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| Japan Airlines shares plunge to new low amid bankruptcy rumours Government ministers hold crisis talks as Asia's biggest carrier considers filing for bankruptcyShares in Japan Airlines plunged to a record low today amid rumours that Asia's biggest carrier could file for bankruptcy in an attempt to turn around its failing business.The transport minister, Seiji Maehara, and other cabinet ministers were this evening holding crisis talks to discuss JAL's options ahead of an official decision on the airline's future late next month.Maehara told reporters that no decision had been made on whether JAL should be exposed to court-led bankruptcy, and promised state backing for its restructuring efforts, possibly though bridge loans.JAL shares closed down 24% at Â¥67 (46p), having plunged 32% at one stage, with investors taking flight amid media reports that liquidation was now under serious consideration."Investors were very nervous about the fate of JAL," said Masatoshi Sato, a market analyst at Mizuho Investors Securities. "With recent reports saying the airline could face bankruptcy, investors were panicking that their JAL stock ownership could be worthless."Liquidation could leave JAL shareholders, whose shares were each worth Â¥213 at the start of the year, with zero.Media reports quoted an official as saying that bankruptcy is the "strongest possibility" being considered by the Enterprise Turnaround Initiative Corporation [ETIC], a government-backed body formed in October to decide the airline's fate.The ETIC has up to Â¥1.6tn in state-guaranteed funding at its disposal and, according to reports, is still considering a private restructuring plan that would not involve the courts.No guaranteeBut bankruptcy became a realistic option last week after the finance minister, Hirohisa Fujii, said the government would no longer guarantee loans to JAL. Until now, banks have lent to the airline on the understanding that the loans are guaranteed by the state.Fujii's surprise announcement was a major blow to JAL, the beneficiary of four bailouts since 2001, as the government had been expected to provide up to Â¥100bn in credit through the Development Bank of Japan (DBJ).Fujii said: "This is a matter that should be worked out by private companies. The DBJ is wholly owned by the state but it has the status of a private bank so the government is not allowed to meddle in its business."JAL's three biggest creditors, Mitsubishi UFJ, Mizuho and Sumitomo Mitsubishi, reportedly rejected liquidation during fractious talks with Maehara yesterday.It would saddle them with huge losses on their investments and risk grounding the airline's fleet if it is unable to find enough ready cash to buy fuel and parts from nervous suppliers.Bankruptcy could also complicate rival bids for a minority stake from Delta and American Airlines.The US airlines are hoping to use a partnership with JAL to expand their trans-Pacific services and gain a stronger foothold in the Asian market ahead of the expansion of Haneda airport in Tokyo next year.The Asahi Shimbun newspaper claimed earlier this month that JAL was leaning towards the $1bn (£630m) bid from Delta, the world's biggest airline, in a move that would end its Oneworld alliance with American, which has offered $1.1bn.A capital tie-up with either could herald a dramatic reshaping of the global aviation industry, as it would give the buyer access to JAL's Chinese and other Asian routes through code-sharing agreements.StruggleJAL is heading for its fourth annual loss in five years as a result of the global slump in air travel, inefficiency and an unwieldy pension scheme.The ETIC is expected to ask JAL to cut 9,000 jobs and scrap 45 domestic and international routes in return for capital. The airline had already said it would suspend 50 domestic and international routes by March 2011, and cut 6,800 – 14% of JAL's workforce – by March the following year.The airline could struggle, however, to secure the two-thirds approval it needs from employees to cut retirement payouts and make a sizeable dent in its Â¥330bn pension shortfall.Last year it lost Â¥63.2bn but, in a move indicative of its current turmoil, has withdrawn a forecast of similar losses for the year to March 2010.Given the airline's liabilities, which totalled Â¥1.5tn at the end of September, its bankruptcy would be the sixth biggest in Japanese corporate history.Airline industryJapanTravel & leisureJustin McCurryguardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds guardian.co.uk |
Gunman on rampage at US factory At least three people are killed and five wounded after a gunman storms a factory in St Louis, Missouri, police say. news.bbc.co.uk |
Hippo on run from flooded Montenegro zoo A two-tonne hippo, Nikica, is on the loose in a village in southern Montenegro after escaping from a flooded zoo. news.bbc.co.uk |
Pope John Paul II gunman released from prison ANKARA, Turkey (AP) -- The Turkish man who shot Pope John Paul II nearly 29 years ago rode out of jail Monday, declared himself a messenger from God, then spent his first night of freedom in a luxury hotel room.... hosted.ap.org |
Interactive: development calendar for upcoming events in 2010 Use our interactive calendar to find out which events, lectures and summits that focus on aid and development are being held each monthLiz FordLisa Villani guardian.co.uk |