|
Monday October 19, 10:50 AM
|
|
JAL shares rebound, banks reject restructure plan
By Nobuhiro Kubo
TOKYO (Reuters) - Shares of Japan Airlines Corp rebounded nearly 9 percent on Monday on views they fell too far in losing a quarter of their value last week, even as creditors rejected its latest restructuring plan.
The airline, under the supervision of a government-appointed task force, has asked banks for 300 billion yen ($3.3 billion) in debt waivers and debt-for-equity swaps, sources familiar with the matter told Reuters last week.
Creditors, which include the state-owned Development Bank of Japan, rejected the plan on Sunday and requested a new one with less debt forgiveness and clarity on how it will cut pension obligations and the injection of public funds, a source with direct knowledge of the meeting said.
Shares of JAL rose 9 yen to 110 yen by the midday break in Tokyo, in contrast with a 1.1 percent fall in the benchmark Nikkei average. The stock, which hit a record closing low of 101 yen on Friday, rose as high as 113 yen.
"Investors are just buying back the stock after it was oversold last week," said Takahiko Kishi, an analyst covering JAL at Mizuho Investors Securities.
JAL, Asia's largest airline by revenue, is headed for its second straight annual loss in the year to next March, weighed down by $15 billion in debt and a bloated cost base that makes it less efficient than domestic rival All Nippon Airways Co.
PENSION WOES
JAL has been restructuring under state supervision since it received a 100 billion yen government-guaranteed loan in June.
It put forward a plan in September that included the loss of 6,800 jobs, a cut of 50 routes and reducing operating costs by 30 percent, but was forced back to the drawing board after the government said the steps were not enough.
The latest plan, which would boost job cuts to around 10,000, has not satisfied creditors who feel it is asking banks to carry too much of the burden in the form of debt waivers while not clearly addressing the state's plans for injecting public funds.
It also fails to offer a viable plan for reducing pension payouts to retirees, said the source, who spoke on condition of anonymity because the plan has not been made public. Creditors expect a revised turnaround plan as early as this week, he said.
The Yomiuri newspaper reported on Monday that the government was considering various methods to inject funds into JAL, including offering guarantees on loans and tapping a newly created state-backed corporate turnaround body.
"There really isn't a lot of clarity on JAL over the longer term," said Okasan Securities strategist Noritsugu Hirakawa.
"So while it's fairly natural that it rebounds right now on a sense the stock may have fallen too far last week, any real recovery is impossible until we see some real sense of direction regarding its future."
JAL's largest creditor is the Development Bank of Japan with 230 billion yen in loans outstanding as of March 31.
Other lenders include a unit of Mitsubishi UFJ Financial Group with 57 billion yen in loans, a unit of Mizuho Financial Group with 53 billion yen and a unit of Sumitomo Mitsui Financial with 37 billion yen.
(Additional reporting by Nathan Layne and Elaine Lies; Editing by Michael Watson)
(For more news on Reuters Money visit http://www.reutersmoney.in)
