Sunday October 25, 05:58 AM
JAL new state-backed agency restructuring: reports
TOKYO (AFP) - Ailing Japan Airlines will restructure itself under a state-backed corporate turnaround firm while the government mulls a special law to cut the carrier's high pension payouts, reports said Sunday.
The Japanese government, which will announce a turnaround plan for JAL (Berlin: JAY.BE - news) by the end of this week, will also consider an injection of public funds after the plan is finalised, the Nikkei (news) business daily reported without citing sources.
Local media reported that the state-backed Enterprise Turnaround Initiative Corp. of Japan will be in charge of breathing life back into the carrier.
The government launched the quasi-public agency earlier this month to help debt-laden companies that are seen as having the potential to recover, designed to ensure transparency in negotiating debt-relief measures among creditors.
The agency may guarantee loans extended by the Development Bank of Japan and other JAL creditors, or it may lend to the company directly, the Nikkei said.
The carrier needs a bridge loan of about 200 billion yen (2.17 billion dollars) by the end of this year, it said.
JAL's shortfall of pension reserves has reached about 330 billion yen, placing pressure on its management, reports said.
The government also considers creating a new law to enable the carrier to lower its pension payouts to retirees, the Yomiuri daily reported, citing unnamed government sources.
If the law is enacted, debt write-offs by financial institutions and the injection of public funds are to proceed more smoothly, which could accelerate the airline's rehabilitation, the daily said.
JAL, which is expected to plunge 5.5 billion dollars into the red this financial year, has also decided to reduce its group workforce by 13,000 by the end of March 2015, 4,000 more than its initial plan, Kyodo News said.
The company, which lost more than one billion dollars in the April-June quarter, is seeking another public bailout to keep operating. JAL has already received three government bailouts since 2001.
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