Japan Airlines denied bailout on fears cost-cutting will not go far enough
JAPANAIRLINES was yesterday denied its request for a government bailout, as the country’s new transport minister withheld financial support on fears the carrier’s cost-cutting plans would not go far enough.
The request for a cash injection from the carrier’s chief executive Haruka Nishimatsu came as the airline’s shares tumbled 16 per cent to a record low, after being hit by fears that lenders might seek to break up the company.
Japan Airlines, which is buckling under the weight of $15bn (£9.3bn) of debt, is being wooed by both Delta and a rival group led by American Airlines, offering capital in return for closer business ties.
The company is expected to report its second straight annual loss.
Asia’s largest airline by revenue has been scrambling to put together a restructuring plan to submit to the government this month, a condition of a state guarantee on a 100bn yen (£9.1bn) loan earlier this year.
‘The likelihood of further state support has been thrown into doubt by a change in government in August, which brought the Democratic Party to power, ending the rule of the Liberal Democratic Party, which had supported state help for Japan Airlines.
Transport Minister Seiji Maehara met with the airline’s boss yesterday. He reiterated he did not want to see the company go bankrupt but he said he was not ready to approve a request for the state to prop up the carrier by buying shares.