Japan Airlines Corp. said Friday it plans to raise ¥151.5 billion in capital by selling preferred shares to 14 creditors and business partners to reinforce its financial strength and further improve profitability.
Unveiling its midterm plan for the period through business 2010, the airline said it would use the money to purchase more fuel-efficient airplanes and equipment to improve customer convenience.
JAL announced in February it is on course for a profit for the business year ending March 31, after two consecutive years of losses brought on by rising fuel costs and safety lapses that hurt its reputation.
“Based on a situation in which the price of crude oil is on the rise and signs of an economic slowdown are appearing from the (U.S.) subprime mortgage problems, we still can’t be optimistic about our future,” JAL President Haruka Nishimatsu said.
Under the fundraising plan, JAL’s 14 creditor banks and business allies will inject ¥151.5 billion into its capital base. The creditors include Mizuho Corporate Bank, the core unit of Mizuho Financial Group Inc., while the allies include trading houses Mitsui & Co. and Sojitz Corp. and refiners Nippon Oil Corp., Japan Energy Corp., Idemitsu Kosan Co. and Cosmo Oil Co.
Nishimatsu also said the fundraising move would help the carrier survive competition ahead of the capacity expansions at Narita and Haneda airports planned for 2010.
Boosting its capital base will make the purchase of 65 new planes easier. JAL’s capital adequacy ratio will be 22 percent, compared with 16 percent at the end of December.
JAL also pledged to take additional steps to improve its financial standing by curbing personnel expenses through continued reduction of bonuses and other means.
The airline also raised its target for business 2010 operating profit to ¥96 billion from ¥88 billion.
JAL is expected to bounce back into the black with a group net profit of around ¥7 billion for the year ending in March. For the April-December period, JAL chalked up a group net profit of ¥20.45 billion, reversing the ¥9.38 billion loss it logged the year before.
Operating profit totaled ¥82.58 billion for the first nine months of the year, compared with a loss of ¥5.86 billion recorded in the previous year.
Becky ad blitz
SYDNEY (Kyodo) Australian budget airline Jetstar Airways has enlisted the help of a Japanese TV star to revive Japan’s flagging interest in holidaying Down Under.
Rebecca-Eri Rayborn, known as Becky, is the face of the airline’s new campaign launched in Japan this week.
Ads featuring Rayborn outside iconic Australian locations such as the Sydney Opera House are being rolled out on Japanese TV, magazines, online and in railway stations.