JAL To Raise At Least USD$6.5 Bln In Re-listing

January 5, 2012

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Japan Airlines plans to raise more than JPY¥500 billion (USD$6.5 billion) ahead of re-listing its shares as early as September, a source with knowledge of the matter said, marking a sharp turnaround for the carrier following its bankruptcy in 2010.

A government-backed fund overseeing the airline's restructuring has said it would aim to recoup its JPY¥350 billion investment through a public offering by January 2013, three years after it went under with JPY¥2.3 trillion in debts.

The state-backed fund, the Enterprise Turnaround Initiative Corporation of Japan (ETIC), is looking at a September to December window to re-list the stock in Tokyo, according to the source, who was not authorised to speak publicly about the deal.

"The valuation will be influenced a lot on the level of global stock prices, and right now it's very unclear how stock markets will perform over the next six months or so," the source said, adding that JPY¥500 billion was seen as a minimum target for the offering to get a decent return on taxpayer funds.

Nomura Holdings and Daiwa Securities were selected by the ETIC as global coordinators for the public offering in August, a Japan Airlines spokesman said. He declined to comment on the potential size of the share sale.

The carrier emerged from bankruptcy last March after slashing 16,000 jobs, cutting pension benefits and paring its international and domestic routes, and logged a record operating profit of JPY¥188.4 billion for the 2010 financial year.

Japan Airlines' recovery has been built almost entirely on cost-cutting and comes in the face of high fuel prices and a sluggish global economy, which has crimped travel demand.

Those tough conditions drove American Airlines to file for bankruptcy protection in November, highlighting just how quickly an airline's fortunes can change.

American had offered to invest in Japan Airlines, its partner in the oneworld Alliance, when the Japanese carrier was heading into bankruptcy in late 2009.