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JAL financial situation

Japan Airlines may receive government funding

Jan 01, 2010

The Japanes government is making arrangements for an increase in a credit line set by the state-owned Development Bank of Japan for Japan Airlines Corp as part of its plan to revive the struggling carrier, transport minister Seiji Maehara said Wednesday. ‘‘Talks are fully under way to provide an additional loan (to JAL) if necessary,’’ Maehara told reporters after meeting with four other cabinet members charged with the reconstruction of the cash-strapped airline.

While the DBJ has extended 55 billion yen to JAL under its credit line of 100 billion yen, it is ready to provide the remaining 45 billion yen ‘‘any minute now,’’ he added.

Maehara stressed that the government will adopt ‘‘all possible means’’ to ensure financing for JAL before the government-backed Enterprise Turnaround Initiative Corp of Japan decides on a financial package for the carrier in mid-January.

The reported proposal has aroused concern about JAL’s credibility on the Tokyo stock market, sending JAL stock plunging to an all-time low of 60 yen during Wednesday’s trading, market insiders said.

The government is split over how to rescue JAL. Kan, who oversees ETIC, and some other cabinet ministers favor court-backed bankruptcy protection, while Maehara opposes it for fear such a move would hinder JAL’s smooth operations, according to sources familiar with the matter..

Japan Airlines may receive government funding
Source: Japan News wires

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