JAL denies report that CEO Nishimatsu will step down

Japan Airlines Corp., seeking its fourth state bailout since 2001, denied a report that said Chief Executive Officer Haruka Nishimatsu will step down as the carrier is restructured.

Nishimatsu will quit “to clarify management responsibility” and may be replaced by a new CEO from outside the company by January, Kyodo News reported today, citing unidentified people familiar with the matter. Japan Air spokeswoman Sze Hunn Yap denied Nishimatsu will step down.

The Tokyo-based airline, to be reorganized under a government plan to avert bankruptcy, will also seek forgiveness of 250 billion yen ($2.8 billion) of debt and raise 150 billion yen in capital from public and private sources, Kyodo said. The carrier will expand the number of planned job cuts to more than 9,000 from 6,800 previously announced, it said.

“It’s positive that the pace of restructuring has become faster,” said Mitsushige Akino, who manages the equivalent of $666 million at Tokyo-based Ichiyoshi Investment Management Co. “But 250 billion and 150 billion are still far from enough. Japan Air needs to be changed drastically in order to be competitive.”

Sze Hunn Yap declined to comment on the airline’s plan, saying details will be announced by the end of next month.

Fourth Bailout

The government last month appointed a five-member panel headed by Nomura Holdings Inc.’s Shinjiro Takagi to assess the airline’s future and look at its management performance.

Japan Airlines plans to seek approval from the nation’s transport ministry for a draft of its management plan by the end of this month and complete negotiations with creditors in November, Kyodo said, adding the carrier may consider filing for bankruptcy if the talks fail.

Japan Air posted a loss of 63 billion yen for the year ended March 31 and is expecting another loss this year, after the global recession cut travel demand.

The company’s shares fell 2.9 percent to close at 133 yen in Tokyo trading today. They have declined 37 percent this year, compared with a 31 percent drop at Tokyo-based rival All Nippon Airways Co.