Shares of Japan Airlines surged nearly 12 percent Monday following a report the government is expediting a rescue for the struggling carrier.
Japan Airlines Co. shares surged 11.9 percent, closing at 113 yen on the Tokyo Stock Exchange, after the Nikkei business daily reported a government-appointed taskforce is to announce the final reconstruction scheme for the airline by the end of October and launch the plan early November — one month earlier than expected.
The newspaper cited comments made to reporters by an unidentified taskforce member following a meeting with JAL’s main banks Sunday. Transport Ministry officials declined to confirm the report.
“The report that the government is expediting the reconstruction plan reassured investors, who interpreted it as a sign that the taskforce is confident about saving JAL without turning the company inside out or having it go bankrupt,” said Mitsushige Akino, fund manager at Ichiyoshi Investment Management.
The government last month formed a team of corporate turnaround experts to create a restructuring plan for the airline after JAL sought public funds for survival.
The five-member team asked JAL’s banks to provide 300 billion yen ($3.3 billion) through debt relief and equity swaps, the Nikkei said. It said at least two taskforce members may take posts within the company to negotiate restructuring and cost-cutting measures with the airline’s labor unions and retirees.
JAL has also submitted its own draft reconstruction plan, which included 6,800 job cuts, or about 14 percent of its workers, but failed to get a pass mark from its main banks and the transport minister.
The airline has reportedly been in talks on financial tie-ups with several top airlines including Delta Air Lines Inc., the world’s biggest airline operator, its rival American Airlines Inc. and Air France-KLM, Europe’s biggest airline group.
JAL, which was privatized in 1987, incurred its biggest quarterly net loss of 99 billion yen ($1 billion) in the three months to June, and has forecast a net loss of 63 billion yen ($701 million) for the current fiscal year to March 2010.
Its request for taxpayer money came months after it received 60 billion yen ($668 million) in loans from the government-owned Development Bank of Japan in June.
JAL has reportedly told the government that it’s short 450 billion yen ($5 billion) through March 2011 — money that is needed for debt repayment.