Japan Airlines completes $ 2.7 billion fundraiser to position itself in post-COVID-19 era

Japan Airlines (JAL) planes sit on the tarmac at the new Chitose Airport in Sapporo, Hokkaido, Japan on May 4, 2021. REUTERS / Issei Kato

  • Raise includes hybrid loans and subordinated bonds
  • Will be ‘safety net of last resort’ – executive
  • The funds will be used to introduce Airbus A350-1000 aircraft
  • The airline will also repay its debt and strengthen its balance sheet

TOKYO, Sept. 10 (Reuters) – Japan Airlines Co Ltd (JAL) (9201.T) on Friday announced that it has finalized plans to issue 300 billion yen ($ 2.73 billion) in hybrid loans and subordinated bonds to give it a safety net and a position for a post-coronavirus business environment.

It will raise 200 billion yen in hybrid loans and 100 billion in subordinated bonds, the airline said in a statement to the stock exchange.

JAL had announced initial plans for the fundraiser on Thursday, but provided more details on the makeup and uses of the funding on Friday. Read more

“We would like to maintain our unused line of engagement, as we believe it is the safety net of last resort,” JAL Chief Financial Officer Yuichiro Kito told reporters. “We don’t want to bemoan the unexpected.”

The airline forecast last month that its cash consumption rate would fall to around 5 billion yen per month in the second quarter ending September 30, from 10 billion to 15 billion yen per month in the first quarter.

However, Kito said the severe COVID-19 situation in Japan meant the company was unsure whether it could meet the second-quarter cash consumption target.

The airline said the proceeds from the collection would be used to introduce the Airbus SE (AIR.PA) A350-1000s as its new flagship aircraft, helping it reduce carbon emissions on international flights.

JAL will also renew its revenue management system for domestic routes and repay other debts with the proceeds of the collection, he added.

“It’s not just about defense, this funding also positions us to be aggressive in the post-coronavirus future,” Kito said.

($ 1 = 109.7400 yen)

Reporting by Maki Shiraki in Tokyo and Jamie Freed in Sydney; additional reporting by Ritsuko Ando in Tokyo; Editing by Christopher Cushing and Gerry Doyle

Our Standards: Thomson Reuters Trust Principles.

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