Japan Airlines Reportedly Will Seek Debt Forgiveness, Slash 2,200 More Jobs

Japan Airlines is not commenting on reports in the Japanese media that it will seek ¥250 billion ($2.78 billion) in debt forgiveness from its creditors and increase its planned job cuts to 9,000.

The country’s new Democratic Party of Japan-led government, which took office last month, has expressed misgivings about JAL’s restructuring plan, which calls for cutting 14% of its workforce, or nearly 6,800 jobs, over the next three years while eliminating 50 routes, with a heavy emphasis on international reductions.

Transport Minister Seiji Maehara responded to a request by JAL President Haruka Nishimatsu for a bailout by saying he was “not convinced” the restructuring plan will work, and the carrier acknowledged that deeper cuts may be necessary.

According to the Kyodo news agency, JAL has developed a revised plan that calls for significant debt forgiveness and slashes an additional 2,200 jobs. The report also stated that Nishimatsu would resign, which the airline denied.

JAL lost ¥99 billion in its fiscal first quarter ended June 30 and received government-backed loans from the Development Bank of Japan totaling around ¥100 billion in June. Kyodo reported that the carrier’s largest creditors are DBJ with ¥230 billion in total loans, Mizuho Corporate Bank with ¥57 billion in loans, Bank of Tokyo-Mitsubishi UFJ at ¥53 billion and Sumitomo Mitsui Banking Corp. with ¥37 billion.