Japan Airlines (JAL) will sell a stake in its credit card unit to Mitsubishi UFJ Financial, a source with knowledge of the matter said on Friday, in a deal reportedly worth nearly USD$500 million.
Buffeted by stiff competition and higher fuel prices, JAL has been looking to sell part of the card company to pay down debt and help finance an upgrade of its fleet.
The airline said in February it would raise about USD$1.5 billion from lenders and business partners, including UBS, after losing more than USD$590 million over the last two years.
That comes after a similar capital raising less than two years ago.
The airline will likely sell a 40 percent stake for around JPY50 billion yen (USD$488 million), Jiji news agency reported.
Spokesmen for both Japan Airlines and Mitsubishi UFJ said nothing had been decided.
People familiar with the deal have previously said that Mitsubishi UFJ, Japan's largest bank, had an advantage over rival bidders such as Credit Saison, due to existing business ties with the card firm.
Japanese private equity fund Advantage Partners was also among the bidders, people familiar with the deal have said.
JALcard ranks sixth in Japan's credit card industry and is estimated by the media to have a market value of about JPY100 billion yen.
It also boasts a higher percentage of wealthy customers compared with its rivals.
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