ANA Holdings will raise as much as ¥332 billion ($3.2 billion) via an overseas share sale, as airlines around the world rush to shore up their finances while the pandemic chokes air travel. Japan’s largest carrier said Friday it will use the proceeds to repay long-term debt, buy Boeing 787s to improve its capacity, “optimize supply to demand and reduce negative environmental impacts.”
Recent news out of ANA has been dire. In October, sources told Kyodo that ANA is targeting an average 30% cut in annual pay for employees with a cost-cutting package involving slashed wages, an early retirement program, scrapping bonuses and asking workers to shoulder more of their pension premiums. Financially squeezed staff would be allowed to take on side jobs, while hiring will be drastically cut in fiscal 2022, down from the usual 3,000 to just 200.
Japan Airlines, the nation’s other major carrier, which is in slightly better shape having received a government bailout a decade ago, said last month it would raise as much as ¥168 billion in a similar share sale. JAL plans to reduce winter bonuses by 80% this year due to the firm’s sharply deteriorating earnings.
The pandemic travel shutdown has already claimed one scalp in Japan’s airline industry, albeit a minor one. Malaysian low-cost carrier AirAsia’s Japan affiliate filed for bankruptcy on Nov. 17 after flagging last month that it would cease operations in the country. Hours after the filing in Tokyo, AirAsia Group said it was also reviewing investment in its cash-starved Indian affiliate.
The bad news for Japan’s aviation sector doesn’t end there. On Oct. 30, Mitsubishi Heavy Industries announced it would freeze the SpaceJet project, which aimed to develop Japan’s first homegrown passenger jet aircraft.
In an in-depth report based on discussions with insiders and sources previously involved in the project, the Chunichi Shimbun lays out how overconfidence and a series of costly miscalculations led to a near-terminal loss of momentum, leaving the pandemic to hammer the final nail in the coffin of the ambitious project.