JAL to raise $2.7b to deal with COVID travel slump
Japan Airlines is looking to raise 300b yen ($2.7b) in funds to ride out anticipated funding challenges amid the continued slump in air traffic, sources have told Nikkei. The funds will be raised through subordinated loans and other financing measures, the sources said. The move comes as air travel continues to languish in Japan despite progress with the country's vaccination program, weighing on the airline's bottom line. JAL will look to shore up its finances to ride out the slowdown, should it continue. Subordinated debt is set to be classified as quasi-equity this month. JAL is also looking at issuing bonds to raise funds. The amount of the capital raised could vary, depending on demand for the JAL bonds. The funds are not just to cover operating expenses. The company needs to invest in new initiatives to reduce carbon emissions. JAL wants to limit any damage to its balance sheet by using quasi-equity financing. The move follows earlier rounds of capital raising of 180bn yen carried out in November and December. JAL has concluded that it needs an additional cash buffer as the pandemic has lasted longer than expected. The country has been under the state of emergency for much of the year. JAL has a capital-to-asset ratio of 42.4%, one of the healthiest among global airlines. But the company has continued to bleed cash over the past several months. <br/>
https://portal.staralliance.com/cms/news/hot-topics/2021-09-09/oneworld/jal-to-raise-2-7b-to-deal-with-covid-travel-slump
https://portal.staralliance.com/cms/logo.png
JAL to raise $2.7b to deal with COVID travel slump
Japan Airlines is looking to raise 300b yen ($2.7b) in funds to ride out anticipated funding challenges amid the continued slump in air traffic, sources have told Nikkei. The funds will be raised through subordinated loans and other financing measures, the sources said. The move comes as air travel continues to languish in Japan despite progress with the country's vaccination program, weighing on the airline's bottom line. JAL will look to shore up its finances to ride out the slowdown, should it continue. Subordinated debt is set to be classified as quasi-equity this month. JAL is also looking at issuing bonds to raise funds. The amount of the capital raised could vary, depending on demand for the JAL bonds. The funds are not just to cover operating expenses. The company needs to invest in new initiatives to reduce carbon emissions. JAL wants to limit any damage to its balance sheet by using quasi-equity financing. The move follows earlier rounds of capital raising of 180bn yen carried out in November and December. JAL has concluded that it needs an additional cash buffer as the pandemic has lasted longer than expected. The country has been under the state of emergency for much of the year. JAL has a capital-to-asset ratio of 42.4%, one of the healthiest among global airlines. But the company has continued to bleed cash over the past several months. <br/>
