Japan Airlines set to return to Tokyo exchange

Tokyo: Japan Airlines (JAL), delisted from the Tokyo stock exchange after its bankruptcy in 2010, was set to return to Japan’s biggest bourse this week after a massive overhaul and $8.5 billion (Dh31.2 billion) share sale.

The carrier is to begin trading on Wednesday following its initial public offering (IPO) — the world’s second-biggest IPO this year after Facebook — marked a stunning turnaround for one of Japan’s worst corporate catastrophes.

“The re-listing is a very important milestone for us and something that we had craved, but it is also just part of our bigger goal” of steady profitability, JAL president Yoshiharu Ueki told reporters last week.

“Without being carried away by the euphoria... we will make further efforts so that we respond to our new investors’ expectations,” he added.

JAL crashed into bankruptcy in January 2010, owing 2.3 trillion yen (Dh106.5 billion) in one of Japan’s biggest-ever corporate failures, but continued flying while it went through a rehabilitation process under court protection.

Most profitable airline

The overhauled carrier, recently touted as the world’s most profitable airline, received a huge government bailout and other concessions, drawing howls of protest from rivals including All Nippon Airways (ANA).

Led by charismatic businessman Kazuo Inamori, who was brought in by the government to help turn the firm around, JAL also withdrew from unprofitable routes and sold or merged non-core businesses.

Last month, JAL pointed to its improved financial health, saying net profit in the April-June quarter more than doubled to 26.9 billion yen.

In a regulatory filing last Monday, JAL said it expected to sell 175 million new shares at 3,790 yen each — the top end of a previously announced range — resulting in proceeds of 663 billion yen.

That is nearly double the amount of public money spent to keep it afloat during the massive restructuring, with the proceeds expected to be used to pay back the government bailout.

Second-biggest IPO

The offering was the year’s second-biggest globally behind Facebook, after the social networking giant’s $16 billion IPO in May, although Facebook shares have dived since their much-hyped May 18 debut.

JAL’s new shares “look undervalued among market participants and are likely to attract reasonable demand”, Shigeo Sugawara, senior investment manager at Sompo Japan Nipponkoa Asset Management, told Dow Jones Newswires.

But Sugawara warned “uncertainty remains... over international flights” as opposed to the domestic market that “will be steady under a near-duopoly by JAL and ANA”.

Japan was slow to the budget carrier sector although several new low-cost airlines have come online this year. It remained unclear how much they would eat into their bigger rivals’ profits.

The airline has embarked on an ambitious expansion, saying earlier this year it ordered 10 new fuel-efficient Boeing 787 Dreamliner aircraft as it looks to build on its recovery.

The announcement, part of a five-year plan, is in addition to an existing order for 35 of the mid-sized planes capable of flying long-range routes.