JAL to Go Public again Less than 3 Years after Bankruptcy

Rabu, 19 September 2012 07:09

(TOKYO-Kyodo) Japan Airlines Co. will be relisted Wednesday on the Tokyo Stock Exchange, with an initial public offering of around 663 billion yen, marking a turnaround from its 2010 bankruptcy.

JAL's relisting is the world's second-largest share sale this year after Facebook Inc.'s and the largest in Japan since Dai-ichi Life Insurance Co.'s debut in 2010.

With the IPO price set at 3,790 yen per share, JAL's market value will eclipse the around 630 billion yen of archrival All Nippon Airways Co.

The state-backed Enterprise Turnaround Initiative Corp. injected 350 billion yen of taxpayers' money, enabling the former flag carrier to make one of the most successful turnarounds less than three years after its bankruptcy and subsequent delisting from the Tokyo bourse.

The airline's earnings improved sharply thanks to the injection and a range of restructuring measures, leading to a record operating profit of 31.4 billion yen for the April-June period, up 83.1 percent on year.

JAL's operating profit in the business year ended March stood at a record 204.9 billion yen, more than twice that of ANA's 97 billion yen.

The strong results sparked criticism within the aviation industry that the huge amount of investment in the private carrier had undermined fair competition.

Although hopes have been high among investors that the relisting will stimulate the stock market, some are already cautious about whether JAL will be able to sustain its profitability down the road amid increasing competition from low-cost carriers.

JAL completed rehabilitation procedures in March 2011 and filed a preliminary application for listing with the Tokyo exchange in March this year. The carrier implemented measures such as withdrawing from many unprofitable routes and reducing its workforce by 40
percent.