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Japan Airlines may seek $2 billion government loan – source

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Written by editor

TOKYO – Japan Airlines Corp may seek about a 200 billion yen ($2 billion) loan from the government’s emergency lending programme, a company source said, as Asia’s biggest carrier struggles with a stee

TOKYO – Japan Airlines Corp may seek about a 200 billion yen ($2 billion) loan from the government’s emergency lending programme, a company source said, as Asia’s biggest carrier struggles with a steep fall in travel demand amid the global recession.

Such a move would help the airline obtain ample cash as the recession has pushed travel demand to an unexpectedly low level and made it difficult to foresee the business outlook, the source said on condition of anonymity.

“We’ve been doing everything to reduce costs but it’s not enough. The business climate is really tough and our revenues are falling to a worse-than-expected level,” the source said.

But the source denied media reports that JAL has already applied for a loan from the state-backed Development Bank of Japan.

Under its emergency lending programme, the Development Bank of Japan can provide up to 1 trillion yen in low-interest long-term loans to cash-strapped companies in the financial year to March 2010.

JAL, which like many other major airlines is suffering from the global economic downturn, has forecast a loss of 34 billion yen for the year that ended on March 31.

JAL’s smaller rival All Nippon Airways Co has predicted a loss of 9 billion yen for the last financial year.

World airlines are set to lose $4.7 billion this year as a result of the global downturn that has shrunk passenger and cargo demand, industry body The International Air Transportation Association (IATA) estimated at the end of March.