Delta offers JAL billion-dollar financial lifeline
November 18, 2009
Japan Airlines was offered a billion-dollar financial lifeline Wednesday from Delta Air Lines and its SkyTeam alliance partners, as Tokyo refused to rule out allowing the carrier going bankrupt.
Delta said the rescue package on the table included a $500 million (R3.7 billion) equity injection, a revenue guarantee worth $300 million and $200 million in asset-backed funding.
The US carrier is seeking to lure JAL away from the rival Oneworld airline grouping and American Airlines, which is also seeking a tie-up with JAL, eyeing its lucrative Asian landing slots.
The offer came as shares in JAL plunged to an all-time low after the Japanese government said that bankruptcy was still a possibility for the airline, which lost $1.5 billion in the six months to September.
"I have never said the government would not allow bankruptcy protection" for JAL, Transport Minister Seiji Maehara told a parliamentary panel.
Rather, the government wanted to ensure it did not "collapse and disappear," he said.
Bankruptcy protection can enable a company to restructure its debts with creditors and implement other measures to emerge stronger, as seen with ailing US auto giant General Motors earlier this year.
JAL, Asia's largest carrier, is seeking an injection of public funds to boost its capital as it restructures under the supervision of a government-backed turnaround body.
It is also set to receive an emergency loan from a state-backed lender.
The airline last week reported a massive net loss of 131.2 billion yen ($1.5 billion) for the fiscal first half to September, scrapping its forecasts for the rest of the year due to the uncertain outlook.
JAL plans thousands of job cuts and a drastic reduction in routes.
The transport minister's remark sent JAL's share price down to an all-time low of 94 yen in morning trade. The stock closed down 3.9 percent at 98 yen. - AFP
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