Shares of ANA Holdings (T: 9202), the largest airline in Japan, fell over 5% today on reports that the company is looking to issue 200 billion yen ($1.9 billion) to improve its liquidity.
Pandemic continues to hurt the airline industry
Nikkei reports that ANA Holdings is seeking to issue 200 billion yen in shares to help its finances recover as air travel demand remains weak. The airline generated around 1 trillion yen in working capital from banks earlier this year and used that capital for aircraft lease and loan interest payments amid the coronavirus crisis.
However, as travel demand remains low and the recovery process is slow, the company is now considering to bolster its capital through a public offering of shares.
“We do not comment on speculative information. The story is factually wrong,” ANA officials responded.
Just like other airline companies, ANA also had to cut the number of flights due to worldwide travel restrictions because of the outbreak. Until now, ANA has loaned capital from its banks and used government financial help to fight the downturn.
During three months to June 30, the airline reported a loss of 159 billion yen, saying it doesn’t expect a full recovery in demand for international travel until 2023. The Japanese newspaper said ANA will need more capital to fund its operations, given that its full-year loss is going to be about 600 billion yen.
For these reasons, ANA is considering a public offering of its stock as banks, from which the airline wants to borrow an additional 400 billion yen, may be less willing to lend money in the future, and because a recent surge in stock prices in Japan has made a
