Japan Airlines shares surge on strong demand

Published:  19 Sep at 9 AM

A return to the Tokyo Stock Exchange by Japan Airlines has seen a strong demand for shares, which have risen in value by 2.6 per cent. Nearly three years ago the flag carrier was forced to file for bankruptcy and was removed from the stock exchange. Shares were relisted at 3,790 yen and have since risen in value to 3,890 yen.

The initial public offering is valued at 663 billion yen, this years biggest share sale since Facebook. Since being bailed out by the Japanese government in 2010, JAL has slashed costs through massive restructuring that involved scrapping older planes, axing unprofitable routes and cutting its workforce by around a third.

For the quarter ending in June this year, the airline said that profits had doubled compared to the same period a year earlier. However, some analysts are concerned that JAL could struggle against increased competition from low-cost carriers in a market where there is now little room for further growth.

Fukoku Capital Management analyst, Yuuki Sakurai, said that investors who had lost money when the airline declared bankruptcy may be wary about reinvesting. However, new buyers may be encouraged by the current surging stock value. He added that JAL was giving out coupons for flights to individual investors, which was an added enticement.

Share prices could be damaged if the political tension between Japan and China escalates over the disputed East China Sea islands.