2nd UPDATE: JAL Reform Delayed As Government Consults Task Force
September 25 2009 - 4:15AM
Dow Jones News
Japan's transport minister said Friday finalization of Japan
Airlines Corp.'s (9205.TO) revival plan will be delayed by two
months to November, while he waits for recommendations on the
overhaul of Japan's biggest airline from a newly established expert
panel.
"Making the (restructuring) plan with people who understand the
issue and can review it with an objective eye is the quickest way
to achieving reform," Japan's Minister of Land, Infrastructure,
Transport and Tourism Seiji Maehara told a news conference.
JAL is yet to suffer critical financial problems, Maehara added,
so the company would be better served by following revitalization
measures to be finalized by the panel by the end of November.
The new restructuring framework by Maehara will force JAL to go
back to the drawing board in its effort to raise fresh capital from
financial institutions, including a state-run bank, in exchange for
restructuring that includes pay cuts and the termination of some
routes.
The government-led reform may also affect JAL's tie-up talks
with Delta Air Lines Inc. and American Airlines parent AMR Corp.,
which have been in separate talks with the Japanese company to
strengthen their business cooperation and potentially invest in the
airline with an aim of enhancing their service in the Asian
market.
AMR, British Airways PLC and other members of the Oneworld
airline alliance are also in talks with JAL to discuss deeper
cooperation.
JAL is a member of Oneworld, while Delta belongs to the rival
SkyTeam group.
Maehara stopped short of commenting on whether investment from
foreign carriers will be needed for financing JAL's turnaround.
"The limited amount of capital is a major problem (for JAL) and
seeking investment from outside is a move in the right direction;
but whether it can be done is uncertain," he said.
Maehara said the establishment of a task force to advise on
reviving the airline was his decision and has been approved by
Prime Minister Yukio Hatoyama.
Hatoyama, who is attending the meeting of Group of 20 countries
in Pittsburgh, told reporters his administration wants to scrap
plans formed under the guidance of the previous government and come
up with a "new scheme" for turning around JAL.
"Public aid may become necessary, but I want to reach a final
conclusion in the shortest period of time possible by consulting
Minister Maehara," Hatoyama said.
The launch of the advisory team comes after JAL President Haruka
Nishimatsu met with Maehara Thursday to seek government support for
his company's additional reform steps, including the use of public
funds.
Maehara said Thursday, however, he was "skeptical about the
feasibility of JAL's rehabilitation plan" within the time frame the
airline was proposing.
JAL is mired deep in the red as the global economic slump and an
outbreak of swine flu take their toll on its bottom line, with the
airline predicting a net loss of Y63 billion for the fiscal year
ending March.
The head of the task force, Shinjiro Takagi, said in a separate
news conference Friday that his team is open to various options
available in reforming JAL.
Takagi, a former executive of the defunct government corporate
revitalization body, said his team will review JAL's operations and
financial conditions "without having any preconception" and didn't
deny the possibility of splitting the company's operations.
But he added he isn't considering a court-led rehabilitation for
the company.
"What kind of management is suitable (for JAL) will be seen in
our upcoming research," Takagi said.
-By Kazuhiro Shimamura, Dow Jones Newswires; 813-6895-7566;
kazuhiro.shimamura@dowjones.com