JAL come AZ: good e bad company
Plan on table to split JAL in two
Government and creditor banks mulling transfer of profitable operations to a new entity
Kyodo News
The government and major creditor banks of Japan Airlines Corp. are examining an option to accelerate its rehabilitation by separating the ailing carrier's profitable operations from the ones that lose money, sources said Tuesday.
They are also studying the possibility of using a special public fund to help strengthen JAL's financial standing, the sources said.
Under this kind of restructuring plan, JAL's profitable operations and healthy assets would be transferred to a new entity, while the airline would retain the underperforming operations and loss-making assets. The carrier would determine its debts and losses and concentrate on rehabilitation work with bailout measures.
Earlier this year, U.S. auto giant General Motors Corp. underwent such a restructuring to create a new government-backed company, General Motors Co., while filing for Chapter 11 bankruptcy.
The government and JAL's creditors consider the plan an option because of the possibility that the group's financial standing could be worse than it appears if latent losses, such as depreciation of aircraft, are taken into account, the sources said.
Creditors have become cautious about extending additional financial aid because JAL has yet to show a clear way out of its chronic losses, they added.
However, industry analysts said such a scheme may not be offered because some members of the new administration are questioning how far the public sector should become involved in a company's rehabilitation, they said.
Hit by a slump in demand for passengers and cargo traffic at home and abroad amid the global recession, the country's largest airline incurred a group net loss of ¥63.19 billion in the year that ended March 31 and is expected to remain in the red in the current business year through next March.
In the government-supervised rehabilitation process, JAL has submitted a draft of its business improvement plan to an expert panel set up by the Land, Infrastructure, Transport and Tourism Ministry.
Under the plan, the airline will try to eliminate 6,800 jobs and scrap 50 routes through March 2012.
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