Japan's new transport minister is reviewing the previous government's plans to bail out ailing Japan Airlines.
In early July, the Japanese government guaranteed ¥100 billion ($1.1 billion) in loans that the oneworld alliance carrier obtained from five Japanese banks, including some government financial institutions. This is on top of earlier loans by the government. The LDP government also formed a panel to look into the airline's restructuring plans.
This came after JAL reported ¥99 billion net loss in the three months to 30 June, up sharply from a loss of ¥3.4 billion a year before. Operating revenue fell 32% to ¥334.8 billion due to adverse international cargo and passenger traffic.
The Democratic Party of Japan, which defeated the LDP in general elections earlier this month, will take a second look at the plans, especially in light of news that US carriers like Delta Air Lines and American Airlines may be keen to invest in JAL.
"We want to drop for now the committee that comes from the LDP government," Seiji Maehara, the new transport minister, said at a press conference yesterday, according to the Japanese media.
"At the same time, I want to sincerely listen to what the Development Bank of Japan and financial institutions that have provided loans to JAL now have to say, and judge if JAL's rebuilding plans are feasible."
Observers believe that the DPJ government may not be as keen as the LDP to use public money to help JAL, a move that rival carrier All Nippon Airways has opposed as well.
Any change would mean that JAL may have no choice but to look to a foreign investor to raise the money needed to reduce its debt, and to restructure its operations.
A JAL spokeswoman says that the airline does not have a response to Maehara's statements. JAL is working on a medium-term business plan, which will review its operations for the three years to 31 March 2012, that it plans to release in the next month.
Source: Air Transport Intelligence news
