Friday November 13, 07:48 AM
JAL to seek breathing space from creditors: minister
TOKYO (AFP) - Cash-strapped Japan Airlines Corp. will apply for an out-of-court arbitration process that could allow it to delay debt payments, according to the transport minister.
JAL (Berlin: JAY.BE - news) will apply for a so-called "alternative debt resolution" scheme in a bid to win breathing space from creditors, Seiji Maehara told reporters, warning that the airline's latest earning results would be "extremely severe."
The carrier is seeking an injection of public funds to boost its capital as it restructures under the supervision of a government-backed Enterprise Turnaround Initiative Corp. of Japan.
But the turnaround body appears unlikely to make a decision on whether to inject public funds into the company before early next year.
JAL is also set to receive an emergency loan from the state-backed Development Bank of Japan, the government said earlier this week, without disclosing the amount.
The loss-making airline is thought to urgently need about 200 billion yen in emergency financing.
JAL -- the recipient of three government bailouts since 2001 -- lost more than one billion dollars in the April-June quarter and plans thousands of job cuts and a drastic reduction in routes.
The airline, suffering due to the global economic downturn and heavy pension obligations to former employees, is due to announce its half-year financial results later Friday.
It is expected to scrap its financial forecasts for the full year to March 2010 because of the uncertainty surrounding its restructuring process, the Nikkei (news) business daily reported Friday.
-- Dow Jones Newswires contributed to this story --
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