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ANA weighs $1.9bn public offering of common stock

Japan's largest airline aims to boost capital amid prolonged pandemic

ANA Holdings is seeking capital to help it weather a pandemic that continues to hobble the airline industry.    © Reuters

TOKYO -- The parent of Japanese airline All Nippon Airways is considering a public offering of around 200 billion yen ($1.89 billion), Nikkei learned on Friday.

ANA Holdings earlier this year secured about 1 trillion yen of working capital from banks, putting the cash toward aircraft lease and loan interest payments while it rides out the coronavirus pandemic. But with demand from passengers remaining low and unlikely to recover anytime soon, the airline operator has decided to increase its capital through a public offering of common stock.

ANA Holdings logged a group net loss of 108.8 billion yen in the April-June quarter. In August, All Nippon Airways experienced a 96% year-on-year plunge in passengers, mostly due to halted international routes.

The company's capital ratio is worsening due to the large red ink and increased borrowing. It has been in talks with key lenders since August on procuring about 400 billion yen in subordinated loans, but only about half of that amount can be counted as capital.

ANA Holdings could end up posting a net loss of around 600 billion yen for the full year through March 31, eating into its roughly 1 trillion yen in equity capital as of the end of last fiscal year. Boosting capital by 200 billion yen with the subordinated loans is not enough to maintain its credit rating, but banks are reluctant to provide more financing. This prompted the company to decide on a public stock offering.

Another factor in this decision is the strong stock market, with the Nikkei Stock Average recovering to the 23,000-point level.

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