Japan government will waive airport landing fees worth up to 12.5 billion yen ($120 million) to ease the financial burden on airline operators, two sources familiar with the matter said, as they reel from a drop in traffic due to the COVID-19 pandemic.

The government will waive about 50% of landing fees from August through next March, said the sources, who declined to be identified because the information is not public. They added that the announcement was likely to come as early as Friday.

The relief is the latest step to prop up Japanese carriers and comes as banks including the state-backed Development Bank of Japan have provided ANA Holdings $3.8 billion in subordinated loans to help it weather the pandemic, sources told Reuters.

The measure will apply to 14 government-operated airports, the sources said. The transport ministry could not immediately be reached for comment.

While Japanese airlines have seen some rebound in domestic flight demand, helped by a government travel campaign, bookings remain below last year’s levels.

That means carriers are burning through cash to maintain jets that are either grounded or flying with too few passengers. The aviation lobby group, which is comprised of 19 airlines including All Nippon Airways (ANA) and Japan Airlines (JAL), in March called for the government to exempt landing fees as the number of passengers sharply decreased amid the pandemic.

ANA reported a 159 billion yen operating loss in the April-June period, while JAL posted a 131 billion yen operating loss for the three months.

Japan’s biggest airline ANA Holdings has secured $3.8 billion in subordinated loans to bolster funds it needs to survive a slump in air travel caused by COVID-19 travel restrictions, three people with knowledge of the deal said.

While ANA has seen some rebound in domestic flight demand, helped by a government travel campaign, bookings remain below last year’s levels, with international air traffic still only a fraction of what it was before the pandemic. ANA to release its latest quarterly results on October 27.

The latest cash injection, will include 130 billion yen each from Sumitomo Mitsui Financial Group Inc (SMFG) and the state-backed Development Bank of Japan (DBJ), 60 billion yen from Mizuho Financial Group, 50 billion yen from Mitsubishi UFJ Financial Group and 30 billion yen from Sumitomo Mitsui Trust Bank (SMTB), one of the people said, confirming an earlier Kyodo report.

The sources asked not to be identified because they are not authorised to talk to the media.

This is the first major subordinated loan package agreed in Japan since the beginning of the pandemic. Banks usually avoid such risky financing because other lenders are paid first if the borrower goes out of business.

ANA, SMFG, Mizuho and Mitsubishi UFJ declined to comment. The DBJ and SMTB could not immediately be reached.

Following an early round of borrowing, ANA had 517 billion yen in cash at the end of June. For ANA, like other airlines, the key to survival may be to make those funds last as long as possible.

The International Air Transport Association (IATA) last month downgraded its forecast for this year, predicting global passenger traffic will drop by two thirds after fresh coronavirus outbreaks further hurt demand.

ANA last week said it planned to offer voluntary redundancies to some workers, cut end of year bonuses and reduce monthly salaries. It also said it will allow some workers to take up to two years off without pay.  Meanwhile, Japanese stocks fell on Thursday as fading hopes for a new round of US fiscal stimulus, a return of coronavirus lockdowns in Europe and worries about Sino-US tensions hurt sentiment.

The Nikkei index ended 0.51% lower at 23,507.23, with the healthcare and telecommunications sectors leading the decline. The broader Topix fell 0.74% to 1,631.79.

US Treasury Secretary Steve Mnuchin said reaching a compromise with the Democrats on a fiscal stimulus was unlikely before the November 3 election, raising concerns about the economic outlook for an economy reeling from the impact of the COVID-19 pandemic.

Sentiment also worsened after sources told Reuters the US State Department has submitted a proposal for President Donald Trump administration to add China’s Ant Group to a trade blacklist, which could complicate its highly-anticipated initial public offering.

Britain has introduced a new lockdown system, France imposed curfews and other European nations were closing schools to stop a second wave of the novel coronavirus.

Reuters