Post COVID-19 strategy; Japan Airlines raised $2.7 billion

“JAL has finalized preparations to offer 300 billion yen in hybrid loans and subordinated bonds to give it a safety net and position it for the post-coronavirus economic climate,” JAL announced on Friday. According to a statement to the Tokyo Stock Exchange, it would raise 200 billion yen from hybrid loans and 100 billion from subordinated bonds.

Initially, JAL revealed its plans for the fund-raising on Thursday, but offered more specifics on the financing mix and its intended purposes on Friday instead. “We would like to maintain our commitment line unused, as we believe it is the last-resort safety net,” JAL’s general manager of finance, Yuichiro Kito, told reporters. “We don’t want to be lamenting the unexpected.”

Since last month, the airline has been forecasting that its cash burn rate will drop from 10 to 15 billion yen per month to approximately 5 billion yen a month in the second quarter ending September 30. As a result of Japan’s catastrophic COVID-19 outbreak, Kito said the business was unsure it would be able to fulfil its second-quarter cash burn goal. When it comes to foreign flights, the A350-1000 will be the

airline’s new flagship aircraft, and the revenues from the fundraising will be utilised to help cut carbon emissions. JAL will also renew its revenue management system for domestic routes and repay other debt with the raising’s proceeds, it added.

“This isn’t just about defense, this financing is also positioning ourselves to be aggressive in the post-coronavirus future,” Kito said.