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Transition Bonds

In the JAL Group Medium-Term Management Plan for Fiscal years 2021-2025, JAL positioned “Safety and Comfort” and “Sustainability” as growth engines amid a time of upheaval accompanied by drastic changes in values. In order to achieve JAL Vision 2030, its ideal image of the JAL Group in 2030, it set ESG strategy*1 as one of its three strategic pillars alongside business strategy and finance strategy.

In particular, reduction of CO2 emissions from aircraft is one of the most important issues in the aviation industry, given that air travel produces significantly greater CO2 emissions per unit than other methods of travel, and the public are strident in their demands that emissions be reduced. The JAL Group is aiming to achieve its target of net-zero CO2 emissions by 2050, primarily by upgrading its aircraft to fuel-efficient models that emit minimal CO2, and increasing the amount of Sustainable Aviation Fuel (SAF) for its fleet carries. When planning to issue SDG Bonds, JAL chose to issue Transition Bonds that the net proceeds will be allocated to upgrading to fuel-efficient aircraft.

*1: JAL Group Announces Medium Term Management Plan for Fiscal Years 2021-2025PDF

Summary of Transition Bonds

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Name Japan Airlines Co., Ltd. 11th Series of Unsecured Corporate Bond
(with inter-bond pari passu clause; Transition Bond)
Maturity 5 years
Issue amount 10.0 billion yen
Timing of issue March 1st, 2022
Coupon rate 0.70% per annum
Use of proceeds Upgrading to fuel-efficient aircraft (Airbus A350, Boeing-787, etc.)
External review provider Sustainalytics
Bond ratings A- (Rating and Investment Information, Inc.), A (Japan Credit Rating Agency, Ltd.)

Second Party Opinion

JAL has developed the Transition Bond Framework (hereinafter, "this framework"). This framework has obtained a second party opinion from Sustainalytics as an independent external reviewer that this framework is aligned with the Green Bond Principles 2021 (ICMA), Green Bond Guidelines 2020 (Ministry of the Environment, Japan), Climate Transition Finance Handbook 2020 (ICMA), and Basic Guidelines on Climate Transition Finance (May 2021) (Financial Services Agency, Japan; Ministry of Economy, Trade and Industry, Japan; and Ministry of the Environment, Japan).

Selection of Climate Transition Finance Model Projects

The issuance has been selected as the first model example in Japan's Aviation Industry for the 2021 Climate Transition Finance Model Projects by Ministry of Economy, Trade and Industry of Japan.

List of investors announcing investment in the bonds

Investors who have demonstrated interests and committed to investing in JAL Transition Bond. (As of February 22, 2022)

  • AICHICHITA AGRICULTURAL COOPERATIVE ASSOCIATION
  • Aizu Syoko Shinkumi bank
  • Akita Shinkin Bank
  • AZUSA SEKKEI CO.,LTD.
  • Asset Management One Co., Ltd.
  • JA AWA
  • Iizuka Shinkin Bank
  • IBARAKI Prefectural Credit Federations of Agricultural Cooperatives
  • ANGEL PARK CO.LTD
  • The Osaka-kyoei Credit Cooperative
  • The Gifu Shinkin Bank
  • kyoei
  • Kyoritsu Credit Cooporative
  • The Kumamoto Shinkin Bank
  • COSEL Co., LTD.
  • THE SAIKYO BANK,LTD
  • SHOWA SHINKIN BANK
  • THE SUGAMO SHINKIN BANK
  • SUMITOMO LIFE INSURANCE COMPANY
  • Sompo Asset Management Co., Ltd.
  • Choshi Shoko Shinkumi Bank
  • General Incorporated Foundation Tsuyama Jifu Kai
  • Touto sinyo nogyo kyodo kumiai
  • Dokkyo University
  • The First Bank of Toyama,Ltd.
  • NAGASAKI MITSUBISHI CREDIT UNION
  • THE NAGANO-KEN SHINKUMI BANK
  • Nakanogou Credit Cooperative
  • Niigata credit union
  • Nissay Asset Management Corporation
  • Banshu Shinkin Bank
  • THE HIRATSUKA SHINKIN BANK
  • Hokkaido Labor Bank
  • Mie Prefecture credit federation of agricultural cooperatives
  • Mienaka Japan Agricultural Cooperatives
  • The Mizusawa Shinkin Bank
  • Sumitomo Mitsui Trust Asset Management Co., Ltd.

Summary of Transition Bond Framework

1.Use of Proceeds

JAL will use the proceeds of the Transition Bonds to finance and refinance new and existing Eligible Projects falling within the following project category. In the case of existing investments, allocation is limited to expenditures made within three years before the issuance of the Transition Bonds.

This table can be scrolled horizontally.
Project Category Eligibility Criteria SDGs
  • Upgrading to Fuel-efficient aircraft
  • Green Bond Principles:
  • Clean transportation
    (Environmental objectives: Climate change mitigation)
  • "Targets and Initiatives towards CO2 emmission reduction by 2030":
    Upgrading to fuel-efficient aircraft (Airbus A350, Boeing-787, etc.)
  • 7.Ensure access to affordable, reliable, sustainable and modem energy for all
  • 9.Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation
  • 13.Take urgent action to combat climate change and its impacts

2.Process for Project Evaluation and Selection

JAL's Finance Department will negotiate with related business departments and select nominated Eligible Projects. General Manager of Finance & Accounting Division will be responsible to select the Eligible Projects on behalf of the Board.

Eligibility assessments are done in a comprehensive manner based on the Eligibility Criteria. In addition, in the operation and implementation of the project, JAL is working on the conservation of the surrounding environment in each related department.

3.Management of Proceeds

JAL's Finance Department will manage the allocation of the proceeds annually using the internal management system until the net proceeds from the Transition Bonds have been fully allocated. The proceeds will be managed in cash or cash equivalents until the net proceeds from the Transition Bonds have been fully allocated.

Reporting

Allocation Reporting

JAL will report on the allocation of proceeds on JAL’s website annually until the proceeds have been fully allocated to Eligible Projects.
The report will include the aggregated amount of allocation of the proceeds to the Eligible Projects at category level, the amount of unallocated proceeds and the amount of proceeds used for refinancing.
JAL will report timely in the event of a significant change in the allocation of proceeds.

Impact Reporting

Where possible, JAL will report on the following impact metric and the outlines of Eligible Projects on JAL's website, until the proceeds from the Transition Bonds have been allocated.

Project Category Impact Metric
  • Upgrading to Fuel-efficient aircraft
  • Annual CO2 emissions reduced

Annual Review

Within one year from the date of issuance of the Transition Bonds, JAL will obtain a review from Sustainalytics, an independent external reviewer, to evaluate whether its reporting is aligned with this framework. This review will be conducted annually until the proceeds from the Transition Bonds have been fully allocated.

Note: This website has been prepared for the purpose of publicly announcing JAL's issuance of Transition Bonds, and not for the purpose of soliciting investment or engaging in any other similar activities.

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