ANA To Raise USD$1.9 Bln, Orders More 787s

All Nippon Airways plans to issue shares to raise up to USD$1.9 billion to shore up its battered finances and buy five more of Boeing's long-delayed 787s.

Like other global airlines, ANA has suffered from the sharp downturn in air travel caused by the economic crisis, but is also looking to increase investment to tap an expected rise in passenger demand once the expansion of Tokyo's Haneda airport is completed next year.

Analysts said the fund raising, ANA's first in three years, was bigger than expected, but some said the move was positive as it suggested ANA was committed to growth. In comparison, bigger rival Japan Airlines has been forced to downsize its business and seek an emergency loan from the government.

"From a mid- to long-term perspective, the fundraising is a positive step because ANA needed money and it has been calling Haneda's expansion a big business opportunity... This will really differentiate ANA's and JAL's financial health," said Mitsubishi UFJ Securities analyst Ryota Himeno.

Haneda Airport, which handles mainly domestic flights, is scheduled to open a fourth runway next year. The expansion is expected to increase annual capacity by 40 percent by 2012 and allow airlines to launch new routes.

DREAMLINER BOOST

Aiming to tap the expected rise in passenger demand from the Haneda expansion, ANA has been hiring new staff and is buying new planes to replace existing ones or launch services for new routes.

The extra five 787 orders, worth about USD$800 million at list prices, represent a vote of confidence in Boeing's troubled project.

More than five years after ordering an initial 50 Dreamliners, the biggest launch order for any new plane in Boeing's history, ANA has yet to receive a single aircraft following a succession of delays.

ANA urged Boeing to clarify the delivery schedule for the project as soon as possible after the latest setback announced last month. It said it expects an update within several weeks.

As the global economic slump hit demand for air travel, ANA reported a group net loss of JPY4.3 billion yen for the year ended in March, its first annual loss in six years.

ANA expects to return to profit this year by cutting JPY73 billion in costs, though the outlook for travel demand has been clouded somewhat by the global influenza outbreak.