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Saturday October 17, 09:20 AM
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Japan govt cool to JAL restructuring plan - Nikkei
TOKYO (Reuters) - Japan's finance ministry and a state-owned bank are wary about approving the latest restructuring plan for struggling Japan Airlines Corp, the Nikkei business daily reported on Saturday.
JAL, Asia's biggest airline by revenue, has been scrambling to craft a turnaround plan under the supervision of the government, which is overseeing its restructuring after backing a 100 billion yen ($1.1 billion) loan.
Under its latest plan, the airline has asked creditors for 600 billion yen in financial aid, including 300 billion yen in debt waivers and debt-for-equity swaps.
But the Ministry of Finance and the state-owned Development Bank of Japan, JAL's largest creditor, have determined that the plan may be difficult to implement, the Nikkei said quoting government and financial sources.
The plan calls for JAL's 330 billion yen in pension liabilities to be cut to 100 billion yen, but the move is certain to face hurdles in securing approval from retirees and others, the Nikkei said.
A call to cut 9,000-10,000 staff over three years is also likely to face strong resistance from JAL's labour unions.
A growing number of government officials believed JAL should rebuild under the Enterprise Turnaround Initiative Corp. of Japan, a new body funded by both the government and private financial institutions, the Nikkei added.
JAL's shares slid to a record low on Friday as investors suggested bankruptcy may be an option for the airline. The shares, which lost a quarter of their value this week, closed at 101 yen.
(Reporting by Chisa Fujioka; Editing by Alex Richardson)
