ID :
84474
Wed, 10/14/2009 - 13:36
Auther :
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http://m.oananews.org//node/84474
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JAL to seek over 250 bil. yen debt waiver, 9,000 job cuts, CEO exit+
TOKYO, Oct. 13 Kyodo - Struggling Japan Airlines Corp. has compiled a draft of its new turnaround plan seeking a debt waiver of more than 250 billion yen and is making arrangements with the government and its main creditor banks, sources close to the matter
said Tuesday.
Based on the draft of the plan, JAL will also expand the number of job cuts
from the previously stated 6,800 to more than 9,000 group employees, and
company president Haruka Nishimatsu will step down to clarify management
responsibility, the sources said.
Japan's top airline, which anticipates a second consecutive year of huge losses
in fiscal 2009 through next March, also plans to boost its capital by around
150 billion yen through private investment as well as public financial
assistance.
The company will seek official endorsement for the draft from transport
minister Seiji Maehara by the end of this month and finalize negotiations with
banks on the debt waiver and capital reinforcement during November, the sources
said, adding the company may consider filing for bankruptcy proceedings in the
event the talks fail.
The government is studying injecting de facto public funds through the
state-owned Development Bank of Japan under an emergency financial aid program
set up by the previous Cabinet led by the Liberal Democratic Party to support
nonfinancial companies hit by the global economic downturn.
JAL's new plan, orchestrated by the Democratic Party of Japan-led government,
focuses on reinforcing the company's financial standing. But it also includes
drastically stepped-up restructuring measures as a means to obtain the
understanding of financial institutions, which have demanded JAL fix its
high-cost structure before they agree to provide more funds.
As part of those expanded restructuring measures, JAL also plans to speed up
the replacement of Boeing 747 jumbo jets to a more fuel-efficient model and
scrap the use of McDonnell Douglas MD-90 aircraft that mainly fly on regional
domestic routes by fiscal 2014 through March 2015 to enhance efficiency.
The sources added the airline plans to have several tens of billions of yen,
out of the 250 billion yen in debt, waived through a debt-for-equity swap. JAL
will also seek more than 300 billion yen in fresh loans from its main
creditors, including loans backed by the government, to secure its cash flow.
The new restructuring measures were compiled under the guidance of a
five-member task force of corporate turnaround experts the government recently
launched to evaluate JAL's assets after Maehara criticized a previous draft of
its business improvement plan as insufficient.
''The evaluation of assets and the compilation of a turnaround plan are going
smoothly,'' Maehara told reporters after Tuesday's Cabinet meeting without
specifying details of the restructuring measures.
''I got the sense that a fundamental solution will be found,'' he said, adding
he received an update from a task force member in the morning.
JAL will also temporarily shelve capital tie-up talks with two of the world's
largest air carriers -- Delta Air Lines Inc. and American Airlines Inc. -- to
focus on finalizing its turnaround measures.
In a major management reshuffle scheduled around January, a chief executive
replacing Nishimatsu would be appointed from outside the company while a JAL
employee, aged in his or her 40s, would be promoted as chief operating officer,
the sources said.
The draft of the plan also includes reducing debt related to corporate pensions
from the current 330 billion yen level to 100 billion yen by substantially
slashing pension benefits, according to the sources.
JAL officials have said they hope to finalize arrangements on restructuring its
high-cost pension system by January, but hurdles are expected to remain high
with former JAL employees launching a fierce campaign against measures to
reduce the payments.
The airline had also earlier said it would scrap 29 loss-making domestic routes
and 21 international routes over the three years through March 2012.
But under the new plan, the company expects to keep five of the international
routes after deciding they would be able to secure profitability while keeping
intact the restructuring of its domestic routes, the sources said.
==Kyodo
said Tuesday.
Based on the draft of the plan, JAL will also expand the number of job cuts
from the previously stated 6,800 to more than 9,000 group employees, and
company president Haruka Nishimatsu will step down to clarify management
responsibility, the sources said.
Japan's top airline, which anticipates a second consecutive year of huge losses
in fiscal 2009 through next March, also plans to boost its capital by around
150 billion yen through private investment as well as public financial
assistance.
The company will seek official endorsement for the draft from transport
minister Seiji Maehara by the end of this month and finalize negotiations with
banks on the debt waiver and capital reinforcement during November, the sources
said, adding the company may consider filing for bankruptcy proceedings in the
event the talks fail.
The government is studying injecting de facto public funds through the
state-owned Development Bank of Japan under an emergency financial aid program
set up by the previous Cabinet led by the Liberal Democratic Party to support
nonfinancial companies hit by the global economic downturn.
JAL's new plan, orchestrated by the Democratic Party of Japan-led government,
focuses on reinforcing the company's financial standing. But it also includes
drastically stepped-up restructuring measures as a means to obtain the
understanding of financial institutions, which have demanded JAL fix its
high-cost structure before they agree to provide more funds.
As part of those expanded restructuring measures, JAL also plans to speed up
the replacement of Boeing 747 jumbo jets to a more fuel-efficient model and
scrap the use of McDonnell Douglas MD-90 aircraft that mainly fly on regional
domestic routes by fiscal 2014 through March 2015 to enhance efficiency.
The sources added the airline plans to have several tens of billions of yen,
out of the 250 billion yen in debt, waived through a debt-for-equity swap. JAL
will also seek more than 300 billion yen in fresh loans from its main
creditors, including loans backed by the government, to secure its cash flow.
The new restructuring measures were compiled under the guidance of a
five-member task force of corporate turnaround experts the government recently
launched to evaluate JAL's assets after Maehara criticized a previous draft of
its business improvement plan as insufficient.
''The evaluation of assets and the compilation of a turnaround plan are going
smoothly,'' Maehara told reporters after Tuesday's Cabinet meeting without
specifying details of the restructuring measures.
''I got the sense that a fundamental solution will be found,'' he said, adding
he received an update from a task force member in the morning.
JAL will also temporarily shelve capital tie-up talks with two of the world's
largest air carriers -- Delta Air Lines Inc. and American Airlines Inc. -- to
focus on finalizing its turnaround measures.
In a major management reshuffle scheduled around January, a chief executive
replacing Nishimatsu would be appointed from outside the company while a JAL
employee, aged in his or her 40s, would be promoted as chief operating officer,
the sources said.
The draft of the plan also includes reducing debt related to corporate pensions
from the current 330 billion yen level to 100 billion yen by substantially
slashing pension benefits, according to the sources.
JAL officials have said they hope to finalize arrangements on restructuring its
high-cost pension system by January, but hurdles are expected to remain high
with former JAL employees launching a fierce campaign against measures to
reduce the payments.
The airline had also earlier said it would scrap 29 loss-making domestic routes
and 21 international routes over the three years through March 2012.
But under the new plan, the company expects to keep five of the international
routes after deciding they would be able to secure profitability while keeping
intact the restructuring of its domestic routes, the sources said.
==Kyodo
