We are currently surveying All Nippon Airways Co. (ANA). According to the article, in 2012, All Nippon Airways is planning to raise $2.6 billion (£1.6 billion) by selling new shares. Their focus is to buy new planes and to bolster its finances as it faces a resurgent rival in Japan Airlines. This is a type of expansion plans for them. Through this offering of new shares, All Nippon Airways is able to promote investment in strategic aircraft which have high economic efficiency, mainly the state of the art Boeing 787s. It can helps in its network competitiveness in the international passenger business and establishing a financial base. So, it give ANA an opportunities to establish a Multi-brand strategy based in Asia.
Shares are the capital of the company that can be divided into different units with definite value. The one who buy or hold these shares are called shareholders or members of the company. There are two types of shares that a company may issue. For example, it is the preference shares and ordinary shares. Why does All Nippon Airways (ANA) choose to sell shares rather than other types of ways to expand their plans?
All Nippon Airways (ANA) do not have to pay dividend to the ordinary shareholders if they do not earn any profit during the year as there is no fixed dividend will be given to the ordinary shareholders. This means that if the company faces some financial problems as they were lose in their business, the do not have to pay any dividend to ordinary shareholders. This will help to reduce the company’s stress when they are facing financial problems. Beside, issue of ordinary share will help to reduce the gearing ratio. A gearing ratio means the proportion of a company’s capital that provided by debt relative to the capital that provided by equity. The examples for gearing are debenture and preference share which are all company’s long-term liabilities and they are carrying a right to a...
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