The parent company of All Nippon Airways Co. plans to acquire 400 billion yen ($3.8 billion) in loans from five Japanese banks as the airline operator's earnings have sharply deteriorated under the novel coronavirus, sources close to the matter said Wednesday.
Four major commercial banks and the government-backed Development Bank of Japan are expected to extend the capital to ANA Holdings Inc. through subordinated loans, the sources said.
Under the plan, the DBJ and Sumitomo Mitsui Banking Corp. will extend 130 billion yen each in subordinated loans, which rank after other debts but carry higher interest rates than other types of loans.
Mizuho Bank will provide 60 billion yen, followed by 50 billion yen from MUFG Bank and 30 billion yen from Sumitomo Mitsui Trust Bank.
ANA and the five lenders will sign a deal as early as by the end of October, according to the sources.
About half of the 400 billion yen in loans will be recognized as ANA's capital. The company also plans to raise an additional 200 billion yen later in the year through a public offering of shares.
Increased financial standing is vital for ANA to raise fresh capital and avoid possible downgrading by credit rating agencies.
In its earnings report for the July-September quarter and full-year projections slated for Oct. 27, ANA is likely to forecast a massive group net loss in the year to March 2021, according to the sources.
The company logged a record net loss of 108.82 billion yen in the April-June quarter, citing reduced demand for air travel.
ANA had notified its labor union that it has no plan to pay winter bonuses after having already halved summer bonuses, a development that would result in a 30 percent cut in employees' annual income on average.
With a rebound in air travel not yet on the horizon, ANA will announce further cost-cutting measures such as mothballing passenger jets earlier than scheduled as part of structural reforms.