Report: JAL’s plan to be rejected by banks

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Japan’s three largest banks have decided to reject the Transport Ministry’s rehabilitation plan for their loan customer Japan Airlines Corp., the Nikkei newspaper reported.

Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. have determined that the plan “lacks a robust business strategy” and doesn’t resolve uncertainty about public fund injections and debt guarantees, the Nikkei reported, without saying where it got the information.

The Ministry of Finance and the Development Bank of Japan have also said the restructuring plan may not be feasible, Nikkei English News reported yesterday, without saying where it got the information.

A task force set up by Transport Minister Seiji Maehara to rescue Japan Airlines may use a quasi-public agency to restructure the Tokyo-based carrier, the Sankei newspaper reported, without saying where it got the information. The Enterprise Turnaround Initiative Corp. of Japan may use public funds to take a majority stake in the airline, the Sankei said.

Masako Shiono, a spokeswoman for Mizuho, declined to comment. Spokespeople for Mitsubishi UFJ and Sumitomo Mitsui didn’t answer calls to their mobile phones, and a spokesman for Japan Airlines wasn’t available to comment.