TOKYO - Japan Airlines set the price of its initial public offering on Monday at a level that could value the bailed-out carrier at ¥663 billion ($8.5 billion), setting the stage for the world's second-largest I.P.O this year after Facebook.
After robust investor demand, particularly from retail investors, JAL will seek a price of ¥3,790 a share, the airline said in a news release on Monday.
The figure is at the top of a book-building range that the carrier tentatively set last week. JAL's shares will start trading on the First Section of the Tokyo Stock Exchange, reserved for large companies, on Sept. 19, the airline added.
The offering would nearly double the ¥350 billion investment that a state-backed fund invested in the carrier after it went bankrupt in 2010. The fund, the Enterprise Turnaround Initiative Corporation of Japan, plans to sell its 96.5 percent stake in JAL in the I.P.O., netting a $4 billion profit.
JAL has emerged from its 201 0 bankruptcy as a smaller, leaner airline.
It slashed a third of its workforce, pared back pensions, dropped unprofitable routes and downsized its fleet from jumbo jets to mid-sized planes.
JAL's finances have since become the envy of the global airline industry. For the fiscal year that ended in March, JAL booked a net profit of ¥187 billion, more than six times that of its domestic nemesis All Nippon Airlines.
Despite enthusiasm for JAL's return to the stock market, prospects for the former flagship carrier are not necessarily bright in the fast-changing, cut-throat global aviation industry. JAL has sharply downsized its operations and its fleet of smaller jets. The changes have made the carrier more efficient, though also have left it hardly able to compete with larger rivals like Emirates or Singapore Airlines.
JAL has also mostly missed out on the surge in low-cost carrier traffic in Asia. The Tokyo-based airline made its foray into that fast-gr owing market just two months ago with JetStar Japan, a joint venture with Qantas Airways.
Meanwhile, the airline's turnaround benefited from a write-down of its fleet, government-arranged debt waivers and a $4.5 billion tax credit that will allow JAL to offset corporate tax for nine more years.
Those measures sparked intense criticism from its rival, ANA, which has lobbied the government to level the playing field by prioritizing ANA over JAL in future landing slot allocations. If ANA is successful, JAL could lose out further in air traffic.
In a reflection of the uncertainties ahead, JAL, now led by the former pilot Yoshiharu Ueki, forecasts an almost 30 percent drop in profit for the current year to March. The shaky outlook could eventually put pressure on the airline's share price, especially if investors look to book short-term profits.
According to JAL's statement on Mondany, the airline is issuing 175 million shares, of which 131.25 million have been allocated to Japanese investors and the remaining 43.74 million to investors overseas.
