TOKYO - Japan Airlines, the former flagship carrier driven to bankruptcy and a government bailout two years ago, will relist its stock in Tokyo on Sept. 19 in an initial public offering that could raise $8.5 billion.
A government-backed fund that owns the airline and has led its restructuring will sell 175 million shares at a tentative price of 3,790 yen a share, recouping its investment, Japan Airlines said Friday in a filing with the Tokyo Stock Exchange.
On paper, the airline, also known as JAL, is on track for a strong recovery after it eliminated one-third of its work force, or about 16,000 jobs, dropped unprofitable routes and slashed pensions. JAL said Thursday that its net income had more than doubled in the three months through June to 26.9 billion yen ($343 million), as a strong yen buoyed international travel from Japan.
But the airline owes much of its turnaround to the government bailout, as well as generous provisions that will allow it to f orgo billions of dollars in future tax payments. Critics including the airline's rival, All Nippon Airways, have said such provisions have given JAL an unfair edge that distorts competition.
Other critics worry that JAL has not addressed the structural problems that led to the government bailout, making it a weak prospect in the increasingly cutthroat global airline industry. JAL has little in the way of a low-cost carrier strategy, they say, despite a surge in low-cost plane travel in Asia.
And JAL's sharply reduced capacity will greatly handicap its attempts to regain its standing among the world's biggest airlines, especially compared to giants like Singapore Airlines and Emirates, which have both invested heavily in large aircraft.
By contrast, JAL has retired its jumbo jets and now runs a modest fleet centered on midsize planes, which might improve profitability in the short term but leaves it less able to capitalize on surging air travel, especially i n Asia.
Despite the turnaround, JAL itself predicts lower profits going forward, starting with 130 billion yen in the year through March 31, lower than the 187 billion yen it booked last fiscal year.
In a statement, JAL's president, Yoshiharu Ueki, said the airline was aware of the many challenges it now faces.
“The relisting will merely put us on the starting line to a turnaround,†Mr. Ueki said.
