The Japanese government has offered former national carrier Japan Airlines by Y100bn ($1bn) in emergency funding to guaranteed new loans.
The airline, which is Asia’s largest carrier by revenues, had been seeking up to Y200bn from existing creditors, which including the Development Bank of Japan, to cover widening losses and restructuring costs.JAL notched up a Y63bn net loss in its last financial year, ending March. International passenger revenue fell by Y51bn, or 6 percent. The airline expects to lose an equal amount this year.
The Japanese government has extended loan guarantees to companies in several industries affected by the economic downturn, including automobiles and electronics. The guarantees free up collateral that can be used to secure additional funds from private-sector lenders, lowering the overall cost of credit.
Kaoru Yosano, finance minister, said by guaranteeing the DBJ’s portion of the JAL financing, it hoped this would allow the carrier’s main private-sector banks to pledge more new funds of their own.
The airline has cut jobs and eliminated unprofitable routes but analysts and creditors are calling for more radical measures.
JAL has said it needs cash to roll over debt as well as to finance an overhaul of its fleet, which is packed with ageing 747s.