Browse > Home / Airlines, Business / Japan Airlines seeking, getting capital infusions

Japan Airlines seeking, getting capital infusions

January 13, 2008
By Ken Worsley


Back in October, we reported that Japan Airlines was ready to sell its credit card unit off to the highest bidder. Way back in June, we also reported that JAL, which carries 75 times more debt than operating profit on its balance sheets, might be looking for a debt-for-equity swap, though there could be some trouble getting that in order as anyone who wants to take a substantial equity stake in the firm would want to see a clear and detailed plan for returning to profitability.

Just before New Years, we learned that JAL was considering issuing somewhere between 100-150 billion yen worth of preferred shares to its creditors and business partners. The Nikkei, however, quoted Motokazu Yoshida, Mitsui’s senior executive managing officer, as saying, “Making an investment just out of sympathy will be difficult to do.”

In other words, JAL still needs to show what it’s planning to do with the extra cash, besides simply paying for layoffs and newer, smaller, more fuel-efficient airplanes.

Two days ago, it was reported that the Mitsubishi UFJ Financial Group would pay about 40 billion yen in order to acquire a 49% stake in Jalcard, JAL’s struggling credit card arm. How a firm manages to struggle in consumer credit is beyond us - especially when Jalcard is gaining about 10% in customer numbers year-on-year, but then again, JAL (together with ANA) operates in the deep red under a virtually government enforced monopoly, and so it shouldn’t be too difficult to see why they’re struggling.

Japan Airlines intends to raise somewhere in the neighborhood of 250-300 billion yen through the sale of assets. This will be a firesale worth keeping an eye on.

Filed Under Airlines, Business 

Social Bookmarks:
del.icio.us:Japan Airlines seeking, getting capital infusions digg:Japan Airlines seeking, getting capital infusions newsvine:Japan Airlines seeking, getting capital infusions furl:Japan Airlines seeking, getting capital infusions reddit:Japan Airlines seeking, getting capital infusions
Related Posts:
BizCast Japan #3 Released: Airlines, Keidanren, Tourism and the Foreign Financial District
JAL still in trouble. Lots of it. With 4,300 fewer employees to take the blame
Development Bank of Japan to invest directly in firms?
FY2007 Capital Sepnding to Increase 11 Percent: Development Bank of Japan
Capital Spending Down 4.9% in the April-June Quarter

Comments

2 Responses to “Japan Airlines seeking, getting capital infusions”

  1. Albrecht on January 15th, 2008 12:57 am

    I thought U.S. airlines were incompetent, but JAL is truly breathtaking in its inability to do anything right.

  2. TransWorld on January 9th, 2009 5:30 pm

    Given the increased pressures piled on to JAL with depressed ASPAC numbers (also being suffered by Cathay, Qantas, and Singapore at the moment) this is not surprising- nor is it quite the scale of the sale of DL/NW portfolio to AMEX in Q4 for much needed cash.

    While JAL has not been without some management issues, given some of its legislative constraints overall we believe that they do incredibly well given the climate. We also have to keep in context over a decade of recession in Japan left JAL a little behind the game in terms of new aircraft, products, and expansion. Their joining oneworld, adding new jets to the fleet, and addition of products like Premium Economy- in addition to their ancillary growth is more impressive than some US Mainline carriers.

Got something to say?