• Reuters, Kyodo


Japan Airlines Co. said Thursday it planned to raise around ¥300 billion ($2.7 billion) of subordinated loans and hybrid financing to help it weather the prolonged impact of the COVID-19 pandemic.

Details of the funding plan will be announced on Friday, the company said in a statement after news organizations earlier reported on the plan citing sources.

"We are considering various ways to secure financing, in order to prepare for the long-term effects of the spread of coronavirus infections and in order to achieve the growth targets laid out in JAL's medium term business plan," the airline said.

JAL last month posted a first-quarter operating loss of ¥82.65 billion — an improvement from a year earlier — as pandemic-related cost cuts took effect and travel demand rose from a very low base.

Like other carriers, the company has been burning through cash reserves to keep jets and workers it will need when travel demand rebounds.

JAL had raised around ¥180 billion last November through a public stock offering and other means to survive the pandemic and cover replacement costs for its fleet.

The airline last month said it expected its cash burn rate to fall to around ¥5 billion a month in the second quarter ending Sept. 30, down from ¥10 billion to ¥15 billion a month in the first quarter.

Rival ANA Holdings Inc. last year raised ¥419 billion in subordinated loans and ¥353 billion of equity to help it weather the pandemic and fund the purchase of new planes.

While Japan continues to see sharply lower numbers of international passengers amid strict border controls due to the spread of the highly contagious delta variant, the situation may improve gradually. Tokyo started issuing so-called vaccine passports to facilitate overseas travel from July.

As for domestic travel, the government is aiming to lift restrictions from around November, provided that people have been fully vaccinated or can provide negative test results.

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