[TODAY'S TOP STORIES] from [The Japan Times]
[BUSINESS NEWS]
Wednesday, Oct. 21, 2009
Public funds mulled to keep JAL afloat
Carrier's losses mount; hotels may be ditched
By KAZUAKI NAGATA
Staff writer
The government may need to inject public funds into Japan Airlines Corp. to keep the ailing carrier aloft, transport minister Seiji Maehara and Finance Minister Hirohisa Fujii indicated Tuesday.
The announcement comes as JAL faces a much bigger than expected group operating loss of around 200 billion in fiscal 2009, compared with an earlier forecast of 59 billion, with management considering selling its hotel business in an urgent move to improve earnings.
The two key members of Prime Minister Yukio Hatoyama's administration met with members of the JAL reconstruction task force Tuesday morning for a briefing on JAL's rehabilitation plans. The task force, formed by the transport ministry, has already informed JAL's creditors of the higher forecast loss, sources said Monday.
Both later admitted that the plans were drafted under the premise that the government will come to JAL's rescue.
The task force is expected to outline the rescue plan by the end of the month and issue a final version by the end of November. But Fujii said JAL's revival plan will be decided "within the next several days."
Apparently at the center of Tuesday's discussions was whether it would be right to use public funds to support JAL, which is projected to suffer huge losses for a second straight year.
The meeting was the first ministerial consultation about Japan's top airline since the Democratic Party of Japan took power a month ago.
Maehara has been emphasizing the importance of JAL turning itself around. But during a news conference Tuesday he hinted public funds may be necessary.
"When the previous government was in charge, 100 billion was loaned to JAL," Maehara said, noting the funds came from major banks and the Development Bank of Japan.
"That loan comes with government compensation. Taking this under consideration, public support has already been provided, and everything was not purely done with private-sector funds. I think we can think of that point in a broader sense," he said.
Maehara meanwhile did not rule out a possible court-managed reconstruction program, saying coming discussions will address this issue.
The swelling loss expected for the year through March 31 is due to increases in spending needed for downsizing JAL's corporate structure and workforce, in addition to sluggish revenues from its operations, the sources said.
As part of efforts to turn its business around, JAL is considering selling JAL Hotels Co., a subsidiary that runs about 60 hotels at home and abroad, the sources said.
The subsidiary runs two chains, Nikko Hotels International and Hotel JAL City. It operates 17 hotels overseas, including in Beijing, Dusseldorf, Hanoi, London and San Francisco. JAL is also considering closing 27 offices over the next two years, they said.
JAL, which posted a record group net loss of 99.04 billion in the April-June quarter, has already asked for more than 300 billion in fresh loans from its main creditors.
Of the envisaged 300 billion, JAL hopes to get up to 180 billion from the DBJ.
JAL proposed a revival plan in September to the government to receive funds, but Maehara rejected it, calling it unfeasible and lacking specifics.
Maehara launched the task force Sept. 25, tasking business reconstruction professionals with thoroughly checking JAL's massive debt woes.
Although Maehara stressed that JAL will be able to become stable with a viable rehabilitation plan, "I think this view is shared by all the government members that we have to avoid a situation in which aircraft are not able to fly."
JAL has also entered the final stages of arranging for a private-sector corporate revival body to mediate with its creditor banks for a debt waiver, other sources said Monday.
The airline plans to hold preliminary talks with such an organization by the end of this week under the "alternative dispute resolution" procedure, an out-of-court arbitration process. The ADR involves engineering a corporate revival with a noncourt third-party body acting as an intermediary. Bringing the procedure to a successful close requires securing creditors' consent.
If a company uses the ADR, financial institutions that write off the company's debts would receive tax benefits.
The task force expects the carrier to be able to post a consolidated operating profit of 40 billion in fiscal 2011 if it streamlines or sells unprofitable operations.
Information from Kyodo added
[BUSINESS NEWS]
Wednesday, Oct. 21, 2009
Japan Post boss set to step down
Kyodo News
Japan Post Holdings President Yoshifumi Nishikawa announced Tuesday he intends to resign amid mounting pressure from the Democratic Party of Japan-led administration.
Nishikawa said he will submit his letter of resignation Oct. 28, when Japan Post holds a board meeting.
He told reporters at the holding company's headquarters that there is a big difference between what he has already done and intends to do for the privatization of the Japan Post group and the new government's policy.
"I cannot remain in my current post," he said.
Shizuka Kamei, state minister in charge of postal services, said he will swiftly decide on Nishikawa's successor, adding that he has some names in mind. Kamei, a strong opponent of Junichiro Koizumi's postal privatization drive, has been demanding that Nishikawa go.
"It should be someone who could contribute to the local society and the nation," said Kamei.
Names of business leaders, former presidents of public entities and retired bureaucrats of the internal affairs ministry have been floated in the Nagata-cho political district.
Postal privatization, the biggest reform effort under former Prime Minister Koizumi, has reached a turning point with the change of management and policies.
Nishikawa was considered a prime player in Japan Post's aborted bid to sell its nationwide inn holdings at fire-sale prices to Orix Corp. in what was considered a shady deal.
The government is expected to submit legislation to revise the postal privatization process during the extraordinary Diet session to be convened next Monday. Although Nishikawa had been planning to list two of Japan Post's financial units on the stock market, this has been met with opposition by the new administration, particularly Kamei.
Nishikawa, a former president of Sumitomo Mitsui Banking Corp., took the helm of Japan Post's predecessor firm formed in 2006 in preparation for the postal privatization.
He assumed the presidency of Japan Post in October 2007 at the launch of a 10-year privatization process.
The holding firm is now wholly owned by the government and controls four companies that provide mail delivery, over-the-counter services, banking and insurance operations.
Earlier in the day, the government laid out its basic position on postal privatization at a Cabinet meeting, drastically changing the policy initiated by previous governments of the Liberal Democratic Party.
Under the new plan, the government will reorganize the Japan Post group to ensure universal postal services nationwide, stipulating that mail and financial services are to be provided in an integrated manner through the postal network. It did not elaborate on specifics.
{{New policy on postal reform{
Kyodo News
The government will:
> Make the Japan Post group offer universal mail, savings and life insurance services in an integrated manner at post offices nationwide.
> Utilize the post office network as a "one-stop base" for government services.
> Legally require the group to offer uniform basic savings and insurance services nationwide.
> Introduce a new regulation to supervise the group's financial operations.
> Reorganize the group's current structure in which a holding company manages four units under its wing.
> Maintain the stock company status for the group companies.
> Oblige the group to disclose more information and raise its accountability.
> Abolish the current law on privatizing Japan Post.}
Since September's change of government, the DPJ-led ruling bloc has put the postal group in its sights, saying its operations under the existing framework have deteriorated and the current structure should be changed to better serve the public.
"The postal business was largely distorted by the Koizumi reforms and experienced a major retreat from what it was supposed to be," financial and postal services minister Kamei told a news conference.
But Kamei, leader of Kokumin Shinto and whose priority has been to oppose Koizumi's privatization plans, said he has no intention of bringing the postal business back to what it was before Koizumi carried out the reforms in October 2007.
"We will deal with this as if we are (embarking on) a new business," Kamei said, adding the government will make related services more accessible to people living anywhere in Japan, including sparsely populated and mountainous areas.
The basic policy was endorsed in line with a coalition accord by the DPJ, Kokumin Shinto and the Social Democratic Party.
"We would like to scrutinize the services and business management" at the Japan Post group to "revitalize the regional communities," Chief Cabinet Secretary Hirofumi Hirano said at a separate news conference.
[BUSINESS NEWS]
Wednesday, Oct. 21, 2009
Public funds mulled to keep JAL afloat
Carrier's losses mount; hotels may be ditched
By KAZUAKI NAGATA
Staff writer
The government may need to inject public funds into Japan Airlines Corp. to keep the ailing carrier aloft, transport minister Seiji Maehara and Finance Minister Hirohisa Fujii indicated Tuesday.
The announcement comes as JAL faces a much bigger than expected group operating loss of around 200 billion in fiscal 2009, compared with an earlier forecast of 59 billion, with management considering selling its hotel business in an urgent move to improve earnings.
The two key members of Prime Minister Yukio Hatoyama's administration met with members of the JAL reconstruction task force Tuesday morning for a briefing on JAL's rehabilitation plans. The task force, formed by the transport ministry, has already informed JAL's creditors of the higher forecast loss, sources said Monday.
Both later admitted that the plans were drafted under the premise that the government will come to JAL's rescue.
The task force is expected to outline the rescue plan by the end of the month and issue a final version by the end of November. But Fujii said JAL's revival plan will be decided "within the next several days."
Apparently at the center of Tuesday's discussions was whether it would be right to use public funds to support JAL, which is projected to suffer huge losses for a second straight year.
The meeting was the first ministerial consultation about Japan's top airline since the Democratic Party of Japan took power a month ago.
Maehara has been emphasizing the importance of JAL turning itself around. But during a news conference Tuesday he hinted public funds may be necessary.
"When the previous government was in charge, 100 billion was loaned to JAL," Maehara said, noting the funds came from major banks and the Development Bank of Japan.
"That loan comes with government compensation. Taking this under consideration, public support has already been provided, and everything was not purely done with private-sector funds. I think we can think of that point in a broader sense," he said.
Maehara meanwhile did not rule out a possible court-managed reconstruction program, saying coming discussions will address this issue.
The swelling loss expected for the year through March 31 is due to increases in spending needed for downsizing JAL's corporate structure and workforce, in addition to sluggish revenues from its operations, the sources said.
As part of efforts to turn its business around, JAL is considering selling JAL Hotels Co., a subsidiary that runs about 60 hotels at home and abroad, the sources said.
The subsidiary runs two chains, Nikko Hotels International and Hotel JAL City. It operates 17 hotels overseas, including in Beijing, Dusseldorf, Hanoi, London and San Francisco. JAL is also considering closing 27 offices over the next two years, they said.
JAL, which posted a record group net loss of 99.04 billion in the April-June quarter, has already asked for more than 300 billion in fresh loans from its main creditors.
Of the envisaged 300 billion, JAL hopes to get up to 180 billion from the DBJ.
JAL proposed a revival plan in September to the government to receive funds, but Maehara rejected it, calling it unfeasible and lacking specifics.
Maehara launched the task force Sept. 25, tasking business reconstruction professionals with thoroughly checking JAL's massive debt woes.
Although Maehara stressed that JAL will be able to become stable with a viable rehabilitation plan, "I think this view is shared by all the government members that we have to avoid a situation in which aircraft are not able to fly."
JAL has also entered the final stages of arranging for a private-sector corporate revival body to mediate with its creditor banks for a debt waiver, other sources said Monday.
The airline plans to hold preliminary talks with such an organization by the end of this week under the "alternative dispute resolution" procedure, an out-of-court arbitration process. The ADR involves engineering a corporate revival with a noncourt third-party body acting as an intermediary. Bringing the procedure to a successful close requires securing creditors' consent.
If a company uses the ADR, financial institutions that write off the company's debts would receive tax benefits.
The task force expects the carrier to be able to post a consolidated operating profit of 40 billion in fiscal 2011 if it streamlines or sells unprofitable operations.
Information from Kyodo added
[BUSINESS NEWS]
Wednesday, Oct. 21, 2009
Japan Post boss set to step down
Kyodo News
Japan Post Holdings President Yoshifumi Nishikawa announced Tuesday he intends to resign amid mounting pressure from the Democratic Party of Japan-led administration.
Nishikawa said he will submit his letter of resignation Oct. 28, when Japan Post holds a board meeting.
He told reporters at the holding company's headquarters that there is a big difference between what he has already done and intends to do for the privatization of the Japan Post group and the new government's policy.
"I cannot remain in my current post," he said.
Shizuka Kamei, state minister in charge of postal services, said he will swiftly decide on Nishikawa's successor, adding that he has some names in mind. Kamei, a strong opponent of Junichiro Koizumi's postal privatization drive, has been demanding that Nishikawa go.
"It should be someone who could contribute to the local society and the nation," said Kamei.
Names of business leaders, former presidents of public entities and retired bureaucrats of the internal affairs ministry have been floated in the Nagata-cho political district.
Postal privatization, the biggest reform effort under former Prime Minister Koizumi, has reached a turning point with the change of management and policies.
Nishikawa was considered a prime player in Japan Post's aborted bid to sell its nationwide inn holdings at fire-sale prices to Orix Corp. in what was considered a shady deal.
The government is expected to submit legislation to revise the postal privatization process during the extraordinary Diet session to be convened next Monday. Although Nishikawa had been planning to list two of Japan Post's financial units on the stock market, this has been met with opposition by the new administration, particularly Kamei.
Nishikawa, a former president of Sumitomo Mitsui Banking Corp., took the helm of Japan Post's predecessor firm formed in 2006 in preparation for the postal privatization.
He assumed the presidency of Japan Post in October 2007 at the launch of a 10-year privatization process.
The holding firm is now wholly owned by the government and controls four companies that provide mail delivery, over-the-counter services, banking and insurance operations.
Earlier in the day, the government laid out its basic position on postal privatization at a Cabinet meeting, drastically changing the policy initiated by previous governments of the Liberal Democratic Party.
Under the new plan, the government will reorganize the Japan Post group to ensure universal postal services nationwide, stipulating that mail and financial services are to be provided in an integrated manner through the postal network. It did not elaborate on specifics.
{{New policy on postal reform{
Kyodo News
The government will:
> Make the Japan Post group offer universal mail, savings and life insurance services in an integrated manner at post offices nationwide.
> Utilize the post office network as a "one-stop base" for government services.
> Legally require the group to offer uniform basic savings and insurance services nationwide.
> Introduce a new regulation to supervise the group's financial operations.
> Reorganize the group's current structure in which a holding company manages four units under its wing.
> Maintain the stock company status for the group companies.
> Oblige the group to disclose more information and raise its accountability.
> Abolish the current law on privatizing Japan Post.}
Since September's change of government, the DPJ-led ruling bloc has put the postal group in its sights, saying its operations under the existing framework have deteriorated and the current structure should be changed to better serve the public.
"The postal business was largely distorted by the Koizumi reforms and experienced a major retreat from what it was supposed to be," financial and postal services minister Kamei told a news conference.
But Kamei, leader of Kokumin Shinto and whose priority has been to oppose Koizumi's privatization plans, said he has no intention of bringing the postal business back to what it was before Koizumi carried out the reforms in October 2007.
"We will deal with this as if we are (embarking on) a new business," Kamei said, adding the government will make related services more accessible to people living anywhere in Japan, including sparsely populated and mountainous areas.
The basic policy was endorsed in line with a coalition accord by the DPJ, Kokumin Shinto and the Social Democratic Party.
"We would like to scrutinize the services and business management" at the Japan Post group to "revitalize the regional communities," Chief Cabinet Secretary Hirofumi Hirano said at a separate news conference.