Japan Airlines plans to raise $2.7bn to bolster finances

TOKYO: Japan Airlines Co Ltd (JAL) said on Thursday it planned to raise around 300 billion yen ($2.7 billion) of subordinated loans and hybrid financing to help it weather the prolonged impact of the coronavirus pandemic.

Details of the funding plan will be announced on Friday, the company said in a statement after news organisations including Reuters earlier reported on the plan, citing sources.

"We are considering various ways to secure financing, in order to prepare for the long-term effects of the spread of coronavirus infections, and in order to achieve the growth targets laid out in JAL's medium term business plan," the airline said.

Japan Airlines logs $2.6bn loss

JAL last month posted a first-quarter operating loss of 82.65 billion yen, an improvement from a year earlier, as pandemic-related cost cuts took effect and travel demand rose from a very low base.

JAL, like other carriers, has been burning through cash reserves to keep jets and workers it will need when travel demand rebounds.

It raised $1.8 billion in a share sale last November.

The airline last month said it expected its cash burn rate to fall to around 5 billion yen a month in the second quarter ending Sept. 30 from 10 to 15 billion yen a month in the first quarter.

Rival ANA Holdings Inc last year raised $3.8 billion in subordinated loans and $3.2 billion of equity to help it weather the pandemic and fund the purchase of new planes.

JAL shares were down 0.8% in afternoon trade, in line with the decline in the broader market.