ID :
85205
Tue, 10/20/2009 - 12:03
Auther :
Shortlink :
http://m.oananews.org//node/85205
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JAL to incur loss of 200 bil. yen in FY 2009, eyeing sales of hotels
TOKYO, Oct. 19 Kyodo -
Japan Airlines Corp. is likely to incur a much bigger-than-expected group
operating loss of around 200 billion yen in fiscal 2009, with its management
considering selling its hotel business in an urgent move to achieve an
improvement in earnings, sources close to the matter said Monday.
The latest forecast, up from an earlier projected operating loss of 59 billion
yen, has been presented to JAL's main creditors by a task force of corporate
turnaround experts recently launched by the government to evaluate the
airline's assets, the sources said.
The swelling loss expected for the year through March 31 is due to increases in
spending needed for downsizing JAL's corporate structure and workforce, in
addition to sluggish revenues from its operations, the sources said.
As part of efforts to turn its business around, JAL is considering selling JAL
Hotels Co., a subsidiary which runs about 60 hotels at home and abroad, the
sources said.
The subsidiary runs two chains of hotel properties, Nikko Hotels International
and Hotel JAL City. It operates 17 hotels overseas, including in Beijing,
Dusseldorf, Hanoi, London and San Francisco.
JAL is also considering closing a total of 27 offices globally over the next
two years, they said.
Of them, 23 are located overseas, including in China's Hangzhou and Mexico
City, the sources said.
Earlier in the day, Finance Minister Hirohisa Fujii said he will hold talks
with transport minister Seiji Maehara to discuss issues related to the
reconstruction of JAL.
''I will meet Mr. Maehara tomorrow,'' Fujii told reporters at the Finance
Ministry. When asked whether the meeting is intended to address the JAL
rehabilitation issue, he said, ''Of course.''
The meeting will apparently be the first ministerial consultations in
connection with Japan's top airline since the new government led by the
Democratic Party of Japan was launched one month ago.
Fujii and Maehara, minister for land, infrastructure, transport and tourism,
may exchange views on whether it would be right to use public funds for support
measures for JAL, which is projected to suffer huge losses for a second
consecutive year.
JAL has already asked for more than 300 billion yen in fresh loans from its
main creditors.
There is speculation that the government may use a new public-private body to
help revitalize JAL, if the airline's negotiations with its creditors fail.
Fujii said, ''I don't know yet,'' when asked about the possibility of using the
Enterprise Turnaround Initiative Corporation of Japan, established last week by
the government and the private sector with a five-year mandate to revitalize
the Japanese economy.
The airline has drafted a new turnaround plan, which includes seeking a debt
waiver of more than 250 billion yen in exchange for implementing a set of
restructuring measures.
The draft was created under the guidance of the five-member task force of
corporate turnaround experts after Maehara criticized a previous draft of its
business improvement plan as inadequate.
On Sunday, the task force entered into negotiations with the state-owned
Development Bank of Japan and JAL's other main creditors over its
rehabilitation efforts.
The task force is anticipating that the Tokyo-based airline will be able to
post a consolidated operating profit of 40 billion yen in fiscal 2011, if it
streamlines or sells its unprofitable operations.
But the creditors deferred a decision on providing new loans as they wanted to
have more time to assess and make sure that the airline would recover with the
latest rehabilitation efforts.
The leader and the deputy leader of the task force, Shinjiro Takagi and
Kazuhiko Toyama, respectively, will both become operating officers of JAL, if
the airline and its creditors agree on the reconstruction framework, the
sources said.
Takagi was chairman of the decision-making panel of the now-disbanded
Industrial Revitalization Corp. of Japan, while Toyama was the IRCJ's chief
operating officer.
Of the envisaged 300 billion yen in fresh loans, JAL is hoping to secure up to
180 billion yen in loans from the development bank, which is under the control
of the Finance Ministry.
JAL is seeking official endorsement of the draft by Maehara by the end of this
month, hoping to finalize negotiations with banks on the debt waiver and
capital reinforcement during November, people familiar with the matter said
last week.
==Kyodo
Japan Airlines Corp. is likely to incur a much bigger-than-expected group
operating loss of around 200 billion yen in fiscal 2009, with its management
considering selling its hotel business in an urgent move to achieve an
improvement in earnings, sources close to the matter said Monday.
The latest forecast, up from an earlier projected operating loss of 59 billion
yen, has been presented to JAL's main creditors by a task force of corporate
turnaround experts recently launched by the government to evaluate the
airline's assets, the sources said.
The swelling loss expected for the year through March 31 is due to increases in
spending needed for downsizing JAL's corporate structure and workforce, in
addition to sluggish revenues from its operations, the sources said.
As part of efforts to turn its business around, JAL is considering selling JAL
Hotels Co., a subsidiary which runs about 60 hotels at home and abroad, the
sources said.
The subsidiary runs two chains of hotel properties, Nikko Hotels International
and Hotel JAL City. It operates 17 hotels overseas, including in Beijing,
Dusseldorf, Hanoi, London and San Francisco.
JAL is also considering closing a total of 27 offices globally over the next
two years, they said.
Of them, 23 are located overseas, including in China's Hangzhou and Mexico
City, the sources said.
Earlier in the day, Finance Minister Hirohisa Fujii said he will hold talks
with transport minister Seiji Maehara to discuss issues related to the
reconstruction of JAL.
''I will meet Mr. Maehara tomorrow,'' Fujii told reporters at the Finance
Ministry. When asked whether the meeting is intended to address the JAL
rehabilitation issue, he said, ''Of course.''
The meeting will apparently be the first ministerial consultations in
connection with Japan's top airline since the new government led by the
Democratic Party of Japan was launched one month ago.
Fujii and Maehara, minister for land, infrastructure, transport and tourism,
may exchange views on whether it would be right to use public funds for support
measures for JAL, which is projected to suffer huge losses for a second
consecutive year.
JAL has already asked for more than 300 billion yen in fresh loans from its
main creditors.
There is speculation that the government may use a new public-private body to
help revitalize JAL, if the airline's negotiations with its creditors fail.
Fujii said, ''I don't know yet,'' when asked about the possibility of using the
Enterprise Turnaround Initiative Corporation of Japan, established last week by
the government and the private sector with a five-year mandate to revitalize
the Japanese economy.
The airline has drafted a new turnaround plan, which includes seeking a debt
waiver of more than 250 billion yen in exchange for implementing a set of
restructuring measures.
The draft was created under the guidance of the five-member task force of
corporate turnaround experts after Maehara criticized a previous draft of its
business improvement plan as inadequate.
On Sunday, the task force entered into negotiations with the state-owned
Development Bank of Japan and JAL's other main creditors over its
rehabilitation efforts.
The task force is anticipating that the Tokyo-based airline will be able to
post a consolidated operating profit of 40 billion yen in fiscal 2011, if it
streamlines or sells its unprofitable operations.
But the creditors deferred a decision on providing new loans as they wanted to
have more time to assess and make sure that the airline would recover with the
latest rehabilitation efforts.
The leader and the deputy leader of the task force, Shinjiro Takagi and
Kazuhiko Toyama, respectively, will both become operating officers of JAL, if
the airline and its creditors agree on the reconstruction framework, the
sources said.
Takagi was chairman of the decision-making panel of the now-disbanded
Industrial Revitalization Corp. of Japan, while Toyama was the IRCJ's chief
operating officer.
Of the envisaged 300 billion yen in fresh loans, JAL is hoping to secure up to
180 billion yen in loans from the development bank, which is under the control
of the Finance Ministry.
JAL is seeking official endorsement of the draft by Maehara by the end of this
month, hoping to finalize negotiations with banks on the debt waiver and
capital reinforcement during November, people familiar with the matter said
last week.
==Kyodo
