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Sunday October 18, 02:00 PM
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JAL task force to tap govt-backed rehab body - media
TOKYO (Reuters) - A Japanese government task force set up to keep Japan Airlines Corp afloat has decided to tap a state-backed institution tasked with revitalising struggling companies, the Sankei newspaper reported on Sunday.
The Enterprise Turnaround Initiative Corporation of Japan (ETIC), would use public funds to prop up JAL, Asia's biggest airline by revenue, and obtain a majority stake in the airline, Sankei said.
That would allowing the government to have more say in the running of the airline, the paper said.
JAL 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 ($1.10 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.
The government task force, under the direct control of Transport Minister Seiji Maehara, has crafted a plan to rebuild JAL, which includes debt waiver topping 250 billion yen, but its main creditor banks have been opposed to the plan, Sankei said.
The ETIC opened for business on Friday with the ability to tap up to 1.6 trillion yen in state-guaranteed funding in the current fiscal year to March 2010. Its mandate runs for 5 years.
The ETIC scheme is similar to that of the Industrial Revitalisation Corp of Japan (IRCJ), a state-backed entity that restructured textile and cosmetics maker Kanebo Ltd and retailing giant Daiei Inc and other businesses before disbanding in 2007.
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 Tetsushi Kajimoto; Editing by Alex Richardson)
