JAL PERKS LOSE ALLURE IN BUDGET ONSLAUGHT

The rise of budget carriers is undermining a perk for retail investors in Japan Airlines Co.'s ¥663 billion initial public offering — cheap tickets.Individual investors, who held 59 percent of JAL shares before its 2010 bankruptcy and delisting, are being offered discount coupons as the carrier prepares to hold the biggest worldwide IPO since Facebook Inc.

Such vouchers used to give travelers some of the cheapest tickets in Japan. Now they can be undercut by low-cost carriers, such as Jetstar Japan Co. and AirAsia Japan Co., which advertise fares at a third of JAL's prices. 

"I have absolutely no interest in buying JAL stock again," said Takashi Uema, 59, who used shareholder vouchers before the carrier's bankruptcy, which wiped out his investment. He was waiting for an AirAsia flight this week at Narita airport that was "even cheaper than using a discount coupon," he said.

Retail investors may also be deterred because JAL is offering a less-generous voucher package than larger rival All Nippon Airways Co., said Ryota Himeno, an analyst at Barclays PLC.

JAL said in a statement Thursday that its shares will be priced between ¥3,500 and ¥3,790, which is in line with the indicative price of ¥3,790 announced earlier in August. The carrier is relisting following a government-backed turnaround that has sparked opposition-party complaints about tax breaks.

"It's proving a difficult sell to individual investors," Himeno said. "JAL's discount-coupon deal isn't as good as ANA's and there are political risks."

31/08/2012  :  The Japan Times.

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