Japan’s government will provide additional funding for Japan Airlines Corp (JAL) until a turnaround plan is announced mid-next month aimed at preventing a collapse of Asia’s biggest carrier by sales.
The government won’t disclose details of the plan, Transport Minister Seiji Maehara said at a briefing in Tokyo yesterday.
Japan’s government has pledged to keep JAL in business as it bails out the carrier for the fourth time since 2001.
The company has posted three losses in four years and owed its biggest lenders at least ¥529 billion (US$5.7 billion) as of July.
The stock plunged 24 percent to a record low in Tokyo yesterday on speculation that the company may seek bankruptcy.
“The government intends to act firmly in support of JAL’s rehabilitation to secure its safe and stable operations,” Prime Minister Yukio Hatoyama told reporters earlier yesterday.
Turning around JAL was very possible and the company may not have to file for bankruptcy under court protection, Maehara said at the briefing.
The carrier secured a ¥100 billion bridge loan from a state-affiliated bank and was trying to persuade staff and retirees to accept pension cuts as it battles to avoid collapse. JAL had used ¥55 billion of those funds, Maehara said.
The government is increasing the credit line to JAL to get rid of concerns that the company won’t have sufficient funding with the remaining ¥45 billion in funds, the minister said.
JAL has also received competing investment offers from Delta Air Lines Inc and American Airlines.
A state-affiliated agency charged with rescuing JAL met creditors yesterday to discuss a proposed bankruptcy, the Yomiuri newspaper reported earlier.
The airline’s main lenders opposed bankruptcy in the meeting, according to the report.
The biggest lenders are Mitsubishi UFJ Financial Group Inc, Sumitomo Mitsui Financial Group Inc, Mizuho Financial Group Inc and the state-affiliated Development Bank of Japan.
Bankruptcy is the preferred option being pursued by the Enterprise Turnaround Initiative Corporation, the Asahi newspaper said yesterday.
The agency is scheduled to decide on a plan next month.
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