Japan’s ANA Eyes $4.7 Billion From Banks To Help With COVID Impact

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All Nippon Airways (ANA) is reportedly in talks with several banks to raise capital to see it through the prolonged coronavirus crisis. As it braces for an uncertain future, Japan’s largest airline is said to be seeking funding of up to JPY 500 billion ($4.7 billion). The escalating COVID-situation in Japan makes for a shaky road to recovery. However, the travel corridor opening up with Singapore in September is cause for cautious optimism.

ANA net losses $1 billion Q1
ANA is in talks with several Japanese banks. Photo: Getty Images

Adding to prior billion-dollar loans

Hard-hit ANA recently reported a loss of $1 billion for the first quarter. While it secured a round of financing for $8.8 billion back in April, the uncertainty of the ongoing pandemic has pushed the carrier back into negotiations for more.

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According to the Nikkei Review, ANA is now looking to secure between JPY400 billion ($3.75 billion) to JPY500 billion ($4.7 billion) in subordinated loans. A subordinated loan means that if the company were to face bankruptcy, that loan would have less priority than other debt. The financial institutions in question are the state-backed Development Bank of Japan, Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho Bank.

At the moment, ANA is going through about JPY 100 billion ($936 million) monthly on aircraft leases and interest payments. In early July, the carrier also secured loans of JPY85.6 billion ($793 million) to import six unspecified aircraft from Boeing and Airbus.

In an early play to preserve cash, the carrier has put 6,400 flight attendants on a rotating furlough scheme since March. Encompassing 70% of the airline’s cabin crew, the program will last for a year.

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Japan-Subsidized-holidays
The carrier expects funds to see it through the year. Photo: Tom Boon / Simple Flying

Rapidly evolving situation in Japan

ANA expects to have enough operating funds for a year. However, it is bracing for a prolonged impact of COVID-19 on passenger demand. Unfortunately, it looks as if it could be wise to do so.

While international markets are predicted to remain stunted for an extended period of time, domestic travel is expected to bounce back quicker. However, Japan is recording ever-increasing figures of new coronavirus cases – around 900 every day for the past week with a high of 1,601 nationwide on Friday.

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Many of those cases are in Tokyo. There are fears that the situation in the densely populated capital could spiral out of control as daily new case rates have increased from under 100 for May and June, to 472 on August 1st.

While Japan’s Prime Minister Shinzo Abe has said declaring a new state of emergency is not on the cards, if the situation unravels, he may have no choice but to reimplement strict nationwide lockdown measures.

ANA 787
Travel between Japan and Singapore will open up with precautionary measures in September. Photo: Boeing

Singapore corridor in September

Japan still bans entry for all foreign nationals from a list of 146 countries. However, as a small glint of optimism, Japan and Singapore have agreed on a mutual travel corridor for business travelers and expatriates from September. Travel will be subject to “precautionary measures,” which could be assumed to mean COVID testing. Furthermore, Japan has said it is entering into discussions with another 14 Asian countries for similar arrangements.

Simple Flying has reached out to ANA for comment but was yet to receive a reply at the time of publication.

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