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Monday, November 23, 2020

ANA stock price falls over 5% on financial struggles

  • ANA may issue 200 billion yen in shares to help its finances recover as air travel demand remains weak
  • ANA stock price closed the day over 5% in the red on Nikkei story
  • The airline reported a loss of 159 billion yen in the last quarter ending June 30

Shares of ANA Holdings (T: 9202), the largest airline in Japan, fell over 5% today on reports that the company is looking to issue 200 billion yen ($1.9 billion) to improve its liquidity.

Pandemic continues to hurt the airline industry 

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Nikkei reports that ANA Holdings is seeking to issue 200 billion yen in shares to help its finances recover as air travel demand remains weak. The airline generated around 1 trillion yen in working capital from banks earlier this year and used that capital for aircraft lease and loan interest payments amid the coronavirus crisis. 

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However, as travel demand remains low and the recovery process is slow, the company is now considering to bolster its capital through a public offering of shares. 

“We do not comment on speculative information. The story is factually wrong,” ANA officials responded.

Just like other airline companies, ANA also had to cut the number of flights due to worldwide travel restrictions because of the outbreak. Until now, ANA has loaned capital from its banks and used government financial help to fight the downturn. 

During three months to June 30, the airline reported a loss of 159 billion yen, saying it doesn’t expect a full recovery in demand for international travel until 2023. The Japanese newspaper said ANA will need more capital to fund its operations, given that its full-year loss is going to be about 600 billion yen. 

For these reasons, ANA is considering a public offering of its stock as banks, from which the airline wants to borrow an additional 400 billion yen, may be less willing to lend money in the future, and because a recent surge in stock prices in Japan has made a public offering a more appealing option.

Technical analysis: Shares plunge

ANA price gapped around 7% lower this morning on weekend’s reports of financial struggles. The buyers have managed later to recover a portion of earlier losses to close the session 5.11% in the red. 


screen shot 2020 09 28 at 2 56 44 pm
ANA stock price chart (TradingView)

What’s important for the bulls is a daily close above the 200-DMA, although the stock price dipped below it earlier in the day. Resistance sits at 2700 while the moving average will continue to offer support at 2513.

Summary

The Japanese airline ANA Holdings is considering a public offering of 200 billion yen ($1.9 billion) in shares to reinforce its finances as travel demand continues to be low and is unlikely to recover in the near future.

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