Ministry, Main Lender Deem JAL Rehab Plan Unworkable
The plan, presented to Transport Minister Seiji Maehara Tuesday by a task force overseeing the carrier's rehabilitation efforts, calls for debt waivers from creditor banks. The MOF and JAL's main lender, the DBJ, support measures that would sharply streamline the financially strapped airline's operations and shake up its management. But they also believe the plan itself may not be feasible given the difficulty in slashing the carrier's pension liabilities. Under the plan, JAL's 330 billion yen in pension liabilities will be reduced to 100 billion yen. But achieving this would have to be approved by retirees and others. Also, calls for the work force to be reduced by 9,000 to 10,000 personnel over three years are expected to face strong opposition from JAL's labor unions. The MOF and the DBJ will urge the task force and the airline to continue pursuing turnaround measures initiated by the company, while pressing for drastic steps to deal with its liabilities. Meanwhile, a growing number of government officials believe that JAL should rebuild under the Enterprise Turnaround Initiative Corp. of Japan, a newly established organization funded by both the government and private-sector financial institutions. The turnaround body could play a key role in helping to arrange debt waivers and other steps to make the process as smooth as possible. Such an arrangement would enable JAL to reap debt-waiver-related tax incentives, while allowing financial institutions to upgrade loan categories for the airline to "sound." The task force will hold unofficial discussions with the DBJ and other creditor banks as early as Sunday. (The Nikkei Oct. 17 morning edition)TOKYO (Nikkei)--The Ministry of Finance and the Development Bank of Japan contend that the latest turnaround plan drafted for Japan Airlines Corp. will be difficult to implement, The Nikkei learned Friday.
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