Japan Airlines Co. said Thursday it plans to raise some 300 billion yen ($2.7 billion) to strengthen its financial standing and secure operating funds for the future as air travel demand remains weak amid the coronavirus pandemic.
The airline, known as JAL, said it will raise the funds through subordinated loans and bonds to avoid share dilution, while sources familiar with the matter said the company would use part of the funds to invest in green technology to cut greenhouse gas emissions.
The company is looking for approximately 200 billion yen in subordinated loans, which can partially be counted as capital, from banks and about 100 billion yen from subordinated bond issuance, the sources said.
JAL said it will announce the details of the fundraising plan on Friday.
JAL raised around 180 billion yen last November through a public stock offering and other means to survive the pandemic and cover replacement costs for its fleet.
The company's capital adequacy ratio stood at 42.4 percent as of late June, a relatively high level among major global airlines, but JAL is planning to secure fresh funds as it expects a recovery in air travel demand could take time amid the prolonged COVID-19 pandemic, the sources said.
In July, the seat occupancy rate for JAL's international flights was 23.4 percent and that for domestic flights was 48.6 percent.
JAL reported a net loss of 57.9 billion yen for the April-June quarter despite some improvement in travel demand.
The company has not released an earnings forecast for the current business year ending in March, saying it is difficult to make projections amid the pandemic.
JAL's domestic rival ANA Holdings Inc., the parent of All Nippon Airways Co., also raised about 300 billion yen through a public offering in December.
While Japan continues to see a sharp fall in the number of international passengers amid strict border controls due to the spread of the highly contagious Delta variant, the situation may improve gradually with Tokyo 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 show negative test results.