JAL: Banks reject bail out, government to step in
Shares in the debt-ridden company did rally by as much as 11.9% on Monday in Tokyo, rebounding from a more than 26% loss last week as traders assessed the carrier’s prospects for recovery.
Reuters have reported that the JAL creditors have requested a new plan with less debt forgiveness and more clarity on how the carrier will cut pension obligations and the injection of public funds.
Meanwhile a task force of corporate rescue experts, overseen by Transport Minister Seiji Maehara wants a new quasi-public agency to take a majority stake in JAL and rebuild the ailing airline. The Enterprise Turnaround Initiative Corp. of Japan may use public funds for this move.
Maehara’s task force wanted creditor banks to forgive debts of more than 250 billion yen (2.75 billion dollars) racked up by JAL. It would seem that the banks have rejected this offer but that a deal is possible with the creditors not wanting to force JAL into bankruptcy.
The government will clearly step in at some stage but they are looking for JAL to get its house in some sort of order before it receives any public funds.
The airline was initially offering to cut 6,800 jobs, drastically reduce its route network and seek a tie-up with a foreign carrier. The possibility of larger cuts in jobs remains.