Japan Airlines Co., the world’s most profitable airline, plans to raise about 663 billion yen ($8.5 billion) in the world’s second-biggest initial public offering this year, capping a recovery from a 2010 bankruptcy.

The airline will list on the Tokyo Stock Exchange on Sept. 19, it said today in a Ministry of Finance filing. Its government-backed owner will sell 175 million shares at a tentative price of 3,790 yen apiece.

The biggest initial public offering since Facebook Inc.’s marks the airline’s return after then-Chairman Kazuo Inamori slashed jobs, cut debt and retired older, less fuel-efficient aircraft to revive profit. The carrier, which will get no money from the sale, yesterday reiterated its annual profit forecast of 130 billion yen for the period ending March 31, compared with 40 billion yen at larger rival All Nippon Airways Co.

“JAL is regarded pretty highly among market participants after improving its earnings,” said Ryota Himeno, an analyst at Barclays Securities Japan Ltd. “Still, with the emergence of low-cost carriers in Japan, and efforts from ANA, competition in the airline market is set to intensify.”

Inamori, 80, also founder of Kyocera Corp. (6971) was asked by then-Prime Minister Naoto Kan to oversee the airline’s turnaround.

Record Profit

JAL posted a record profit of 187 billion yen, the equivalent of $2.4 billion, last fiscal year, more than twice that of Air China Ltd., the second-most profitable, with $1.1 billion, according to data compiled by Bloomberg.

Now, JAL and ANA, as the full-service airlines are also known, face rising competition from low-cost carriers and have formed their own ventures aimed at serving rising demand for budget travel.

AirAsia Japan Co., a venture between ANA and AirAsia Bhd. (AIRA), this week became the third budget airline to start flights in the country this year. ANA affiliate Peach Aviation Ltd. started operation in March and Jetstar Japan Co., a venture with owners including JAL and Qantas Airways Co., began flying last month.

The Enterprise Initiative Turnaround Corp. of Japan, the government-backed body funding the carrier’s restructuring, is selling its stake after becoming the biggest shareholder after the bankruptcy.

ETIC invested 350 billion yen in the airline, becoming the main shareholder with 97 percent of JAL’s shares. The entity will get more than that investment after JAL’s share sale, Chairman Emeritus Kazuo Inamori said yesterday.

The share offering will be the largest in Japan since Dai- Ichi Life Insurance Co. raised 1 trillion yen, including the exercise of overallotment options, in March 2010, according to data compiled by Bloomberg.

To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net