a tenth of the Japanese market but are expected to grow that to nearer 25 percent over the longer term. JAL is part owner of JetStar Japan, a budget carrier run in partnership with Australia's Qantas. JAL's biggest local rival All Nippon Airways has invested in two low-cost operators.