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2009年9月13日 (日)

日航再建 外資導入で活路は開けるか

The Yomiuri Shimbun(Sep. 13, 2009)
Will foreign capital put JAL on road to recovery?
日航再建 外資導入で活路は開けるか(9月13日付・読売社説)

Japan Airlines, which is undergoing a restructuring program, has entered capital and business tie-up negotiations with major U.S. and European airlines.

JAL is considering receiving capital investments from the United States' Delta Air Lines--the world's largest airline--and Air France-KLM--Europe's largest airline--as well as code-sharing on international routes.

If JAL reaches such deals, it would be the first time for the nation's flagship carrier to receive assistance from foreign airlines.

The net loss for JAL's group in the April-June period this year reached 99 billion yen. Its performance has deteriorated because of a decline in passenger numbers stemming from the downturn in the economy since last autumn and the spread of the new strain of influenza.

The group's net loss for the current fiscal year is expected to total 63 billion yen.

In June, JAL managed to cover its capital shortfall through the receipt of 100 billion yen in bank loans, including a loan from the Development Bank of Japan. It was told, however, that it must undergo drastic restructuring if it were to become eligible for additional financing.


Tie-ups to boost financial base

JAL, which is restructuring under the supervision of the Construction and Transport Ministry, has been instructed to present an outline of its new management improvement plan by the end of this month. The envisaged capital and business tie-ups with the two foreign carriers form a major component of this plan.

By accepting foreign investment, JAL will be able to strengthen its financial footing and find it easier to secure additional loans.

JAL also will attempt to make flying more convenient for passengers by joining arms and code-sharing with Delta and Air France-KLM, which have route networks in the United States and Europe, respectively.

The Japanese airline also aims to slash costs by cutting unprofitable routes.

JAL probably determined a foreign capital tie-up would be an opportunity to help it shake off its dependence on the government--an attribute particular to the airline.

The Civil Aeronautics Law, however, restricts the ratio of investment by foreign companies in JAL to less than one-third. Because the amount the two foreign carriers would invest is unknown, it is unclear how much such deals would help shore up JAL's balance sheet.

JAL also appears to be seeking tie-up partners other than Delta and Air France-KLM. It is predicted that the negotiation process for such alliances could run into difficulties.

Cooperation from financial institutions is indispensable and JAL has to carry out further restructuring to receive such financial backing.

Starting in October, JAL plans to either abolish or reduce the number of flights on 16 domestic and international routes. It also will merge its unprofitable air cargo unit with NYK Line's unit. However, the effect of both measures in boosting profitability will be limited.


Uncertainty over pensions

The biggest issue now is uncertainty whether JAL will reduce the level of its corporate pension benefits.

JAL would not be able to make an estimated cost reduction of 88 billion yen without slashing benefits. JAL should speed up its efforts to win over beneficiaries who oppose such cuts in their pensions.

A proportion of loans extended to JAL is guaranteed by the government, and so if the airline fails with its restructuring program, it is taxpayers that will foot the bill.

The new Democratic Party of Japan-led administration, which is set to be inaugurated this week, has yet to clarify its stance on this issue. It must, however, tackle the reconstruction of JAL from the standpoint of protecting national interests.

(From The Yomiuri Shimbun, Sept. 13, 2009)
(2009年9月13日01時07分  読売新聞)


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