Japan Airlines, Asia’s largest carrier, will be given government help to rebuild its strength, Cabinet ministers said yesterday, after the company was hammered by falling demand caused by the global economic slump.
“The DBJ [Development Bank of Japan] will extend loans, not unconditionally, but on the premise that [the airline] must do its best to improve management,” Finance Minister Kaoru Yosano told reporters.
He did not comment on the amount of possible funding for the firm.
Reports have said the state-backed DBJ is arranging a loan of about ¥100 billion (US$1 billion) in cooperation with major private firms Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp.
Yosano said that Transport Minister Kazuyoshi Kaneko had asked him to “cooperate on crisis-management loans to JAL as the [transport] ministry will give it strong instructions on improving its management.”
Kaneko told a separate press conference that JAL was “an extremely important company for our country’s economy, society and people.”
“It’s unusual, but we have decided to take this action,” he said, referring to his ministry’s open pledge to supervise restructuring of a private company.
JAL has sought to borrow some ¥200 billion under a government program of low-interest financing for cash-starved firms amid the global financial crisis, reports said.
The ¥100 billion DBJ loan, the first tranche of that funding, would be extended by the end of the month, the Jiji Press news agency said.
The global economic downturn has dealt a heavy blow to JAL’s efforts to recover from a long period of financial turbulence, stretching back to its privatization more than two decades ago.
The airline expects a net loss of ¥63 billion for the financial year that started in April after an annual net loss of ¥63.2 billion for the 12 months through March.
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