Japan Govt. Plans Emergency Loan To JAL

Japanese Finance Minister Kaoru Yosano said Monday the government was preparing a loan to loss-making Japan Airlines, caught by severe airline turbulence in the global economic crisis.

Yosano said he had received a request by Transport Minister Kazuyoshi Kaneko, in charge of overseeing airlines, for the Development Bank of Japan (DBJ) to extend loans to JAL, Japan's biggest airline.

"I replied that we hope to cooperate through DBJ loans and that I will pass on the request to them," Yosano told a news conference after a cabinet meeting. The Ministry of Finance oversees operations of DBJ, a state-owned bank.

A bank official said it would likely provide around JPY100 billion yen (USD$1 billion) in emergency financing to JAL.

Hit by slumping global travel and rising fuel costs, global airlines are forecast to lose USD$9 billion this year, the International Air Transport Association said this month, nearly double its estimate of just three months ago.

JAL earlier this year requested finance through a government emergency loan lending program.

JAL has not announced the amount it is seeking, but a company source said it may be around JPY200 billion (USD$2.1 billion).

The carrier reported a JPY50.9 billion operating loss for the year to March 2009.

Government support for the carrier will help ease funding strains as it would encourage commercial banks to lend to JAL, Yosano said.

Kaneko said the transport ministry did not see any big problems in JAL's operation itself.

"The airline firm JAL and the airline industry are very important for the Japanese economy as well as for the people, and it is important to maintain airlines in Japan in order to operate internationally, too," he told a news conference.

JAL spokesman Satoru Tanaka said the airline hoped to draft a new business plan as early as possible, reflecting the government's help.