TOKYO: ANA Holdings Inc. has asked the government-backed Development Bank of Japan and three Japanese megabank lenders for financial assistance totaling about 500 billion yen, informed sources said Thursday.

The parent of All Nippon Airways hopes to strengthen its financial base through subordinated loans amid a business slump due to the spread of the novel coronavirus, the sources said.

Subordinated loans have a lower repayment priority than normal loans. Part of the subordinated loans can be treated as capital.

ANA Holdings has entered talks with financial institutions including the DBJ, MUFG Bank, Sumitomo Mitsui Banking Corp. and Mizuho Bank, seeking to procure 400 billion to 500 billion yen in financial assistance.

The holding company posted a record quarterly consolidated net loss of 108.8 billion yen for April-June due to a plunge in travel demand.

It expects that domestic travel demand will not recover until the end of fiscal 2021 and international travel demand until the end of fiscal 2023.

ANA Holdings has so far secured 1 trillion yen in funds, including credit lines, and it has no immediate financing problems.

But if its financial conditions worsen, it may not be able to secure fresh funds when needed.

If ANA Holdings can take out subordinated loans and bolster its capital base, that will give the company more scope for borrowing.

In the second supplementary budget for fiscal 2020, the government expanded corporate financing assistance measures, including subordinated loans from government lenders.

With no early end to the COVID-19 crisis in sight, other companies may also ask for subordinated loans.

JIJI Press