TOKYO — East Japan Railway has raised 410 billion yen ($3.8 billion) in April and May to shore up finances as ridership continues to hemorrhage due to the novel coronavirus outbreak, the rail operator serving Tokyo said Tuesday.
The company, also known as JR East, tapped its bank overdraft arrangement to the tune of 260 billion yen and borrowed an additional 150 billion yen, President Yuji Fukasawa told reporters.
JR East has already raised 365 billion yen from commercial papers and corporate bonds, with total fundraising since March reaching 775 billion. The operator said it has reached its cash goals through June.
At the same time, JR East will trim capital spending by about 10%. The company turned in negative free cash flow during the fiscal year ended March 31 for the first time ever.
JR East still has room to raise funds if the effects of the pandemic persist. The railway has access to 240 billion yen in unused credit lines, and it has yet to hit the limit for commercial paper to be issued.
The coronavirus delivered a substantial blow to JR East’s rail business. The segment’s revenue, outside of fixed-term rail passes, plummeted 83% in May from a year earlier.
Revenue from medium- to long-distance trips, such as those on shinkansen bullet trains, fell 95%, compared with a 72% drop from short-distance trips. The coronavirus is directly responsible for 97 billion yen in lost revenue during May, or nearly 200 billion yen when combined with April.
The passenger count this month has yet to recover. Shinkansen ridership shrank 74% on the year during the five days through Friday. Passenger volume on regular express trains was down by 76%.
JR East’s plan to reduce capital spending roughly 10% this fiscal year follows a 21% increase to 617.9 billion yen during the previous year. The company last reduced capital investment on such a scale in fiscal 2011, after the devastating March 2011 earthquake and tsunami.