JAL to get US$3.3 bln in public funds


TOKYO: Japan Airlines 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 investment if the company goes through the courts and declares bankruptcy, Japanese newspapers the Asahi, Mainichi, Nikkei and others reported, without citing sources.

The ETIC intends to ask JAL’s creditors, including the state-owned Development Bank of Japan, to waive a further ¥300 billion  in loans to the airline, according to a draft rescue plan presented to lenders, the reports 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 around ¥700 billion.

The plan is likely to be finalised later this month, the reports said.  — AFP

JAL’s private lenders favour out-of-court restructuring, fearing legal bankruptcy would damage the airline’s reputation and make it harder for them to recoup their investment.

The company’s shares have swung wildly in recent sessions as investors watched the management’s efforts to drag the once mighty airline out of dire economic straits by slashing international flights and tying up with a foreign carrier.

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. — AFP