Decision on aid for JAL expected in Jan. or thereafter: gov`t body

TOKYO, Nov. 5 Kyodo -
The head of a government-backed corporate turnaround body that will oversee the
reconstruction of struggling Japan Airlines Corp. said Thursday that a rescue
package is likely to be compiled in January or thereafter.
Hiroshige Nishizawa, president of Enterprise Turnaround Initiative Corp. of
Japan, said in an interview with Kyodo News that deciding on the rescue plan by
the end of the year ''will be impossible.''
The corporate turnaround body is expected to formally decide to provide support
to Japan's top airline after it evaluates the company's assets and inks an
agreement with its main creditor banks on a business improvement plan.
''Our basic policy is to accept (applications) from any company as long as it
is believed to have viable (management) resources and is suffering from
excessive liabilities,'' Nishizawa said.
Meanwhile, JAL has been stepping up restructuring measures and officially
announced Thursday that it will scrap a total of 16 money-losing domestic and
international flights by the end of next May.
JAL's announcement to eliminate eight international routes and eight domestic
routes will affect flights linking Tokyo and Mexico City as well as those
connecting Osaka with Kuala Lumpur and Busan.
Last week, JAL sought support from ETIC, which began operating in early
October, bringing the airline a step closer to receiving an injection of public
funds to stay afloat.
Nishizawa said ETIC has launched due diligence procedures together with JAL,
expanding its existing team by inviting experts from the outside.
''We are going to collaborate with JAL,'' Nishizawa said. ''We will grasp the
actual conditions by putting our heads together.''
Earlier in the day, senior vice transport minister Kiyomi Tsujimoto also said a
recently launched government team to address JAL's turnaround will try to draw
up a road map to fix its high-cost corporate pension system by the end of next
week.
Tsujimoto, who serves as the secretary general of the new government task force
on JAL, made the comment after its second meeting and added relevant vice
ministers will again gather next week to discuss the issue of attaching
government guarantees on bridge loans to keep Japan's top airline from facing
an imminent cash shortage.
''We want to reach a common understanding on the JAL pension issue,'' Tsujimoto
said. ''If we're going to provide support amid these tough economic conditions,
JAL will need to take measures that address public concerns.''
The government is considering setting up special legislation to enforce cuts in
substantial corporate pension obligations so as to enable the company, saddled
with heavy pension-related liabilities, to receive state-backed short-term
financing.
''We want to take measures as early possible in view of severe conditions,''
Manabu Sato, JAL's deputy general manager of corporate affairs, told reporters.
''We obtained confirmation from ETIC.''
Separately, JAL will also soon enter talks with its biggest labor union to seek
a major reduction in the payment of winter bonuses to its employees, according
to sources familiar with the matter.
Although strong opposition from union members is anticipated, JAL is eyeing
forgoing or bringing the winter bonus close to zero with creditor banks
expressing doubts about the payment at a time when the company is seeking the
bridge loans to stay afloat, the sources added.
Seiji Maehara, minister of land, infrastructure, transport and tourism, set up
the new government team consisting of senior vice ministers from key
ministries, including finance, labor and welfare, and industry, after he
instructed JAL to apply to ETIC.
The entity 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