Virus-hit ANA to acquire 400 bil. yen in loans to strengthen the capital base
The parent company of All Nippon Airways Co. plans to acquire 400 billion yen ($ 3.8 billion) in loans from five Japanese banks as the airline’s revenues deteriorate sharply under the novel coronavirus sources familiar with the matter said on Wednesday.
Four major commercial banks and the government-backed Development Bank of Japan are expected to extend capital to ANA Holdings Inc. through subordinated loans, the sources said.
The photo shows an All Nippon Airways Co. plane and tow truck at Saga Airport in March 2019 (Kyodo)
As part of this plan, DBJ and Sumitomo Mitsui Banking Corp. Will each provide 130 billion yen in subordinated loans, which rank after other debt but carry higher interest rates than other types of loans.
Mizuho Bank will provide 60 billion yen, followed by 50 billion yen from MUFG Bank and 30 billion yen from Sumitomo Mitsui Trust Bank.
ANA and the five lenders will sign an agreement as early as the end of October, the sources say.
About half of the 400 billion yen in loans will be recognized as ANA’s capital. The company also plans to raise an additional 200 billion yen later in the year through a public offering of shares.
A better financial position is essential for ANA in order to raise new capital and avoid possible downgrading by credit rating agencies.
In its report on results for the July-September quarter and full-year projections scheduled for Oct. 27, ANA is expected to forecast a massive net loss for the group in the year through March 2021, according to the reports. sources.
The company posted a record net loss of 108.82 billion yen in the April-June quarter, citing lower demand for air travel.
ANA had informed his union that it did not intend to pay winter bonuses after having already halved summer bonuses, a development that would result in a 30 per cent reduction in annual income for workers. employees on average.
With the rebound in air travel not yet on the horizon, ANA will announce further cost-cutting measures such as putting passenger planes on hold earlier than expected as part of structural reforms.
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