To save debt-ridden Kansai International Airport Co., the Land, Infrastructure and Transport Ministry has drawn up a bailout plan to provide the semipublic airport operator with about 9 billion yen in subsidies a year and offer government guarantees on short-term bonds to be issued by the company.

Kansai International Airport Co. has been struggling financially since the offshore airport began operations in 1994, piling up 1.2 trillion yen in interest-bearing liabilities.

According to the transport ministry’s bailout plan, the state would subsidize Kansai International Airport’s interest payments — of about 9 billion yen a year — beginning in fiscal 2003 and for the next 30 years.

The subsidies are expected to cost the state treasury between 300 billion yen and 400 billion yen.

The exact sum depends on negotiations between the transport ministry and the Finance Ministry.

The transport ministry bailout package also involves giving Kansai International Airport government guarantees for short-term, five-year bonds in order to help ease the airport operator’s cash flow.

The bailout plan, however, is no panacea for Osaka’s main international gateway, which fell deeper into the red in the first half of fiscal 2002 due to sharp falls in aviation business revenues caused by the aftereffects of the Sept. 11, 2001, terrorist attacks in the United States and the weak domestic economy.

The government is considering privatizing all of the nation’s major international airports, a prospect analysts say could add more uncertainty to Kansai International Airport’s financial health.

Despite falling revenues, Kansai International Airport is pressing ahead with plans to build a second runway with borrowed money.

Kansai International Airport Co. remains upbeat about its future and is projecting a turnaround for the company in fiscal 2004.

Last week, the company reported a group net loss of 6.7 billion yen in the six months to Sept. 30, compared with a loss of 4 billion yen a year earlier. Group revenues shrank 9.4 percent from a year before to 54.8 billion yen.

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