Govt asks creditor banks to waive 220 bn yen in loans to JAL

I / Tokyo October 21, 2009, 11:39 IST

A government task force on reconstructing Japan Airlines Corp (JAL) requested four of the five main creditor banks of the struggling airline to write off 220 billion yen in loans, sources close to the matter said.

The recently formed task force of corporate turnaround experts has also asked the four banks to have 30 billion yen waived through a  debt-for-equity swap, the sources said.

The task force asked the creditor banks — the Development Bank of Japan, Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp — to share the burden of the debt waiver in accordance with the amount of their unsecured loans outstanding, the  sources said.

The main creditor banks plan to continue discussions to seek more detailed explanations over the viability of JAL's reconstruction plan such as slashing pension benefits. 

The task force plans to compile a reconstruction plan by the end of this month by obtaining the creditor banks' consent, the sources said.

Among JAL's main creditor banks, the Japan Bank for International Cooperation was exempted from the task force's request as all of its loans to the airline are covered by collateral, the sources said on Tuesday.