All Nippon Airways Co. plans to raise 211 billion yen ($2.65 billion) in capital to buy aircraft, increase routes and better compete against a rejuvenated Japan Airlines Co. that will relist in September.
ANA said on July 3 it will issue up to 1 billion shares through a public offering this month that will bring its capital-adequacy ratio above 30 percent, compared with 27.4 percent at the end of March.
The company plans to use 600 billion yen, including part of the new funds, to buy 80 aircraft, such as Boeing 787 midsize jets, by the end of March 2015. The new funds will also be used to create more international routes and for possible investments in other airlines in Asia, where the number of passengers has been growing.
ANA’s largest-ever share offering is also designed to get the jump on JAL, the once-bankrupt airline that is expected to raise 600 billion yen to 700 billion yen when its stock is relisted in September.
Shinichiro Ito, president of ANA, has expressed criticism over the resurgence of his company’s main rival with public support.
“We hope a level playing field will be secured,” Ito said.
JAL President Yoshiharu Ueki has countered, “We are rebuilding our business following the rules.”
JAL filed for bankruptcy protection under the Corporate Rehabilitation Law in January 2010. Through debt forgiveness by banks, corporate tax exemptions and other bailout measures, JAL posted a net profit of 186.6 billion yen for fiscal 2011, about 6.6 times ANA’s 28.1 billion yen.
Although ANA reported a company record operating profit of 97 billion yen in fiscal 2011, it remains concerned about JAL and its similar business strategy.
JAL plans to spend 478 billion yen from its earnings to buy Boeing 787s and other aircraft over the next five years to enhance its international operations.
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