Japan Airlines' share price may have plunged below Y10 but one set of investors has found some value in the struggling carrier. Air travellers bought JAL stock yesterday to obtain discounted fares that the airline offers to shareholders.
More than 1bn JAL shares changed hands, a record for one day's trading in a Tokyo Stock Exchange-listed company, and the airline finished Y1 higher at Y8.
Brokers attributed most of the buying to institutional investors closing short positions in the carrier's shares, which started the year worth Y88. After the government firmed up plans to push it into bankruptcy, the group is expected to file for court protection next week.
But it appears some investors have bought shares calculating that the value of travel discounts they receive from owning stock will more than offset losses on their investment.
JAL offers a half-price domestic flight a year to owners of 1,000 shares, and more flights to larger investors. Its biggest shareholders, those owning more than 210,000 shares, can take more than 100 half-price trips a year.
“JAL has always been a popular retail stock,” said one broker. “People buy it in part for the goodies, like discount fares.”
Domestic flights in Japan can cost Y30,000 ($330) or more each way. That means that, at JAL's current share price, its investor discount could be worth twice the minimum stock buy-in. Cashing in, however, is dependant on the airline continuing to offer the perk while in bankruptcy protection, an outcome that is far from guaranteed.
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