The monster sale, which will see JAL’s shares re-listed on the Tokyo Stock Exchange next week, marks a dramatic turnaround for the airline, which went bankrupt and was taken off the Nikkei index in early 2010.
But the overhauled carrier, recently touted as the world’s most profitable airline, received a huge government bailout and other concessions, drawing howls of protest from rivals including rival All Nippon Airways.
In a regulatory filing Monday, the company said it expected to sell 175 million shares at 3,790 yen each — the top end of previously announced range — resulting in proceeds of 663 billion yen ($8.5 billion).
That is nearly double the amount of public money spent to keep it afloat during a massive restructuring, with the proceeds expected to be used to pay back the government bailout.
The new shares in JAL, which went bankrupt with debts totalling 2.32 trillion yen, were scheduled to start trading on the Tokyo Stock Exchange on September 19.
The offering was the year’s second-biggest globally behind Facebook after the social networking giant’s $16.0 billion initial public offering in May.
However Facebook shares have struggled since their much-hyped May 18 debut was plagued by technical glitches and complaints that key forecasts were kept from the public. The New York-listed shares have fallen from $38 to around $19 a share.
Japan Airlines will be valued at about 687 billion yen after the sale, outpacing rival ANA’s market capitalisation of about 633 billion yen Monday.
JAL shares were a bargain on a price-to-earnings basis compared with its rivals, said Shigeo Sugawara, senior investment manager at Sompo Japan Nipponkoa Asset Management.
“The shares look undervalued among market participants and are likely to attract reasonable demand,” he told Dow Jones Newswires.
“The domestic market is under a near-duopoly by JAL and All Nippon Airways. It’ll be a steady market unless they start excessive price cutting. Uncertainty remains, however, over international flights.”
Japan was slow to the budget carrier sector although several new low-cost airlines have come online this year.
Last month, JAL pointed to improved financial health, saying net profit in the April-June quarter more than doubled to 26.9 billion yen.
Cost-cutting and improved productivity were credited for the result, which was up from a 12.7 billion yen net profit a year ago.
Revenue climbed 12.5 percent on the back of a pickup in international travel demand as a strong yen, which hit record highs against the dollar late last year, prompted more Japanese holidaymakers to venture overseas.
JAL, which continued to fly while in bankruptcy, implemented massive job and route cuts as part of its overhaul led by charismatic businessman Kazuo Inamori, who was brought in by the government to help turn the firm around.
The airline has embarked on an ambitious expansion, saying earlier this year it ordered 10 new Boeing 787 Dreamliner aircraft as it looks to build on its recovery and fight off the threat from an emerging domestic budget sector.
The announcement, part of a five-year plan, was in addition to an earlier order for 35 Dreamliners.
Built largely with lightweight composite materials, Boeing said the Dreamliner is about 20 percent more fuel efficient than similarly sized aircraft and was the first mid-size airplane able to fly long-range routes.
Shares in All Nippon Airways rose 2.27 percent to 180 yen in Tokyo on Monday.