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JAL to issue $2.73bln of loans, bonds for post-COVID era

JAL

The airline said the proceeds from the raising would be used to introduce Airbus SE A350-1000s as its new flagship aircraft, helping it to reduce carbon emissions

Japan Airlines Co Ltd (JAL) said on Friday it had finalised plans to issue 300 billion yen ($2.73 billion) of hybrid loans and subordinated bonds to give it a safety net and position it for a post-coronavirus business environment.

It will raise 200 billion yen ($1.82 billion) from hybrid loans and 100 billion yen ($0.91 billion) from subordinated bonds, the airline said in a statement to the stock exchange.

JAL had announced initial plans for the raising on Thursday but provided more details of the funding mix and uses on Friday.

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.

The airline last month forecast its cash burn rate to drop to nearly 5 billion yen ($0.045 billion) a month in the second quarter ending Sept. 30 from 10 billion to 15 billion yen ($0.14 billion) a month in the first quarter.

However, Kito said the severe COVID-19 situation in Japan meant the company was not certain it could meet the second-quarter cash burn target.

The airline said the proceeds from the raising would be used to introduce Airbus SE A350-1000s as its new flagship aircraft, helping it to reduce carbon emissions on international flights.

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 defence, this financing is also positioning ourselves to be aggressive in the post-coronavirus future, Kito said.

JAL group companies include Japan Airlines, J-Air, Japan Air Commuter, Japan Transocean Air, and Ryukyu Air Commuter for domestic feeder services, and JAL Cargo for cargo and mail services.

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