A government-backed corporate turnaround body plans to ensure that Japan Airlines Corp. will have complete access to loans necessary to maintain key operations even if the cash-strapped carrier has to file for court-backed bankruptcy protection, sources said Wednesday.
Enterprise Turnaround Initiative Corp. of Japan will also seek to save mileage points JAL users have collected and will aim to keep JAL’s shares listed to stem credit fears among clients and to control turmoil in equity markets.
Separately, other sources said Japan’s top carrier is arranging to find a replacement for Chief Executive Officer Haruka Nishimatsu from outside its corporate group.
If JAL applies for protection under the Corporate Rehabilitation Law, the company will likely need a massive amount of funds to maintain its operations since clients will demand that business transactions be carried out only in cash.
Therefore, ETIC plans to avoid cutting off loans that JAL would need to finance deals to purchase fuel, aircraft parts and other necessary items to avoid the resulting chaos that would further drive away consumers.
Normally, companies filing for bankruptcy proceedings are delisted. But the Tokyo Stock Exchange Group Inc. revised listing regulations in 2003 and introduced a new framework that would allow firms to keep their shares listed even if they filed, if certain conditions are met.
If JAL remains listed, it would be the first case under the new framework.
On personnel changes, JAL appears to be planning to promote a junior executive within the company to the post of chief operating officer.
Nishimatsu, who concurrently serves as JAL group president, earlier expressed his willingness to step down to take the blame for the carrier’s dismal operations. Other directors on the board of executives are expected to be forced out as well.
The turnaround body is also engaged in moves to pick the new CEO from candidates in the airline business as well as other areas. The CEO is expected to serve concurrently as president and chairman.
ETIC plans to announce its bailout package for JAL later this month and is ironing out details with main creditor banks so JAL can apply for bankruptcy protection at the same time the rehabilitation plan is announced. But key banks have opposed the bankruptcy option in view of the turmoil the move may cause.
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