Japan Airlines seeks to get financed largely for anticipating prolonged COVID years

 

JAL Stock Price at Tokyo Exchange, July-Sept 2021

Nikkei reported on Thursday that Japan Airlines announced to finance about JPY 300 billion (about USD 3 billion) from the market.  JAL, suffering from higher-than expected business setbacks by COVID-19, would aim at strengthening its financial prowse.

However, JAL secured about JPY 180 billion (USD 1.8 billion) in 2020 by public offering but the management decided to try large scale financing again.

JAL sees lower yield in its passenger traffic while it feels a stronger need for investment for new technologies including decarbonizing. 

As of the end of June, JAL’s capital ratio was 42.4%, one of the highest in major airliners in the world but its cash position decreased to JPY 357 billion, dropping by JPY 50 billion in just three months. 

However, JAL sees a gloomy perspective for the time being. Its domestic lines show stagnating demand due to many times of emergency situations declared by the central government while its international operations are blocked by continuing resticition of travel by many countries.  As of July, JAL passengership was around 40% in domestic lines and just 10% for international traffic, compared with pre-COVID 2019.

But JAL needs to secure financing for its long-term investment; a total of 450 billion for three years from March 2022 to the same month of 2024 is planned to introduce Airbus 350-900s and beef up its low cost carrier operations.

JAL will announce its official financial plans on September 10 in Japan.

Source 日本経済新聞　JAL、3000億円程度の調達発表　コロナ禍長期化に備え　

Japan Airlines to Acquire LCC Spring Air Japan Anticipating Post-COVID Tourism of Chinese Visitors to Japan

 

Japan Airlines is going to acquire over 51% stocks of Spring Airlines Japan, a low cost carrier (LCC) and an affiliate of Spring Airlines of Shanghai, China, by June to make the LCC as a consolidated subsidiary of the major carrier. JAL owns about 5% of the stocks of Spring Airlines Japan at present.

Japan Airlines will pursue to get in-bound tourists to Japan after COVID-19 will be dwindled.

Spring Airlines Japan was launched in 2012 by Spring Airlines of China. Japanese investors, including JAL, have invested in this new airline with head office in Narita City, Chiba.  From its hub in Narita, Spring Airlines Japan operates domestic routes such as Shin Chitose, Hiroshima, Saga as well as international routes to Tianjin, Harbin and such, hoping to get connected to strong network of Spring China.

JAL hopes to acquire leisure tourists through this LCC. As more remote work and video conferencing has become popular, JAL cannot expect the return of robust business demands anytime soon.

 

Japan's Newest Carrier ZIPAIR Starts Flight Service as Cargo Only

画像：ZIPAIRプレスリリース

ZIPAIR Tokyo or ZIPAIR, a newly established low cost carrier subsidiary of Japan Airlines, inaugurated its scheduled cargo flight from Narita to Bangkok, Thailand on June 3, 2020.

ZIPAIR, a whole owned by JAL, operates two Boeing 787-8s. The new LCC aims at starting other routes to Southeast Asian destination and trans-Pacific routes.  

The carrier originally planned to start its passenger flight between Narita and Suvarnabhumi Airport from 14 May 2020 but it postponed the start due to the pandemic of COVID-19. 

Over 90 percent of scheduled international flights have been stopped, the demand for air cargo is  steadily rising and ZIPAIR has decided to launch its scheduled cargo flight at first.

ZIPAIR offers four cargo flights a week as below. 

ZG51　Narita 17:20/ Bankok 22:00 　Wed/Thur/Fri/Sat

ZG52　Bangkok 23:30/Narita 07:45（+1）　Wed/Thur/Fri/Sat

The carrier has not announced a flight schedule for its passenger flights yet.  As ZIPAIR has a plan to operate Narita-Incheon flights, it is probable that the flight to and from Korea will take place in daytime and Bangkok service will take place in night. ZIPAIR has announced its plan to start the Korean flight effective from July 1.  However, passenger service between Japan and South Korea is still under restriction and business environment is not favorable yet.

The new LCC has also announced its plans to start Narita-Honolulu flights from winter schedule of 2020.

Visit ZIPAIR website. http://www.zipairtokyo.com/en/

JAL Seeks For Space Travel After Supersonic Airliner

JAL Goes to Space after Supersonic Airliner: it teams up with ‘ispace,’ a space start-up

the editor, December 18. 2017

Japan Airlines (9201 TSE) announced its capital collaboration with ispace, a startup space company for seeking future habitation in outer space.

JAL will work closely with ispace for mutual promotion as well as support for operation, maintenance and space flight. JAL regards this venture as a way to create new value for the society.

This would be something related with ‘space travel,’ one of other area of JAL’s new business domains for expanding its business.  The Japanese airliner previously announced its collaboration with Boon Technologies for development of a new supersonic airliner.

JAL is one of corporate members to sponor HAKUTO lunar exploration team led by ispace. based in Tokyo.

Corporate visions of ispace is “Expand our planet. Expand our future,’ and lunar exploration is jut a step toward coming deep space exploration for expanding human habitation. The company seeks for lunar orbit flight and lunar landing as the only Japanese entratnt for Google Lunar XPRIZE.

Once bankrupt, Japan Airlines is now free from any restraint due to corporate rehabilitation supervised by the government of Japan.

JAL Selects MRJ for Local Domestic Routes

First MRJ under final assembly in June 2014. (PHOTO  Mitsubishi Aircraft)

NIKKEI web-edition reported on August 28 that Japan Airlines has chosen MRJ, regional jets under development by Mitsubishi Aircraft.  

JAL will introduce MRJ to its domestic destinations from 2021 by replacing aging feeder fleet.  Fuel efficient, MRJ is expected to lower fuel bills for JAL while bringing with more flexibility to adjust flexibility of operations by seasonal change, thus reinvigorating JAL’s local network that once shrunk during the carrier’s corporate rehabilitation processes.

JAL will introduce 32 MRJs, billed about JPY 150 billion (USD 1.4 billion) by catalog price. The fleet will be based at Osaka Itami Airport for operations by its subsidiary J-Air that currently flying both Bombardier and Embraer small aircraft.

MRJ, either 70- or 90-seat,  will  become commercially available in 2017 according to Mitsubishi Aircraft. Applying with more composite materials and GTF engines, MRJ has a target of fuel consumption lower by 10 to 20 percent than today’s counterparts.

ANA, the launch customer of MRJ, has ordered 25 previously.

Mitsubishi Aircraft received order for 375  MRJs including options. Adding 32 more from JAL, Mitsubishi will mark over 400 orders that is said to be break-even point for MRJ development and production. Further, expectations of cost reduction by volume production may accelerate its marketing in overseas markets. ■

JAL Bankruptcy Filed

Breaking News

JAL Files For Bankruptcy, With Record High Total Debt of Y2.3Trillion

Japan Airlines, with its two subsidiaries, fileｄ a petition for protection with the Tokyo District Court under the Corporate Rehabilitation Law and the court issued its acceptance to start the procedures on afternoon, January 19. With total debt of ￥2,320 billion, JAL rewrote the history of corporate failure in the past. Simultaneously Enterprise Turnaround Initiative Corporation (ETIC) formally decided to support JAL's rehabilitation and is ready to infuse a total amount of ￥900 billion. Accordingly, on the same day, Tokyo Stock Exchange classified JAL stocks as special category, a step before desisting of stocks; TSE today announced JAL stocks will be desisted on February 20. 

JAL's Rescue Plans Calls For 15,000 Employment Reduction in Three Years

Japan Airlines is expected to file its bankruptcy on 19 January for simultaneous start of its corporate rehabilitation by Enterprise Turnaround Initiative Corp. (ETIC) while expecting support by the government of Japan. The outline of its rescue plans was revealed yesterday: according to the plans, more than 15,000 employees, equivalent of 30 percent of the entire group would be slashed in three years. ETIC would confer with JAL and its main commercial banks for details of the plans.

ETIC seems to see JAL as having excess liability of over 800 billion yen and would ask JAL's creditors to write off 730 billion yen while ETIC itself would invest 300 billion yen to capitalize JAL so that the balance sheet would turn into positive.

Both Delta Airlines and American Airlines had express their intention of financial assistance to JAL for over $1 billion respectively, but ETIC assumes JAL should not accept American capitalization on the ground their capital investment might influence the course of JAL's rehabilitation. However JAL will choose its partner for joint operations under Open Skies between Japan and USA.

ETIC is now preparing to request Mr. Kazuo Inamori, 77, honorable chairman of Kyocera, Kyoto-based integrated manufacturer of electronics and industrial ceramics, to assume CEO after the process of legal liquidation starts in January.

ETIC is also studying if JAL stocks should be maintained listed in stock exchange; currently the fund is reportedly comparing two plans to maintain the listing after capital reduction by over 90% or delist JAL stocks after 100% capital reduction.

Tokyo Does Not Endorse JAL Financing

9 November 2009

From Yomiuri Shimbun


Regarding management rehabilitation of Japan Airlines, Prime Minister Yukio Hatoyama conferred with Vice Prime Minister Naoto Kan, Finance Minister Fujii, Minister of Land and Trasport Maehara at official residence of PM on 8th November.

JAL deadly needs emergency financing for keeping its operations, around 100 billion yen within this year, and the governemnt agreed on financing for JAL without the government guarantee with commercial banking consortium on November 9.

JAL's mid term business performance records will be announced on November 13 and that day would a decisive timing to finalize JAL corporate restructure plans.

At ministers' meeting on 8th night, Maehara, as chief of 'JAL Rehabilitation HQS' consisting of seven government divisions, made a presentation of the policy direction. One of the issues is to lower high amount of corporate pension scheme of JAL by legislative measure and the other is support the company financially by the use of public funding from tax revenue. Prime Minister Hatoyama expedited the team to compile a working plans.

The rescue financing was expected to be guaranteed by the government as 'crisis situations solution' but the government now has a different view to JAL's management ciris as 'structural' and not caused by rapid deterioration of economic situations; and the original plan to provide government guarantee was canceled as the government changed its perception toward JAL.

Comment: JAL stock price on November 9 was closed as 106 yen, down 3 yen or 2.75% from the previous week at TSE.

JAL to Discontinue 16 Routes First by June '10

Deficit-ridden Japan Airlines is now studying suspend flight service of 16 routes of which 8 for domestic and 8 for international. The company is expected to formally decide the abolition of these air routes within this week. JAL has already requested official support from Japan Corporate Revitalization Support Platform (JCRSP), a public-private joint investment firm and it is expected to add more number of money-losing air routes to abolish as a part of the corporate rehabilitation plan to be made by the request of JCRSP.

Domestic lines under study are: Chubu-Kushiro, Chubu-Hananomaki, Chubu-Kumamoto, Kobe-Shin Chitose, Kobe-Tokyo Handa, Kobe-Naha, Kobe-Ishigaki, and Kita Kyushu-Naha. International lines currently under scrutinizing include Narita-Mexici City, Kansai-Hanzhou(China).

JAL's Business Rescue Plan to be Shown to Banks

A task force of business experts reporting to Seiji Maekawa, Minister of Land and Transportation completed an outline of business reconstruction plan for Japan Airlines mainly based on financial support of 550 billion yen on October 24. The plan will be presented to main banks led by DBJ and when being agreed by them, a path for JAL's salvage would be finalized.

The plan calls for capital reinforcement of 300 billion yen including public funding and request for commercial banks for debt waiver worth 30 billion yen. Financially crunched JAL needs a bridge loan of 180 billion yen as well, and the plan presumes this loan to be guaranteed by the Japanese government.