Japan Airlines closer to bankruptcy
Hit hard by the economic recession and the ensuing drop in tourist and business travel, JAL is mired in huge losses and weighed down by about US$ 16 billion in debt. Today, it announced it was drawing down US$ 1.6 billion in emergency funding.
Internal sources are reporting that the company will file for bankruptcy protection as early as Tuesday as part of a restructuring plan being crafted by a state-backed turnaround fund.
Transport Minister Seiji Maehara said he would meet Prime Minister Yukio Hatoyama on Friday to set the “X-day”, a term widely used by media and bankers working on JAL's restructuring to refer to when it will file for bankruptcy.
“We are doing everything possible to reduce anxiety and reassure that the X-day will not cause any confusion,” Maehara told reporters.
With an accumulated debt of about US$ 16 billion, JAL applied in October to the Enterprise Turnaround Initiative Corporation of Japan (ETIC), a fund that can draw on government-backed funding to bail out ailing firms.
The ETIC is expected to make an official decision next week to support the carrier with public money after it files for what could rank as Japan's sixth-largest bankruptcy.
The Nikkei reported on Friday that Japan Airlines International, which handles domestic and overseas flights, and JAL Capital, which raises operational funds, would also file for bankruptcy and be part of the state-led bailout.
“We expect at least the group's three core companies, JAL, JAL International and JAL Capital, to file for bankruptcy protection under the government-led rehabilitation scheme,” said Minoru Nakano, an official at the bankruptcy research firm Teikoku Databank.
At the Tokyo stock exchange, investors have already reached their verdict. JAL shares were unchanged today at 8 yen, giving it a market value of about US$ 240 million. This week, the stock lost about US$ 1.8 billion.
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19/01/2010
08/06/2010
