Japanese government seeks more money for JAL
TOKYO - The Japanese government asked the state-backed Development Bank of Japan to extend more financial support to Japan Airlines Corp. in Tokyo's latest measure to assist the ailing carrier.
TOKYO – The Japanese government asked the state-backed Development Bank of Japan to extend more financial support to Japan Airlines Corp. in Tokyo’s latest measure to assist the ailing carrier.
In a statement on its Web site Sunday, the DBJ said it will urgently consider and decide on the request in order to cooperate with the safe operation of Japan Airlines, also known as JAL.
Local media reported government ministers, including Deputy Prime Minister Naoto Kan, asked the state-owned bank to double JAL’s existing credit line to 200 billion yen, or about $2.14 billion. A JAL spokeswoman declined to comment on the figure.
JAL shares plummeted 24% to 67 yen on Dec. 30, the last trading day of 2009, following reports that the carrier is studying court-led bankruptcy protection even as it explores an out-of-court alternative under the auspices of the government. The market reopens on Monday.
Increasing state-backed funding for JAL’s bailout may be a way for the government to get the airline’s private-sector lenders to agree to its plan for JAL. The banks are believed to be unhappy about the possibility of the airline filing for bankruptcy protection because that could force them to write off more of their loans to JAL. The banks have declined to comment.
The airline is also trying to get retirees to bend on pension benefits to ease its financial burden. A legal liquidation would force them to accept reduced benefits. The retirees are in the process of voting on whether to accept the proposal.
In an interview published Sunday in the Asahi newspaper, Japan Airlines President Haruka Nishimatsu said he believed JAL could restructure without needing to seek court-sponsored bankruptcy protection.
In November, JAL obtained a credit line of up to 100 billion yen from the Development Bank as part of the 125 billion yen it says it needs for the rest of the fiscal year ending March 31.
JAL is considering competing overtures from U.S. carriers Delta Air Lines Inc. and AMR Corp.’s American Airlines to form a tight alliance. Despite its problems, JAL offers the potential for greater access to fast-growing Asian routes. It is currently a member of the Oneworld airline alliance, of which American is a member.