Japan Air Lines Seeks Bailout
The president of Japan Airlines said Thursday the money-losing carrier is applying for public funds to help turn around a company that’s been pummeled by the downturn in global air travel.
JAL President Haruka Nishimatsu said he has told Land and Transport Minister Seiji Maehara that the airline plans to apply for emergency government aid under the industrial revitalization law that’s intended to help struggling companies.
“I have made the request from JAL,” seeking approval for an injection of public funds, Nishimatsu told reporters after the talks. He refused to reveal how much money the airline wants.
If approved, JAL would be the second company to receive emergency aid under a new government program designed to help companies ride out the global slump. The government approved aid for chip maker Elpida Memory Inc. in June.
Approval is not guaranteed because some government officials believe JAL’s slump reflects structural problems in the company not just the global economic downturn, Japan’s largest newspaper Yomiuri said.
JAL has reportedly been in talks with several major airlines including American Airlines, Inc. and Delta Air Lines Inc. for possible financial and business support. Earlier this month, JAL said it would cut 6,800 jobs by March 2012.
Maehara also met with leaders of the government-owned Development Bank of Japan, as well as Japan’s top three commercial banks — Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group and Mizuho Financial Group — to discuss the possibility of funding the airline. JAL in June reached a 100 billion yen ($1.1 billion) loan deal with the Development Bank of Japan and three commercial banks.
Nishimatsu also provided details of the company’s restructuring measures, including scrapping of unprofitable routes and capital tie-ups with foreign airlines, during talks with Maehara. The president said JAL aimed to conclude talks with foreign carriers by mid-October, but did not identify them by name.
JAL, a former national carrier that was privatized in 1987, incurred its biggest-ever quarterly net loss of 99 billion yen ($1 billion) in the three months to June.
JAL has also forecast a net loss of 63 billion yen for the current fiscal year to March 2010.
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AP writer Shino Yuasa contributed to this report.
9/24/2009 6:15 AM MARI YAMAGUCHI, Associated Press Writer TOKYO