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JAC faces $1.1 billion hedging losses
Osaka News.Net
Saturday 21st November, 2009
Crippled Japanese carrier Japan Airlines is facing massive losses on derivatives trading.
JAL has been hedging currencies, interest rates, and fuel prices and is believed to have incurred losses of 100 billion yen ($1.1 billion).
Some contracts are now subject to early calls after the Japanese carrier applied for a debt moratorium earlier this month.
The ADR (Alternative Dispute Resolution) is a scheme similar to the Chapter 11 provision which operates in the United States. It allows Japanese companies to continue to trade while they seek to restructure their debts. There is some debate however as to whether the ADR triggers a "debt default," or "insolvency event," common terms in contracts which then require immediate payment.
A spokesman for JAL Taro Namba said counter-parties to the derivatives contracts had agreed to stand down on the default provision, regardless of whether it applied or not.
The Japanese airline's creditors agreed at a meeting on Friday to support the ADR debt moratorium.  Email this story to a friend
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