Oct. 16--TOKYO -- Japan Airlines Corp. is reconsidering its earlier plan to secure funds by selling some of its shares in three group firms amid the possibility of a debt waiver from its main creditor banks as part of its new turnaround plan, sources familiar with the matter said Thursday.

Japan's top airline is hoping to strengthen its balance sheet by receiving a large-scale financial package and keep the group firms that are directly linked to its mainstay air transport operations through cost-cutting measures, the sources said.

Cash-strapped JAL had originally considered selling some of its shares in JALways Co., which chiefly operates on leisure and low-yielding routes as a fully owned unit of Japan Airlines International Co., to trading houses, travel agencies or investment funds.

The company was anticipating a profit of around 90 billion yen in total, by also selling shares in TFK Corp., a unit handling in-flight food operations, and JAL Ground Service Co., a subsidiary in charge of luggage operations at airports.

JAL decided it may not need to sell off the shares in the three group firms after it began drafting a new restructuring plan seeking a debt waiver of more than 250 billion yen, part of which is expected to be waived through a debt-for-equity swap, the sources said.

The new plan was drafted under the guidance of a five-member task force of corporate turnaround experts that the government launched recently to evaluate JAL's assets after transport minister Seiji Maehara criticized a previous draft of the airline's business improvement plan as insufficient.

According to people familiar with the matter, JAL, which is anticipating a second consecutive year of huge losses in fiscal 2009 through next March, also plans to boost its capital by around 150 billion yen through private investment as well as public financial assistance.

It will also seek more than 300 billion yen in fresh loans from its main creditors, including loans guaranteed by the government, to secure its cash flow. The company plans to finalize its turnaround plan by the end of next month.

-----

To see more of Kyodo News International, go to http://www.kyodonews.com

Copyright (c) 2009, Kyodo News International, Tokyo

Distributed by McClatchy-Tribune Information Services.

For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.

JASJF, JALSY, 9205,

A service of YellowBrix, Inc.