Japan Airlines (JAL) is likely to get about US$3.3 billion of new public money from a state-backed body overseeing the rehabilitation of the struggling carrier, reports said yesterday.
The Enterprise Turnaround Initiative Corp of Japan (ETIC) is readying a ¥300 billion (US$323 million) investment if the company goes through the courts and declares bankruptcy, the Asahi, Mainichi, Nikkei and other newspapers reported, without citing sources.
The ETIC intends to ask JAL’s creditors, including the state-owned Development Bank of Japan, to waive an additional ¥300 billion in loans to the airline, a draft rescue plan presented to lenders allegedly said.
Further debt waivers and a deal reached with workers to cut back on pension obligations would mean a total ¥730 billion boost to the ailing company’s coffers.
The Japanese government at the weekend announced it was doubling JAL’s state-backed loan to ¥200 billion.
An asset review ETIC has carried out estimates JAL’s liabilities have exceeded its assets by about ¥840 billion, the Nikkei said.
Other reports put the figure at about ¥700 billion.
The plan is likely to be finalized later this month, the reports said.
JAL’s private lenders favor out-of-court restructuring, fearing legal bankruptcy would damage the airline’s reputation and make it harder for them to recoup their investment.
JAL, Asia’s largest operator, has been offered financial assistance by both American Airlines and Delta Air Lines, which are competing to take a stake in the Japanese company and increase their share of the lucrative Asian market.
The Yomiuri Shimbun reported this week that JAL had decided to forge a capital tie-up with Delta Air Lines and join the SkyTeam global alliance, leaving the OneWorld group, which includes American Airlines.
JAL denied the report, saying it was still in negotiations with the two US carriers.
Meanwhile, a group representing business travelers was opposing the proposed tie up between Delta Air Lines and money-losing JAL as bad for competition.
Kevin Mitchell, chairman of the Brussels-based Business Travel Coalition, said yesterday the proposed SkyTeam alliance would likely create a monopoly, totaling 62 percent market share on routes between Japan and the US, up from a third.
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