Identifier
Created
Classification
Origin
09TOKYO1455
2009-06-26 09:01:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Tokyo
Cable title:  

JAPAN AIRLINES TO RECEIVE LOANS UNDER INDUSTRIAL

Tags:  EAIR PGOV ELTN ETRD WRTO JA 
pdf how-to read a cable
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DE RUEHKO #1455 1770901
ZNR UUUUU ZZH
O 260901Z JUN 09
FM AMEMBASSY TOKYO
TO RUEHC/SECSTATE WASHDC IMMEDIATE 4120
INFO RUEHNH/AMCONSUL NAHA 7229
RUEHNAG/AMCONSUL NAGOYA 2439
RUEHOK/AMCONSUL OSAKA KOBE 8701
RUEHFK/AMCONSUL FUKUOKA 4898
RUEHKSO/AMCONSUL SAPPORO 5423
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RULSDMK/DEPT OF TRANSPORTATION WASHINGTON DC
UNCLAS TOKYO 001455 

SENSITIVE
SIPDIS

STATE FOR EEB/TRA DAS BYERLY, EAP/J
STATE PASS USTR FOR M. BEEMAN
COMMERCE FOR D. LEE AND E. ALFORD
TRANSPORTATION FOR K. GLATZ

E.O. 12958: N/A
TAGS: EAIR PGOV ELTN ETRD WRTO JA
SUBJECT: JAPAN AIRLINES TO RECEIVE LOANS UNDER INDUSTRIAL
REVITALIZATION ACT

REF: TOKYO 785

SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET DISTRIBUTION

UNCLAS TOKYO 001455

SENSITIVE
SIPDIS

STATE FOR EEB/TRA DAS BYERLY, EAP/J
STATE PASS USTR FOR M. BEEMAN
COMMERCE FOR D. LEE AND E. ALFORD
TRANSPORTATION FOR K. GLATZ

E.O. 12958: N/A
TAGS: EAIR PGOV ELTN ETRD WRTO JA
SUBJECT: JAPAN AIRLINES TO RECEIVE LOANS UNDER INDUSTRIAL
REVITALIZATION ACT

REF: TOKYO 785

SENSITIVE BUT UNCLASSIFIED, NOT FOR INTERNET DISTRIBUTION


1. (U) Summary: Japanese press reports the Development Bank
of Japan (DBJ) and three other financial institutions will
provide Japan Airlines (JAL) a 100 billion yen (approximately
$1 billion) loan facility under a GOJ program to assist
companies adversely affected by the economic downturn (ref).
If the Ministers of Trade and Industry, Transportation, and
Finance agree to JAL's restructuring plan, the GOJ would
guarantee 80 percent of the loan and oversee JAL's
restructuring. Despite GOJ support, critics suggest this
financial assistance represents at best a stopgap measure
that will not solve JAL's problems. End summary.


2. (U) JAL reported a net loss of 63 billion yen
(approximately $630 million) in 2008 and continues to try and
cut costs through early retirement programs and adjustments
to its pension scheme. Responding to a request from the
Ministry of Land, Infrastructure, Transport and Tourism
(MLIT),JAL developed a medium-term corporate plan, unveiled
in June, in which the airline plans to reform its business
model, reduce the size of its fleet, revise its international
and domestic routes, change its cargo business model, and
reduce maintenance, operations, and sales costs. Critics,
however, maintain the airline needs large-scale restructuring
and that the GOJ loan falls short of fostering needed change.



3. (SBU) Finance Minister Yosano affirmed publicly the
Ministry's willingness to assist JAL through the loan scheme,
but said "sacrifices" on JAL's part may be required (e.g.,
labor cuts). The MLIT Minister was reported in the press
June 23 as saying that GOJ steps to assist JAL are in line
with what other countries, including the United States, are
doing to assist businesses. The DBJ and three private sector
banks -- Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ,
and Sumitomo Mitsui Banking Corporation -- are ironing out
the specifics of the assistance package. If approved, it
would be the first such loan to qualify under the GOJ
assistance program.


4. (SBU) Opinions among industry reps are mixed about if and
how JAL's financial woes will affect its position going into
the upcoming civil aviation negotiations with the U.S.
scheduled to be held in Tokyo July 8-10. JAL's predicament
may help prod the company in the direction of undertaking
necessary restructuring; it may also result in stronger
support for an Open Skies agreement with the United States, a
U.S. airline representative told econoff June 23. In
contrast and while one ANA executive saw the news about JAL
as positive in terms of getting desired changes in place,
another All Nippon Airlines (ANA) representative speculated
that as JAL's financial situation deteriorates, the airline
will become increasingly conservative and resist moves that
would open the door to greater competition in Japan's civil
aviation sector.

ZUMWALT