Japan Airlines takes step towards $8 billion IPO, re-listing: sources

By Nathan Layne and Chikafumi Hodo

TOKYO (Reuters) - Japan Airlines applied on Wednesday to re-list its shares in September after it has raised about $8 billion in an initial public offering, doubling the government's investment in a rare successful case of state-led restructuring in Japan.

The carrier, which rebounded sharply from bankruptcy and is booking record profits, submitted its application to the Tokyo Stock Exchange after an annual shareholder meeting, a person with knowledge of the matter said.

JAL is looking to raise 600-700 billion yen ($7.6-$8.9 billion) in the IPO, sources have said, which would make it the second biggest offering this year after social networking giant Facebook's (FB.O: Quote) $16 billion IPO, and the seventh-largest ever in Japan. The listing is expected in mid-September.

A successful IPO at that valuation would allow the government to make a handsome profit on the 350 billion yen a state-backed fund injected into the airline following its bankruptcy in January 2010 with $25 billion in debts.

JAL's revival is not without controversy.

Chief domestic rival All Nippon Airways (9202.T: Quote) has started to publicly question whether state support has created an unfair playing field, pointing to a massive tax credit that could allow JAL to forgo corporate tax payments for another eight years.

But to some observers JAL represents a rare success story, in sharp contrast to a common approach by both the state and the country's top lenders of propping up ailing firms with funds without pushing for tough restructuring.

"JAL's quick turnaround can change the impression of Japan. In the past, there was a perception that any revival scheme in Japan took a lot of time," said Hideyuki Ishiguro, assistant manager at Okasan Securities' investment strategy department.