ANA Holdings Inc. has decided to bring low-cost carrier affiliate Peach Aviation Ltd. under its wing by raising its stake in the company from about 39 percent, a sources close to the matter said Friday.
ANA, parent of All Nippon Airways, plans to spend about ¥30 billion (about $266 million) to boost its holding to 67 percent, making the carrier its subsidiary, the source said.
Initially, the purchase amount was estimated to be around ¥100 billion but it is likely to be reduced to ¥30 billion following further discussions, the source said.
Currently, ANA holds 38.7 percent of Peach shares, while Hong Kong investment company First Eastern Aviation Holdings Ltd. owns 33.3 percent and public-private fund Innovation Network Corp. of Japan owns 28.0 percent.
Peach Chief Executive Officer Shinichi Inoue and other executives are set to remain in their posts. While Peach will retain management independence, the two airlines will aim to bolster their business ties, including joint aircraft purchases, to cut costs, the source said.
The move will allow ANA to further benefit from the growth of the budget aviation operator set up in 2011, whose expansion is spurred by increasing demand for low-cost travel in Japan.