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Japan Airlines Tax Breaks May Be Reviewed, Ruling LDP Says

Japan’s ruling Liberal Democratic Party said it may review tax breaks for Japan Airlines Co. after the carrier returned to the stock market with a 663 billion-yen ($7.5 billion) initial public offer.

“Is it OK for a company to give priority to dividends and be able to pay them while it isn’t paying taxes?,” Takeshi Noda, head of the LDP’s tax panel, told reporters in Tokyo today. “We will continue to study the situation and decide how we should act.”

Japan Air’s profit got a 35 billion-yen boost from tax breaks in the year ended in March, according to a transport ministry paper. The carrier may not have to pay tax for as long as nine years under existing regulations because of credits earned against writedowns, including ones made while in bankruptcy protection, the LDP said in June.

Shares of the carrier fell 4.1 percent, the most since Sept. 25, to 3,610 yen at close of Tokyo trading. Japan Air has dropped 4.7 percent since it sold stock at 3,790 yen apiece in its September IPO.

Japan Air wasn’t immediately available to comment on the LDP statement. Kyodo News earlier today reported Noda’s comments.

In November, Japan Air raised its profit forecast 7.7 percent to 140 billion yen for the current fiscal year as it aims to lower costs by 20 billion yen. The carrier cut its sales forecast by 5 billion yen to 1.215 trillion yen.

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