Questions grow over gov`t support for JAL as market uncertainty deepens

TOKYO, Dec. 24 Kyodo -
A number of foreign financial institutions are questioning the government's
stance over support for Japan Airlines Corp. amid deepening market uncertainty
following the withdrawal of planned state guarantees on loans to the
cash-strapped airline, sources close to the matter said Thursday.
Credit concerns regarding Japan's top airline resurfaced after Finance Minister
Hirohisa Fujii said Tuesday that the government will not include state
guarantees under the second extra budget for the current fiscal year or the
budget for next fiscal year starting April.
Many market players as well as JAL's creditor banks perceived the move as a
sign that support for the airline, which is seeking a state-supervised
turnaround, is weakening in Prime Minister Yukio Hatoyama's Cabinet.
A British financial institution, which earlier warned that it would terminate
credit card transactions for the purchase of JAL tickets, and other
organizations have made multiple inquiries about the government's position, the
sources said.
A top official of one of JAL's creditor banks said, ''The impression is
deepening that the Hatoyama Cabinet will not keep its promise.''
In an interview with Kyodo News on Thursday, senior vice transport minister
Kiyomi Tsujimoto said that the government will take firm measures to address
the credit concerns regarding JAL.
''There is no change in the government's stance to provide support,'' she
emphasized.
Last month, the state-owned Development Bank of Japan extended a pool of around
100 billion yen to the airline to keep it operational amid widespread
understanding that the government would provide a guarantee at a later phase.
JAL, headed for its fourth annual loss in five years, is seeking broader and
longer-term financial support from a government-backed corporate turnaround
body, the Enterprise Turnaround Initiative Corp. of Japan.
If the airline manages to secure support from the entity, it will be able to
access government-guaranteed funds, but whether ETIC will extend support
remains uncertain amid lingering doubts about whether JAL will be able to
implement drastic cuts in pension benefits currently being worked out with
retirees and current employees.
In early November, five Cabinet members signed a written statement that
strongly suggested the government would guarantee loans to JAL at a subsequent
phase, but the sources said Deputy Prime Minister Naoto Kan, also state
minister for national strategy, was skeptical about including such guarantees
in the fiscal 2010 budget.
Seiji Maehara, minister of land, infrastructure, transport and tourism, has
said that some Cabinet members have suggested a state guarantee is unnecessary
for loans extended by the DBJ since it is wholly owned by the government.
But a senior official at a financial institution with business ties to JAL
said, ''There are moves among Cabinet members to plot JAL's liquidation with
the aim of winning public support.''
==Kyodo