25 September 2009

JAL in plea for government bailout

TOKYO — Japan Airlines has asked for a government bailout to help its fight for survival.

The struggling carrier is also dumping services and laying off workers.

JAL, hit by US$15.4 billion, of debt, is being wooed by rival airlines seeking to gain access to its high-yielding route network.

JAL’s chief executive, Haruka Nishimatsu, talking to reporters after meeting Japan’s new transport minister, said that the indebted carrier needed government help.

"Considering debt repayments planned ahead, we thought asking for the public fund injection would make the most sense," he said.

Nishimatsu rejected suggestions that some JAL creditors may seek to break up his airline in an effort to separate out the worst parts of the company.

"If we were a manufacturer, then that could have been a choice. But for us, an airline company, that’s not an option," he said.

Reuters said it was unclear how much JAL is asking the government to invest. The airline lost about $1 billion last quarter and has been scrambling to put together a revival plan.

The plea for a bailout comes as SkyTeam’s Delta Airlines and a rival group of Oneworld carriers led by American Airlines hold separate talks to invest in and deepen ties with JAL, eyeing growth in Japan and the rest of Asia.

Up to 6,800 jobs and 50 unprofitable routes will be cut by March 2012 and operational costs lowered by 30 percent under a draft JAL reorganisation plan.

The former national carrier was privatised in 1987.