JAL asks for massive debt write off
29 / 06 / 2012
JAPAN Airlines has asked its creditors to write off ¥250 billion (US$2.8 billion) of its debt as part of its plan to improve its already shaky financial footing.
JAL is seeking government approval for the plan and expects transport minister Seiji Maehara to give it by the end of the month so that the carrier can finalise negotiations with the banks in November.
Under the plan, JAL would expand its job cuts to more than 9,000 group employees from the previously announced 6,800 and president Haruka Nishimatsu be replaced.
The airline would also boost its capital by about ¥150 billion through private investment and public financial help and ask creditor banks to extend a new loan of more than ¥300 billion.
However, analysts suggest that the amount JAL is asking to be written off may be too big for the banks to swallow. “The mega banks would have to absorb large loses if the plan were implemented as discussed,” said Brett McGonegal, a managing director at Cantor Fitzgerald, said. “The last thing the banks in Japan need right now is a big loss.”
As mentioned in last issue’s Air Cargo News, other airlines are circling about the floundering Japanese carrier seeking an opportunity to snap up bargain stakes in JAL. The balance between bargain and liability is fine though so any chance to have debts wiped from a potential investment can only be good news.