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| JAL may separate profitable operations for restructuring |
| Kyodo/PTI / Tokyo Sep 22, 2009, 15:41 IST |
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The government and major creditor banks of Japan Airlines Corp (JAL) are examining an option to separate the ailing carrier's profitable operations from those making losses to accelerate its rehabilitation, sources close to the matter said today.
They are also studying the possibility of using public money under a special law to help strengthen JAL's financial standing and support its funding, they added.
Dividing the company's businesses into two is a corporate restructuring scheme under which profitable operations and healthy assets are transferred to a new entity while underperforming operations and loss-making assets are retained by the company. This will determine debts and losses and concentrate on rehabilitation work with bailout measures.
Earlier this year, US auto giant General Motors Corp used the scheme, creating a new government-backed company, General Motors Co, while filing for Chapter 11 bankruptcy.
The government and creditors consider the scheme as an option for JAL because some of its creditors fear that the airline's financial standing could be worse than it appears if latent losses such as those on disposal of aircraft are taken into account, the sources said.
Those creditors became cautious to extend additional financial help for JAL as the company has yet to show a clear way out of its chronic state of deficit, they added.
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