Gov't team launched to keep Japan Airlines afloat

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TOKYO, Oct. 30 Kyodo -
The government on Friday launched a new team involving Cabinet members to
discuss measures to keep Japan Airlines Corp. afloat as it begins turnaround
efforts under state supervision.
The major topics to be addressed in the coming weeks will include whether to
attach state guarantees to about 180 billion yen in bridge loans to prevent the
struggling airline from facing a cash shortage.
''If the airline does not fly, it is possible that the Japanese economy will
fall into serious trouble,'' Seiji Maehara, the minister of land,
infrastructure, transport and tourism, said at the outset of the team's first
meeting.
''To avoid flight disruptions, we have created this kind of task force,''
Maehara said. ''The government will make concerted efforts to offer a support
system.''
The task force, headed by Maehara, consists of senior vice ministers from key
ministries, including finance, labor and welfare, and industry.
The government is stepping up its involvement in trying to revive JAL after
Maehara instructed it Thursday to apply to a recently launched
government-backed corporate body -- Enterprise Turnaround Initiative Corp. of
Japan -- to gain access to both private and public funds.
In addition to bridge loans, the government team will soon likely tackle
questions over JAL's huge corporate pension obligations, which have posed a
major hurdle to injecting public money for its restructuring.
''We need to understand why (JAL) is in the current financially distressed
situation from the viewpoint that it is a private company,'' Prime Minister
Yukio Hatoyama told reporters.
''We must have them make every effort until the very last minute,'' he said,
signaling the need for drastic restructuring measures on JAL's part.
The government is considering special legislation to enforce a reduction in
JAL's pension payments to allay concerns that taxpayers' money may be used to
support a system that has largely resulted in the company's high-cost structure
and dire financial condition.
Once JAL officially applies to ETIC, the entity will reevaluate its assets and
the government is expected to provide financial support until the body comes up
with a fresh rescue package possibly before the year-end.
ETIC, which began operating in early October, is able to purchase debt, invest
in and provide loans to companies saddled with liabilities deemed excessive,
and raise up to 1.6 trillion yen in government-guaranteed funds. It has a
start-up capital of 20 billion yen, with half contributed by the government and
the rest by about 130 private financial institutions.
==Kyodo
2009-10-30 23:38:30