Don't miss




FIFA's House of Cards (part1)

Read more


Oregon shooting: Gun culture in the United States

Read more


Canada's methods of Islamist deradicalization

Read more


Climate change: Who will pay for developing countries?

Read more


NYT: 'Is Vladimir Putin trying to teach the West a lesson in Syria?'

Read more


Britain and the EU: Should it stay or should it go?

Read more


Le Monde: 'At Volkswagen, they do things like they do in North Korea'

Read more


Volkswagen's US boss knew of emissions issue in 2014

Read more


The right's direction: Populist pressure on mainstream parties (part 2)

Read more


Japan Airlines shares jump on government loan deal

Video by Rebecca BOWRING

Text by News Wires

Latest update : 2010-01-04

Shares in Asia's leading carrier, Japan Airlines (JAL), soared on Monday as fears of bankruptcy receded after Japan's government said it would double a state loan to the troubled airline.

AFP - Japan Airlines shares skyrocketed on Monday after the government agreed to expand a financial lifeline to the troubled carrier, easing fears that it might file for bankruptcy.

JAL stock soared 24 yen, or 35.8 percent, to 91 by the lunch break as investors welcomed Tokyo's decision at the weekend to double a state-backed loan to Asia's largest carrier to 200 billion yen (2.2 billion dollars).

"There was talk about the company's operating funds drying up unless it secured a bigger credit line by January. I suppose that worry eased," said Makoto Sengoku, a market analyst at Tokai Tokyo Securities.

But investors were still wary of the risk of JAL filing for bankruptcy protection.

"The future outlook is still uncertain," Sengoku said.

JAL shares had nosedived Wednesday, the final trading day of 2009, losing 23.9 percent to 67 yen after local media reported that bankruptcy was a possibility for the beleaguered airline.

Cabinet ministers including Transport Minister Seiji Maehara and Vice Prime Minister Naoto Kan agreed on the increased credit line from the state-backed Development Bank on Sunday, the day before the Tokyo market resumed trading.

JAL, battered by the global recession and swine flu pandemic, is scrambling to slash costs and is seeking its fourth government bailout since 2001 in the face of mounting losses.

Local media have reported that the state-backed Enterprise Turnaround Initiative Corp (ETIC), which is overseeing JAL's restructuring, is considering the possibility of the carrier filing for protection from creditors.

The body is expected to decide on a financial package for the carrier in mid-January.

JAL president Haruka Nishimatsu said in an interview with the Asahi Shimbun daily published on Sunday that he was opposed to any bankruptcy filing.

"Legal liquidation gives an image that will affect us and reduce the number of our clients," he said.

The airline, which lost about 1.5 billion dollars in the six months to September, has said it plans thousands of job cuts and a drastic reduction in routes as part of its efforts to return to profitability.

JAL has been offered financial assistance by both American Airlines and Delta Air Lines, which are competing to take a minority stake in the Japanese carrier, eyeing its coveted Asian landing slots.

The Asahi Shimbun quoted Nishimatsu as saying that he was in favour of the airline switching to Delta's global alliance SkyTeam from the OneWorld group of American Airlines.

Date created : 2010-01-04