Japan Airlines plunges deep into red

TOKYO, Nov 13, 2009 (AFP) - Japan Airlines (JAL) announced Friday a massive loss and sought breathing space from its creditors as Asia's biggest carrier waits to see whether it will secure another public bailout.

This picture taken on November 6, 2009 shows a Japan Airlines passenger jet takes off from Tokyo's Haneda airport. (AFP photo)

The airline scrapped its forecasts for the rest of the year due to uncertainty surrounding its turnaround efforts, which are expected to involve thousands of job cuts and drastic route reductions.

JAL reported a net loss of 131.2 billion yen (1.45 billion dollars) for the fiscal first half to September, against a year-earlier profit of 36.7 billion yen.

"Since the subprime crisis emerged, our business has been affected by drops in the number of business passengers as well as the emergence of the new type of influenza," said JAL executive officer Yoshimasa Kanayama.

"The second half of the year is expected to remain severe."

The cash-strapped carrier, which is seeking a financial lifeline from the government to keep flying, said it had applied for a debt restructuring scheme that could allow it to delay payments to creditors.

Japan Airlines president Haruka Nishimatsu hinted he could step down once the turnaround plan has been put together, apologising for the company's troubles.

"I feel a lot of responsibility that it has come to this. But currently there are things to be done and we need to set up and put in place a restructuring plan as quickly as possible," he told a news conference.

"Only when that has been done will I announce something" on possible management changes, he said, when asked about whether he might step down.

The carrier is seeking an injection of public funds to boost its capital as it restructures under the supervision of government-backed Enterprise Turnaround Initiative Corp. of Japan.

But the turnaround body appears unlikely to make a decision on whether to inject public funds into the company before early next year.

JAL is also set to receive an emergency loan from the state-backed Development Bank of Japan, the government said earlier this week, without disclosing the amount.

The loss-making airline is thought to urgently need about 200 billion yen in emergency financing.

JAL, the recipient of three government bailouts since 2001, has said it plans thousands of job cuts and a drastic reduction in routes, although its restructuring plan has not yet been finalised. The airline is also trying to reduce the burden of heavy pension obligations.

Source: AFP

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