Japan Airlines seeking state aid

http://news.bbc.co.uk/go/rss/-/1/hi/business/8331171.stm

Version 0 of 1.

Loss-making carrier Japan Airlines (JAL) has confirmed it is to apply for financial assistance from a newly-formed state-backed turnaround agency.

JAL said it had started negotiations with the Enterprise Turnaround Initiative Corporation (ETIC).

ETIC has access to up to 1.6 trillion yen ($17.7bn; £10.8bn) of government guaranteed funds, but it remains to be seen how much JAL may be given.

JAL reported a loss of 99bn yen between April and June.

Thursday's announcement comes a month after the airline first said it would need state aid.

JAL's operation covers more than a half of Japan's sky and considering its global network and how it connects regional economies, its revival is extremely important for Japan's economy as well as for our policy Transport Minister Seiji Maehara

Hit by falling passenger numbers and high oil prices, the firm has been in severe financial trouble for some time, and its debts are said to total $15bn.

The airline recently announced plans to cut 6,800 jobs to save money.

The ETIC has been given the power to buy the debt of companies in trouble, and send in turnaround specialists to help them restructure their operations.

It will now study JAL's finances and restructuring plan to decide what funds it requires - a process analysts say could take a few months.

Japan's Transport Minister Seiji Maehara said helping the airline recovery was vital for the Japanese economy.

"JAL's operation covers more than a half of Japan's sky and considering its global network and how it connects regional economies, its revival is extremely important for Japan's economy as well as for our policy," he said.

Mr Maehara had earlier said that a government appointed taskforce had recommended that the airline go to the ETIC.