Tomohiro Ohsumi/Bloomberg NewsAn aircraft owned by Japan Airlines, also known as JAL, at Narita Airport.
TOKYO — Japan Airlines on Monday set the price of its initial public offering at a level that could value the bailed-out carrier at 663 billion yen ($8.5 billion), setting the stage for the world’s second-largest I.P.O this year after that of Facebook.
After robust investor demand, particularly from retail investors, JAL will seek a price of 3,790 yen a share, the airline said in a news release.
The figure is at the top of a range the carrier 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 yen investment that a state-backed fund made 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 2010 bankruptcy as a smaller, leaner airline.
It eliminated a third of its workforce, pared back pensions, dropped unprofitable routes and downsized its fleet from jumbo jets to midsize 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 yen, more than six times that of its domestic rival 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 cut-throat global aviation industry.
The changes made by JAL have made the carrier more efficient, though they have also left it hardly able to compete with larger rivals like Emirates or Singapore Airlines.
JAL, based in Tokyo, has also mostly missed out on the surge in low-cost carrier traffic in Asia. The airline made its foray into that fast-growing 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 allowing 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 a 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 its share price, especially if investors look to book short-term profits.
According to JAL’s statement on Monday, 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.
Article source: http://dealbook.nytimes.com/2012/09/10/jal-to-raise-8-5-billion-in-i-p-o/?partner=rss&emc=rss