JAL readying ¥1 trillion IPO in September

Bloomberg

Japan Airlines Co., the carrier that exited bankruptcy last year, is planning an initial public offering that may raise as much as ¥1 trillion as early as September, two sources said.

Nomura Holdings Inc. and Daiwa Securities Group Inc. were hired to lead the IPO, and the airline is now selecting overseas underwriters, said Taro Namba, a Tokyo-based JAL spokesman. He declined comment on transaction details, including size.

Enterprise Turnaround Initiative Corp. of Japan, the government-affiliated agency that holds about 97 percent of JAL’s voting rights, and other stakeholders are considering selling ¥500 billion to ¥1 trillion of shares, said the sources, who declined to be identified because the process is private. The airline was delisted after it filed for bankruptcy in February 2010 and has cut a third of its staff, grounded planes and received funding from the country’s largest banks.

At ¥1 trillion, the IPO would match that of Dai-ichi Life Insurance Co. in 2010 as the biggest in Japan since 1998, according to data compiled by Bloomberg. Nexon Co.’s ¥91 billion IPO was the country’s largest last year.

JAL plans to submit its IPO filing to the Tokyo Stock Exchange in July, the sources said. JAL in June selected Nomura, Daiwa, and the brokerage units of Japan’s three biggest lenders to underwrite the domestic share sale.

ETIC, which injected ¥350 billion in capital as part of the airline’s bankruptcy, must sell its stake by next January, three years after taking over the carrier. JAL exited bankruptcy in March.

JAL raised its annual earnings forecast 85 percent after slashing loss-making routes and boosting cooperation with AMR Corp.’s American Airlines. The carrier expects to post an operating profit of ¥140 billion in the year ending March 31, compared with an earlier forecast of ¥75.6 billion. Net income will likely reach ¥120 billion, it said in a statement in November.