JAL looks set for $1 billion government loan

The Japanese government is preparing to extend a loan of approximately ¥100 billion ($1.04 billion) to Japan Airlines, Finance Minister Kaoru Yosano said.

Speaking to reporters yesterday, Yosano said he received a request from Transport Minister Kazuyoshi Kaneko for the loan through the Development Bank of Japan. "We hope to cooperate through DBJ loans" but the aid only will be granted "on the premise that [JAL] must do its best to improve management," he said.

According to the Nikkei, the government is considering guaranteeing some 80% of the loan and three private sector banks are participating.

Last week JAL unveiled a series international schedule cuts as it attempts to halt the bleeding that resulted in a ¥63.1 billion loss in the fiscal year ended March 31 (ATWOnline, June 16).

On Friday it elaborated slightly on its "medium term" plan, which it expects to release in full by late September and which is designed to produce a business model "that does not overly rely on the recovery in the economy, but instead, to look within the company and implement sweeping cost cuts across the group wherever possible." JAL said it will cut seven domestic routes and one international route this fiscal year and will continue switching to smaller, more fuel-efficient aircraft.