Japan's airlines are lobbying the government to introduce reforms to help them through the downturn as the country's economic slump deepens.
The country's airlines have for years been pressing the government to reduce landing and other airport charges, for example, in addition to cutting taxes and opening up more slots at busy airports such as Tokyo's Haneda.
The Scheduled Airlines Association of Japan has now put forward a proposal of reforms to the Ministry of Land, Infrastructure and Transport. The government has said a package of promised reforms is expected to be drawn up by late March.
The government aid promises come as both All Nippon Airwaysand Japan Airlines are now forecasting losses for the 2008/9 fiscal year, reversing predictions of profits, as Japan's economy has shrunk faster than anticipated.
The government has already pledged to help large Japanese corporations and has indicated it is willing to provide low-interest loans to ANA and JAL if necessary through the Development Bank of Japan (DBJ). A formal offer of loans is expected to be part of the aid package.
Both carriers say no decisions have been taken on whether to apply for low-interest loans.JAL says it is "still analysing all feasible options to raise capital", while ANA says it is not currently seeking government loans as "we prefer to stand on our own two feet where possible". But it adds: "The DBJ might be considered as one option alongside other forms of finance if and when the time comes, but we intend to go it alone while we can."
The DBJ has helped airlines in the past, having last provided loans in 2003 after travel demand plummeted as a result of the SARS outbreak in parts of Asia.
ANA and JAL are meanwhile stepping up cost-cutting efforts as their financial positions have deteriorated.In its nine-month earnings, ANA cited "a severe drop in international passengers on routes to Europe and North America",on top of an already depressed China leisure market, resulting in a fall in revenue.
It also said that domestically "softening demand brought fewer passengers and smaller revenue". It went on to say that cargo demand has fallen sharply and it expects conditions to worsen further as the downturn "offers challenges of a much harsher nature" than those seen in the past.
ANA is now forecasting a net loss of 9 billion yen ($92 million) for the year ending 31 March, compared with an earlier forecast of a 17 billion yen net profit. It still expects an operating profit but has reduced its forecast to 8 billion yen from 55 billion yen.
JAL is also now forecasting a full-year loss after weaker nine-month earnings. It says a 34 billion yen net loss is anticipated, compared to its earlier 13 billion yen profit forecast. It now expects an operating loss of 37 billion yen, compared to a previous profit forecast of 28 billion yen.
Both ANA and JAL are stepping up route and fleet restructuring efforts to boost productivity and make their operations more efficient. Both say a key area of reform will be in personnel costs, noting that conditions are expected to get worse before they get better.
Source: Airline Business
