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Japan Airlines’s initial public offering, expected in September, could be a monster affair.
After a reorganization with the help of Japanese taxpayers, the airline is posting record profits and healthy operating margins. It even expanded on Tuesday morning into budget air travel in a venture with Qantas Airways .
Analysts estimate that the airline could raise up to 700 billion yen ($8.8 billion) in the offering, making it the biggest anywhere in the world since Facebook listed in May. But the revival of JAL, once the world’s largest international carrier, is sparking debate in Japan on how, and to what extent, the government should rescue large companies that stumble.
Critics say the bailout has given JAL an unfair edge that distorts competition, and questions about its underlying health threaten to distract from the company’s return to the stock market. Whether its shares will be a good long-term investment is still to be seen, analysts say.
The biggest bone of contention is a provision that allows JAL to forgo $4.5 billion in tax payments on future profits. Japan’s other major airline, All Nippon Airlines , says it cannot possibly compete with its rival’s special deal and warns that ANA itself could be pushed to the financial brink.
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