Japan Airlines expects IPO to raise $8.5 billion

TOKYO (Reuters) - Japan Airlines said on Friday it expected to raise about $8.5 billion in an initial public offering next month, nearly doubling the investment of a state-backed fund that injected capital into the carrier following its bankruptcy in 2010.

The IPO is set to be the world's second-largest this year after the $16 billion offering of social networking pioneer Facebook FB.N.

The Tokyo Stock Exchange on Friday gave the green light for a relisting of Japan Airlines' (JAL) stock on September 19, less than three years after the former national flag carrier collapsed under the weight of a bloated cost base and $25 billion in debt.

In a regulatory filing, the airline gave an estimated price per share of 3,790 yen. That would value the stake held by the state-backed fund, which is planning to sell all of its shares in the IPO, at 663 billion yen ($8.5 billion).

That estimate is in line with expectations. Sources with knowledge of the matter had told Reuters that the Enterprise Turnaround Initiative Corporation of Japan (ETIC) was eyeing an IPO of 600 billion to 700 billion yen. The fund injected 350 billion yen of taxpayer-backed funds into the carrier in 2010.

JAL said that it would decide on the final IPO price on September 10 after gauging investor demand during a one-week book-building period. Three-fourths of the shares will be placed with Japanese investors and the remainder overseas.

JAL has emerged from bankruptcy as the most profitable airline in the world, after a massive restructuring that eliminated about a third of its workforce, scrapped unprofitable routes and slashed pensions.

The airline has also taken advantage of a lower interest burden stemming from debt waivers, a drop in depreciation costs from a write-down of its fleet, and a $4.5 billion tax credit that means it is unlikely to pay corporate tax for several years.

On Thursday, Japan Airlines reported a more than doubling of net income to 26.9 billion yen for the April-June on sales of 286.7 billion yen, up 12.5 percent. That builds on a strong showing in the full year ended in March when it booked an industry-leading operating profit of 205 billion yen.

(Reporting by Nathan Layne; Editing by Edmund Klamann)