Japan Airlines Corporation (JAL) is likely to suffer record losses amounting up to 5.5 billion dollars this year, according to newspaper reports on Thursday. The major causes for the losses are believed to be the costs pertaining to a major overhaul of the company which included a great deal of pay cuts as well.
The Yomiuri has said that a report presented by a taskforce appointed by the government to oversee the restructuring shows that the company would have to bear potential losses of 500 billion yen leading up to March next year. The task force has asked for a capital boost of 300 billion yen and a debt relief of 250 billion yen by means of a debt-waiver and debt for equity exchange scheme.
The newly estimated loss figure of 500 million yen is more than eight times the 63 billion yen deficit predicted in May, as demand fell due to the global recession and fear of swine flu. In the April- June quarter itself, JAL had suffered losses greater than 1 billion dollars. If the situation remains the way it is now, JAL may need another government bailout to remain in business.
According to reports in the Nikkei economic daily, the Transport Minister Seiji Maehara would request Finance Minister Hirohisa Fujii to save the airline by pumping in public money. The decision on this bailout and to rescue the airline is likely to be taken in a few days.
JAL had announced plans to reduce 6800 jobs last month, in addition to a huge reduction in routes and tying up with a foreign airline. As of now, JAL is seeking new loans amounting to 350 billion yen from both public and private backs.
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