JAL goes to stock market for fresh capital

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Japan Airlines (JAL) is seeking to raise up to ¥223 billion ($1.95 billion) through the sale of new shares to help it improve its financial position and modernise its fleet, writes Nicholas Ionides in Singapore.

Asia’s largest airline group says that it will offer 350 million new shares through a public offering in Japan and 350 million in two overseas placements to institutional investors, one in the USA and the second in other countries.

There will also be an over-allotment option of 50 million shares for the Japanese market, meaning the total number of new shares issued may rise to 750 million.

“We need to strengthen our financial position,” says JAL, which adds that proceeds will be used “for aircraft, parts and other equipment”.

JAL has dozens of aircraft on firm order with Boeing, including 737-800s, 767s, 777s and 787s.

The airline has been in financial difficulty because it has been hurt by increased fuel costs and by a series of much-publicised safety issues last year that prompted many Japanese travellers to switch their business to JAL’s rival carrier, All Nippon Airways.