Japan Air Plunges After Report Reveals Creditor Backs Bankruptcy

Japan Airlines Corp. plunged in Tokyo trading today following reports that its main creditor favors a bankruptcy filing to support the carrier's restructuring plans, reports Bloomberg.


According to Bloomberg, JAL fell as much as 7.8% to 83 yen and traded 84 yen as of 10:13 a.m. Citing the Nikkei newspaper, Bloomberg says that state-run Development Bank of Japan and the Ministry of Finance have been pushing JAL to file for bankruptcy.


The development bank prefers a prepackaged bankruptcy as court involvement would help in getting agreements with shareholders and unions, without disrupting JAL’s operations, says the Nikkei report. Bloomberg adds the lender earlier this month doubled a credit line for the carrier to 200 billion yen ($2.2 billion), helping the airline maintain services after posting three losses in four years.


In a telephone interview with Bloomberg, JAL spokeswoman Sze Hun Yan says the airline is opposed to a bankruptcy filing as the carrier may lose customers during the proceedings.


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