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Thursday October 29, 09:50 AM
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Japan govt may announce JAL bailout Thursday-media
TOKYO (Reuters) - Japan's transport minister will likely announce as early as Thursday plans to tap a new state-backed corporate turnaround body to restructure Japan Airlines Corp, the Nikkei business daily said.
The government has been aiming to come up with a blueprint this week for bailing out JAL, which is headed for its fourth annual loss in five years, weighed down by $15 billion in debt and a bloated cost base.
The parliamentary secretary at the Transport Ministry told a news conference the government-appointed task force will submit its latest restructuring plan for JAL to Transport Minister Seiji Maehara between 3 p.m. and 4 p.m. (0600-0700 GMT) on Thursday and Maehara comment on it.
JAL shares jumped 6.3 percent to 119 yen, in contrast with a 1.9 percent decline in the Nikkei average.
The Nikkei said Maehara will announce as early as Thursday plans to use the Enterprise Turnaround Initiative Corp (ETIC), which is able to tap up to 1.6 trillion yen ($17.63 billion) in state-guaranteed funds until next March.
Maehara, speaking in parliament, said JAL's revival is "extremely important" for Japan's economy and the government is fully committed to helping its turnaround.
"JAL's operation covers more than a half of Japan's sky and considering its global network and connection between local economies, its revival is extremely important for Japan's economy as well as for our policy," Maehara said.
A JAL official said the airline is not in a position to comment on the Nikkei report.
The Nikkei also said the government was considering a new law mandating the reduction of pension benefits to retirees of the struggling airline to address one of the key hurdles to its survival.
Domestic media have said JAL may need some 800 billion yen ($8.8 billion) for future retirement and pension payments, exceeding the 408 billion yen balance in its corporate pension system.
Senior Vice Finance Minister Naoki Minezaki said on Thursday the government cannot guarantee bridge loans to the troubled carrier without assurances it will reduce legacy costs.
The government plans to submit legislation to parliament next year, though differing views within the government make it unclear what provisions the bill will contain, the Nikkei said.
Another proposal being weighed is for the state-owned Development Bank of Japan to provide 200 billion yen in loans needed by JAL by the end of 2009 and for the state to guarantee loans once the legislation is passed, the Nikkei said.
The proposal will also likely to include plans to support the overall aviation industry such as a reduction in airport landing fees, the report said.
(Reporting by Nathan Layne and Mariko Katsumura; Editing by Michael Watson)
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