Last week, Japan Airlines (JAL) has asked the government to intervene by giving them an emergency capital of $2.5bn-$3bn. If the government agrees to this bailout, Tokyo will tighten its grip on the Japanese company.
According to the chief executive of JAL and sources from the company, they need approximately $1.1bn just to keep flying until the end of the year. The capital they ask from the government would consist of new equity and loans. The bailout would re-boost the confidence in JAL after having great debts and a record loss of about $1.1bn last year. Next to the bailout plan, JAL is also planning to sell a minority stake to a foreign partner, this would give JAL an extra $0.33bn.
The money JAL is asking from the government would be provided from a fund that was created earlier in the year as support for companies who had suffered under the credit crunch, such as Elpida Memory, a troubled chipmaker. But taxpayers are already under a lot of pressure and current rumors of JAL cutting of 14% of its workforce and 50 work routes don’t exactly stimulates the confidence.
But there are also other rumors that say that there is a possibility that there will be a partial liquidation of JAL’s assets. But these rumors are denied.
In my opinion it is up to a government to help the companies in their country, but I don’t believe that the governments can keep up with this. Due to the credit crunch, a lot of companies are having trouble sustaining their position. In this particular case I believe it is up to the government to examine the situation of JAL very precise, because it is a company that has already known some difficult times. If the government would decide to agree on the bailout plan, they would have to be sure that JAL has a future. I think that this bailout plan would be a good opportunity for JAL to keep its operations going for a while, but when the credit crunch doesn’t come to an end, JAL will keep having troubles in the future.
Source: http://www.ft.com/cms/s/0/a1e5f35c-a8e5-11de-b8bd-00144feabdc0.html Viewed October 1 2009
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I agree with you Jens. It's a task of the government to save companies and jobs but they have to be sure that the companies are healthy enough. If JAL is important for the economy the government have to save them but JAL needs to make some promises to the government.
BeantwoordenVerwijderenIf the government doesn't help JAL it could lead to a great loss of jobs in Japan. This will effect the Japanese economy in a negative way. So I agree with Jens and Wouter that the government needs to help JAL
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