Cash guarantee likely to ease carrier's financial plight
The Japanese government is considering a JPY700bn (€5.2bn) loan to Japan Airlines (JAL).
The loan would ease fears that the struggling carrier will run out of money.
Reports of the prospective loan caused the airline's shares to rise by 10% on the Tokyo Stock Exchange, Reuters news agency said.
The agency quoted an analyst Takahiko Kishi, Mizuho Investors' Securities as saying that while the guarantee would ease the carrier's plight, it would still need more money.
Mr Kishi reportedly said it may not be enough to avoid bankruptcy as JAL also had problems with its pension fund and has asked ex-employees to take a 40% cut in their payments.
News of the government's reported guarantee comes after oneworld ceos offered JAL a $1.8bn package to stay in the alliance rather than join rival SkyTeam.
The key elements of the oneworld package were $1.1bn for restructuring and an anti-trust immunity joint venture across the Pacific with American Airlines, one of the leading members of oneworld.
The cash for restructuring JAL which is planning to make redundancies and axe routes, is through a link with the TPG investment group, oneworld said.
It said TPG offered JAL and the Japanese Government which is providing loans for the airline, with "far wider funding resources than would be available through any other airline grouping".
Oneworld said the application for ATI could be lodged as soon as the US and Japanese governments sign an "Open Skies" agreement.
A joint venture could add $100m to JAL's revenue on top of the £500m it already gets from being a oneworld member.
Reuters also reported today (December 7) that the US and Japanese governments could sign an Open skies deal as soon as this week.
Leading SkyTeam member Delta Airlines has offered JAL a $1bn package to join the rival alliance.
The offer included $500m in capital, $320m in revenue guarantees and transition costs and $200m is asset -backed financing.
www.jal.com www.oneworld.com www.skyteam.com www.aa.com www.delta.com