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Last Updated: Wednesday, 1 October, 2003, 08:52 GMT 09:52 UK
Japan airlines land government loans
By Duncan Bartlett
BBC World Service business reporter

Asia's two biggest airlines have been given a huge emergency loan by the Japanese government.

ANA aircraft
ANA has suffered less than JAL since it depends less on international business
Japan Airlines System (JAL) and All Nippon Airways (ANA) are to receive 85bn yen (458m; $760m) in loans.

The loans should help the airlines overcome the fall in air travel due to the Severe Acute Respiratory Syndrome (Sars) virus and the Iraq war.

Shares in both airlines rose on the news.

Hard hit

Like many other airlines around the world, especially those in Asia, their passenger numbers fell sharply even though the impact of the virus on Japan itself was minimal.

JAL was losing $7m a day earlier this year, and so will get the bulk - or 70m yen - of the loans.

ANA, which is less dependent on international passengers as it operates mainly in Japan, also lost money.

ANA is to receive a $15m loan.

Subsidies

This is not the first time the airlines have received state help.

They were given an even larger loan to help them deal with the after-affects of the attacks in the US on 11 September 2001.

The United States has also used government money to subsidise its airlines.

But the European Union is lobbying other countries to stop giving state aid to the airline industry, saying it distorts international competition.

Europe has been reluctant to use taxpayers money to support its airlines.

That may be one of the reasons behind the merger of Air France and KLM.

Without state aid, companies are forced to cut costs or broker mergers and alliances in order to survive.


SEE ALSO:
European airlines join forces
30 Sep 03  |  Business


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