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Japan Airlines plans to raise US$ 2.7 billion to bolster finances

Japan Airlines plans to raise US$
2.7 billion to bolster finances

FILE PHOTO: Japan Airlines' (JAL) airplanes are seen, amid the coronavirus disease (COVID-19) outbreak, at the Tokyo International Airport, commonly known as Haneda Airport in Tokyo, Japan October 30, 2020. REUTERS/Issei Kato

TOKYO :Japan Airlines Co Ltd (JAL) said on Thursday it planned to raise around 300 billion yen (US$2.7 billion) of subordinated loans and hybrid financing to help it weather the prolonged impact of the coronavirus pandemic.

Details of the funding plan will be announced on Friday, the company said in a statement after news organisations including Reuters earlier reported on the plan, citing sources.

"We are considering various ways to secure financing, in order to prepare for the long-term effects of the spread of coronavirus infections, and in order to achieve the growth targets laid out in JAL's medium term business plan," the airline said.

JAL last month posted a first-quarter operating loss of 82.65 billion yen, an improvement from a year earlier, as pandemic-related cost cuts took effect and travel demand rose from a very low base.

JAL, like other carriers, has been burning through cash reserves to keep jets and workers it will need when travel demand rebounds. It raised US$1.8 billion in a share sale last November.

The airline last month said it expected its cash burn rate to fall to around 5 billion yen a month in the second quarter ending Sept. 30 from 10 to 15 billion yen a month in the first quarter.

Rival ANA Holdings Inc last year raised US$3.8 billion in subordinated loans and US$3.2 billion of equity to help it weather the pandemic and fund the purchase of new planes.

JAL shares were down 0.8per cent in afternoon trade, in line with the decline in the broader market.

(US$1 = 110.1600 yen)

(Reporting by Maki Shiraki and Ritsuko Ando in Tokyo; additional reporting by Kanishka Singh in Bengaluru; writing by Jamie Freed; Editing by Christopher Cushing and Richard Pullin)

Source: Reuters

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