JAL president asks for public fund injection


Japan Airlines Corp. President Haruka Nishimatsu on Thursday asked transport minister Seiji Maehara for a capital injection of public funds to keep the troubled carrier flying.

However, Maehara later told the press he was not convinced JAL’s rehabilitation plan will work and said it “lacks specifics and feasibility.”

The minister said he will discuss the issue with Prime Minister Yukio Hatoyama as soon as he returns from New York next week to decide how to proceed with the issue.

Nishimatsu and Maehara discussed the struggling air carrier’s situation during a one-hour meeting at the transport ministry.

“We touched on special measures based on the industrial revitalization law,” Nishimatsu told reporters afterward.

Asked if that meant JAL requested a public fund injection, Nishimatsu said: “Yes, that’s the direction we asked for.” The JAL chief wouldn’t say how much money he asked for.

The nation’s flagship airline received an emergency loan of ¥100 billion at the end of June, including cash from the government-affiliated Development Bank of Japan, and is expected to need at least another ¥100 billion by the end of the year.

Last week, JAL drafted a plan to cut 6,800 workers and terminate 50 domestic and international routes over three years through March 2012. Nishimatsu said he proposed a more aggressive cost-cutting plan at the meeting with Maehara but didn’t elaborate.

Maehara said he doubted the company can execute the plan in three years and said the topic required more discussion.

“Regarding whether to apply the special measures concerning industrial revitalization law, it is not a situation where we can agree to it right now,” Maehara said.

JAL, which posted a record group net loss of ¥99.04 billion in the April-June quarter, was asked to come up the rehabilitation plan by the end of September. It is also negotiating a capital investment with the world’s two largest air carriers — Delta Air Lines Inc. and American Airlines Inc. — as well as other foreign airlines.

But whether the loss-making carrier will receive emergency support remains uncertain. Some ministry officials doubt the recession is the root cause of JAL’s woes.