Wednesday June 3, 09:03 AM
Japan Airlines likely to get one-bln-dlr loan
TOKYO (AFP) - Asia's largest carrier, Japan Airlines, will likely to get a government-arranged loan of around one billion dollars as early as this month amid slumping demand for flights, reports said Wednesday.
The state-backed Development Bank of Japan is arranging a loan of about 100 billion yen (one billion dollars) in cooperation with Japan's three biggest banks, the Nikkei (news) economic daily and public broadcaster NHK said.
The Development Bank of Japan is expected to put up tens of billions of yen, with Mizuho Corporate Bank contributing the second largest slice, the Nikkei said without naming its sources.
Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp. are likely to provide several billion yen each, it added.
Japan Airlines (JAL (Berlin: JAY.BE - news) ) will reportedly use the money for short-term business operations. The airline and the Development Bank declined to comment on the report.
The airline had sought to borrow about 200 billion yen from the Development Bank of Japan under a government programme of low-interest financing for cash-starved companies, the reports said.
NHK said the rest of the hoped-for loan would be considered after banks see the company's earnings outlooks and cost-cutting efforts.
JAL may be forced to reduce its workforce and drop unprofitable routes to get the loan, the broadcaster said.
The global economic downturn has dealt a heavy blow to JAL's efforts to recover from a long period of financial turbulence stretching back to its privatisation more than two decades ago.
The airline expects a net loss of 63 billion yen for the financial year that started in April after an annual net loss of 63.2 billion for the 12 months through March.
It aims to slash costs and axe 1,200 jobs by March 2010 in addition to the more than 10,000 posts it has shed since 2005.
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