JAL receives US$1b govt bailout
Japan - Japan Airlines (JAL) on Monday secured a ¥100 billion (US$1 billion) emergency funding after the government agreed to guarantee new loans to the troubled airline.
The airline had been seeking approximately US$2 billion from existing creditors including the state-backed Development Bank of Japan (DBJ).
Under the new agreement, JAL could receive 50% of the bailout as soon as next week.
The largest portion, approximately US$625 million, will be provided by the DBJ and will carry a state guarantee covering up to 80% of losses, while the remaining sum will be made available at a late date; subject to a review of the airline's restructuring efforts, The Financial Times reported.
According to a report in The Times Online, the loan will come on a condition that JAL improves the way the company is run, to the satisfaction of the government. This could mean the airline will see a significant portion of its existing route network "scrutinised".
JAL has struggled to finance its debt loads amid sluggish demand for air travel. The airline suffered a US$650 million net loss in the previous financial year and is expected to make similar losses this year.
In the January-March period this year, the airline's international passenger revenue fell 6% or US$51 million.
Kaoru Yosano, finance minister of Japan said guaranteeing the DBJ's portion of the JAL financing would allow the carrier's main private sector banks - Mizuho Financial, Mitsubishi UFJ Financial Group and Sumitomo Mitsui Financial Group to contribute a larger share of the targeted financing.
The airline said it needs cash to roll over debt and to overhaul its ageing fleet.
JAL said it plans to cut seven more domestic routes and one international route this year and has extend unpaid leave to cabin crew and other ground staff until September.
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