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January 16, 2008 |
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JAPAN AIRLINES: May Cancel Card Unit Stake Sale, Insiders Say Japan Airlines Corp. may cancel its plan to sell a stake in its credit card unit as it raises cash by selling securities instead, Bloomberg News reports, citing two people familiar with the transaction but who refused to be identified. Japan Airlines is considering selling at least JPY100 billion (US$925 million) of securities including preferred shares to banks, as well as petroleum and trading companies, the sources told Bloomberg. Bloomberg's Takahiko Hyuga and Shingo Kawamoto write that Japan Airlines has JPY48 billion of debt coming due this year and President Haruka Nishimatsu said the airlines needs to increase its capital. The carrier has also ordered 35 Boeing Co. 787 planes, with a value of at least US$5.1 billion at list prices, the report notes. Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc.'s Credit Saison Co. are among the bidders for JALCard. Bloomberg explains that JALCard is attractive to banks because cardholders spend an average JPY860,000 a year. The airline plans to keep a majority stake in JALCard, the sources told Bloomberg. The report recounts that Japan Airlines asked local and overseas companies in October to submit acquisition proposals by Oct. 31, and held the second bidding round on Jan. 11. Japan Airlines, Bloomberg cites the sources as saying, will delay the sale if the proposals do not match its marketing strategy for the unit. The carrier will probably hold a third round of bids if it decides to proceed with the sale, the sources added. Meanwhile, Japan Airlines is in talks with Mitsubishi UFJ, Mizuho, Sumitomo Mitsui and Development Bank of Japan, to sell new securities, the sources further revealed to Bloomberg. The carrier expects to reach a decision by March 31, they said. Tokyo-based Japan Airlines International Company, Limited -- http://www.jal.com/en/ -- was created as a result of the merger of Japan Airlines and Japan Air Systems to boost domestic coverage. Japan Airlines flies to the United States, Brazil and France. * * * As reported on Feb. 9, 2007, that Standard & Poor's Ratings Services affirmed its 'B+' long-term corporate credit and issue ratings on Japan Airlines Corp. (B+/Negative/--) following the company's announcement of its new medium-term management plan. S&P said the outlook on the long-term corporate credit rating is negative. As reported on Oct. 10, 2006, that Moody's Investors Service affirmed its Ba3 long-term debt ratings and issuer ratings for both Japan Airlines International Co., Ltd and Japan Airlines Domestic Co., Ltd. The rating affirmation is in response to the planned restructuring of the Japan Airlines Corporation group on Oct. 1, 2006 with the completion of the merger of JAL's two operating subsidiaries, JAL International and Japan Airlines Domestic. JAL International will be the surviving company. Moody's said the rating outlook is stable. Fitch Ratings Tokyo analyst Satoru Aoyama said that the company's debt obligations and expenses for new aircraft have placed it in an unfavorable financial position. Fitch assigned a BB- rating on the company, which is three notches lower than investment grade. |
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