Airline "no longer Japan's national carrier"
Japan Airlines (JAL) is to ask for public money to see it through its current financial crisis.
The request was made by the airline's president and ceo Haruka Nishimatsu in talks today (September 24) with the country's new transport secretary Seiji Maehara.
Mr Nishimatsu confirmed the request to reporters after his meeting with the minister but declined to say how much the loss making airline had requested.
Although Japan's new government formed by the Democratic Party has already helped one struggling company, it is not guaranteed to help the national airline.
The government wants a full review of the airline's position and also w to see whether its re-structuring plan is realistic.
Under this plan JAL, which is reportedly hoping for a government of about $1.2bn, has announced plans to cut 6,800 jobs and to axe some international routes.
It has also imposed a pay and pension freeze.
Before the meeting, shares in JAL had plummeted 18% to a record low today after threats the carrier might be broken up.
Besides its application for money to the government, the loss making airline is also in talks with two US carriers over a cash injection.
JAL received a loan of $1.1bn earlier this year to help it with its deficit from the previous Japanese government.
Leading Japanese air analyst Yoshima Miyamoto of Okasan Securities was quoted by Reuters as saying: "Our image of JAL as Japan's national carrier no longer exists."
JAL shares fell by 18% to a record low of JPY141 $1.55) before recovering to JPY144 $1.58). The drop wiped JPY62bn ($680.7m) of the airline's stock market value.
The slump came as lenders, led by the Development Bank of Japan, called for a major overhaul of JAL.
This could involve a break up of the carrier into profitable and non-profitable parts.
Reuters further quoted Mr Muiyamoto as saying: "It won't be able to stay alive as it is. It's got to sharply downsize operations or sell off businesses in bits and pieces to other companies."
Another analyst, Takahiko Kishi Mizuho Investors Securities, was quoted by the agency as saying: "Nothing's sure about JAL's future. It's already Japan's GM (General Motors).
"JAL would have to come up with really drastic restructuring to convince lenders or the government, but even if they do, the market would
doubt whether such measures could really be implemented."
Haruka Nishimatsu, JAL's president said he had asked for public money to tide the airline over in talks with Seiji Maehara, Japan's new transport secretary, today for talks on the airline's re-structuring plan.
Mr Maehara, who will also meet lenders' leaders including executives from the state-owned Bank, has said he wants to see if the re-structuring plan is realistic.
JAL is already in talks with American Airlines and Delta Air Lines about a possible cash injection of around $300m.
BA and Qantas, both member of the oneworld alliance like American and JAL, have also sent executives to Japan to persuade the Japanese carrier of the "huge value" of staying with the alliance.
If it links up with Delta, it is likely that JAL will swap oneworld for the rival SkyTeam alliance.
The airline lost $692m last year and announced a $1bn loss for the quarter to June this year.
It is heading for a deficit of $700m for the financial year ending next March.
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