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Panel recommends Japan Airlines seek public funds

Panel recommends Japan Airlines seek public funds

A government-appointed panel recommended struggling Japan Airlines apply to a corporate turnaround body for access to emergency public funds, Transport Minister Seiji Maehara said Thursday.
The five-person task force concluded that if appropriate measures are taken, Japan's largest airline _ battered by declining travel and bloated costs _ could recover, Maehara told reporters.
The panel said JAL needs to reduce the number of airplanes and other equipment, cut its work force, reduce the number of flights and slash so-called legacy costs, which include pension payments.
Asked why the government appeared to be willing rescue this particular company, Maehara pointed out that JAL operates about 60 percent of domestic flights and serves an important transport function for the economy.
"If JAL were to stop flying, that would cause tremendous damage to the Japanese economy and disrupt travel with foreign countries," he said.
JAL reported its biggest quarterly net loss of 99 billion yen ($1.1 billion) in the three months to June, and has forecast a net loss of 63 billion yen for the current fiscal year to March 2010.
The airline said it has yet to formally apply to the rehabilitation body, called the Enterprise Turnaround Initiative Corp. Once it does, the corporation would assess the application to determine if emergency funds and government-backed bridge loans are necessary.
JAL had earlier submitted its own draft reconstruction plan, which included 6,800 job cuts, or about 14 percent of its workers, but failed to get a pass mark from its main banks and the transport minister.
On top of being hit by depressed travel, the carrier also has struggled to regain customer confidence following a series of safety lapses a few years ago that prompted many Japanese to opt instead for rival All Nippon Airways.
No one was injured in those JAL incidents, but wheels have fallen off during a landing, a flight took off with a faulty latch and a plane was forced to return shortly after takeoff when a cockpit window cracked.
JAL has reportedly been in talks on financial tie-ups with several top airlines including Delta Air Lines Inc., the world's biggest airline operator, its rival American Airlines Inc. and Air France-KLM, Europe's biggest airline group.
JAL's stock price rose 3 yen, or 2.7 percent, to 115 yen. Maehara's comments were made after the market closed.


Updated : 2021-06-23 13:57 GMT+08:00