JAL mulls raising up to $2.9b in capital

Japan Airlines is considering raising up to Y300b ($2.9b) in capital while expecting to post an operating loss of around Y85b for the three months through September, hit by a sharp fall in the number of international passengers due to the coronavirus pandemic, sources close to the matter said Monday. JAL could take out subordinated loans, which would allow the airline to count part of the debt as capital, as the impact of the novel coronavirus continues to gut demand for air travel, according to the sources. Seeing the need to strengthen its financial standing by next spring, JAL is hoping to begin full-blown negotiations on its capital-raising plan with a group of banks by the year-end, the sources said. JAL has already informally informed its lenders of such a view, the sources said, adding possible options to raise capital also include the issuance of subordinated corporate bonds and a public offering. JAL's estimated red ink for the July-September period would mark an improvement from its operating loss of Y131.01b in the previous quarter, as it has implemented cost-cutting measures and benefited from a government program launched in late July that subsidizes 35% of domestic travel expenses. JAL filed for bankruptcy in 2010, which exempted it from repaying remaining loans of over Y500b following restructuring efforts, eventually enabling the company to have a higher capital adequacy ratio than rival ANA.<br/>