Ailing Japan Airlines to receive emergency loans
TOKYO - TOKYO (AP) — Japan Airlines said Tuesday it obtained government approval to receive up to $1.1 billion in emergency loans aimed at preventing the money-losing company from grounding flights.
JAL signed an agreement with the state-run Development Bank of Japan after receiving government approval, a company official said on condition of anonymity, citing policy.
Asia's largest airline has pressed for a government bailout and mulled over massive job cuts and other restructuring steps to avoid collapse. JAL shares tumbled 8.4 percent to a record low Tuesday amid worries over a possible bankruptcy.
The bridge loans are aimed at helping JAL to stay in business until a state-backed rehabilitation body determines full turnaround plans for the airline.
The airline Tuesday also signed a loan arrangement for an undisclosed amount with the Development Bank of Japan for "funds necessary for continuance of our flight operations," according to the official.
It also obtained government approval for separate loans of 25 billion yen ($282.2 million) for necessary aircraft imports.
Struggling JAL booked $1.5 billion in losses in the first half of the fiscal year, and faces interest-bearing debt totaling nearly $10 billion.
JAL has teetered for years, hammered by surging fuel prices, global competition and an image problem caused by a series of safety lapses. It had been losing Japanese customers to its local rival All Nippon Airways.
Last week, Delta Air Lines and its alliance partners said a billion-dollar offer was on the table to lure JAL from its affiliation with American Airlines.
JAL President Haruka Nishimatsu has said he will make a decision on the offer by the end of the year.
Monday, the airline asked retired workers to accept a 30-percent cut in pension benefits, but investors were skeptical whether the company could settle the thorny pension issue.
JAL has mentioned reducing 6,800 jobs, or about 14 percent of its global workforce. The airline has also said it will end 17 international and domestic routes, and close four overseas and two domestic offices to cut costs.
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