JAL given access to 100 bil. yen credit line to stay afloat+

TOKYO, Nov. 24 Kyodo -
Struggling Japan Airlines Corp. has inked an agreement with the state-owned
Development Bank of Japan to receive a pool of around 100 billion yen in
emergency bridge loans to keep itself operational after obtaining official
backing from the government, JAL and the DBJ said Tuesday.

Japan's biggest airline, which is heading for its fourth annual loss in five
years, can now bypass screening and freely access the DBJ credit line to avoid
short-term funding difficulties as it awaits a broader injection of public
funds.
Whether JAL will be granted use of public funds will depend largely on whether
it can clinch an agreement from both current employees and retirees for painful
cuts into their pension benefits proposed a day earlier.
In line with recent support measures announced by the government, state
guarantees are later expected to be attached to the DBJ loans now that the
transport ministry has certified that JAL's current dire condition is likely to
have a serious impact on the airline's operations and passengers.
JAL is seeking support from a state-backed corporate turnaround body, but the
company will need the short-term financing until the entity decides on a
broader, longer-term financial package, in January at the earliest.
It is also expected to be granted an additional 25 billion yen in loans by
three private creditor banks to purchase new aircraft.
Earlier Tuesday, transport minister Seiji Maehara emphasized that a full
turnaround of the carrier is possible, after JAL's share price plummeted to a
fresh all-time low on skepticism about the feasibility of drastic cuts in the
company's pension benefits.
''I still believe (JAL) can definitely rebuild itself if it carries out drastic
restructuring, reviews its routes, replaces (aging) aircraft and resolves the
pension issue,'' Maehara, minister of land, infrastructure, transport and
tourism, told reporters.
On Tuesday, JAL dropped 8 yen, or more than 8 percent, to an all-time closing
low of 87 yen on the Tokyo Stock Exchange after falling as low as 85 yen, a
record intraday low since the airline integrated operations with Japan Air
System in 2002.
Company executives on Monday proposed an average 44 percent cut in pension
benefits for current employees and retirees, but the uncertainty of whether it
will be able to obtain the necessary two-thirds consent from them to revise the
system has spread fears that the airline might eventually file for liquidation.
The carrier is seeking a further bailout from the Enterprise Turnaround
Initiative Corp. of Japan, which can raise up to 1.6 trillion yen in
state-guaranteed funds, but the government has opposed tapping into public
funds until JAL can achieve drastic cuts in its pension obligations.
The emergency bridge loans from the state-owned bank face the risk of turning
sour, but the government is planning to establish special legislation at an
ordinary Diet session to be convened next year to enable the attachment of
state guarantees at a later time.
==Kyodo