All Nippon Airways (ANA) said on Tuesday it is raising up to $2.6 billion through the issue of as many as one billion new common shares to buy new planes and to bolster its finances as it faces a resurgent rival in Japan Airlines. The sale process started on Tuesday and the new shares will be priced on July 18, July 19 or July 20, the company said. Two sources had earlier confirmed a report by public broadcaster NHK that the company planned to raise capital, news which sent the airline’s shares tumbling 14 per cent. ANA is raising the funds before Japan Airlines (JAL) launches its initial public offering, slated for September and estimated at around $8 billion. JAL has emerged out of bankruptcy in 2010 with a clean balance sheet and record profits, raising the pressure on ANA to bolster its financial standing. “The difference in balance sheet strength between the two companies is substantial,” Nicholas Cunningham, a transport analyst at Macquarie Capital Securities in Tokyo said before ANA confirmed the share sale. “Although we do not consider ANA’s balance sheet to be weak, the difference could impact investor sentiment towards the company relative to JAL”. ANA’s net debt/equity ratio stood at 1.6 times as of the end of March, including off balance sheet items, compared to 0.2 times for JAL, Cunningham estimated. The fall in ANA’s shares reduced the firm’s market value to around 485 billion yen. The stock market had closed by the time ANA issued its statement confirming the plans. ANA said it will raise as much as 211 billion yen if an overallotment of shares is included. On that basis, the sale will dilute existing shareholder’s stakes by 28 per cent, Reuters calculated. ANA has hired Nomura Securities and the Japan securities arms of JP Morgan and Goldman Sachs to be among the underwriters for the sale, which would follow a roughly 140 billion yen stock offering in July 2009, one of the sources said. Mitsushige Akino, corporate officer at Ichiyoshi Asset Management, said the upside potential for ANA shares will be limited because investors will be aware that the JAL IPO is due.