Crisis deepens for Japan Airlines
JAPAN Airlines was teetering towards bankruptcy after its shares plunged to a record low in Tokyo trading after it was revealed that a liquidation option was put to creditors.
JAL owes more than $US5.8 billion ($6.5 billion).
The Japanese Government called an urgent Cabinet meeting last night to discuss the airline's future after Transport Minister Seiji Maehara told reporters that options existed to aid the unprofitable company.
American Airlines, which is seeking to block rival Delta Airlines from taking a stake in JAL and grabbing coveted routes across Asia, has offered to inject capital and urged the One World alliance, which includes Qantas, to contribute to the bailout.
Qantas, which is a member of One World, has refused cash but has offered to hand JAL the business plan it used to launch its highly profitable low-cost offshoot, Jetstar.
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Shares in JAL, which is the biggest airline in Asia in terms of sales, fell 24 per cent yesterday to close at its lowest level since it listed in October 2002. Yesterday's record sell-off was nine times the daily average for the past three months.
"Shareholders are becoming convinced that bankruptcy will be the case," said Ichiyoshi Investment Management trader, Mitsushige Akino.
"They are dumping the stock. JAL's value will be zero if it goes bankrupt."
Mr Maehara said that any plan to rescue the carrier will require agreement from stakeholders, and bankruptcy isn't the only option.
A state-affiliated agency charged with rescuing JAL met creditors on Tuesday to discuss a proposed bankruptcy, Yomiuri newspaper reported.
JAL has posted three losses in four years and reported a net loss of 63.2 billion in the year to March 31 last year as international travel slumped amid a global recession.
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