Japan Air Lines

Japan Airlines gets $1bn government bailout

Japan Airlines, the loss-making Asian giant, is to receive a $1 billion government-backed loan to tide it over while management struggles to concoct a “crisis plan” to save the company. But analysts said that the former state-owned carrier was unlikely to undertake the sort of drastic reform it needs because of pressure from the Government to remain in the role of public service. Unusually for Japan, the loan will come with the overt condition that JAL visibly improves the way the company is run – to the satisfaction of the Government itself, much like the company operated before privatisation. That restructuring process is expected to see a significant portion of its existing route network “scrutinised”, though not necessarily cut back, along with other long-overdue changes to management structure. As the biggest carrier in Asia, JAL has suffered directly from the financial ravages of the global economic downturn, a large-scale exodus of foreign bankers and executives from Japan, and Tokyo’s diminishing position as a world financial centre.

JAL has already requested about Y200 billion in government loans under the programme begun during the depths of the recession earlier this year. JAL’s calls for the cash injection come as it is predicting a second consecutive year of losses in the Y60 billion range.