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JAL applies for bankruptcy
By Tomoko A. Hosaka |
January 20, 2010, Wednesday
|
Print Edition
Print Edition
JAPAN Airlines filed for bankruptcy yesterday in one of the nation's biggest corporate failures ever, entering a restructuring that will shrink Asia's top carrier and its presence around the world.
Staggering under a US$25.6 billion debt mountain, the carrier applied for protection from creditors under the Corporate Rehabilitation Law - Japan's version of Chapter 11 - with the Tokyo District Court.
Japan's flagship airline will slash nearly 16,000 jobs, reduce pensions for retired staff, cut routes and shift to more fuel-efficient aircraft as part of its restructuring.
Some US$10 billion of government cash will keep JAL's planes in the air during the reorganization. Lenders will forgive US$8 billion in debt, and JAL shares will be removed from the Tokyo Stock Exchange on February 20, wiping out investors.
There was no word on the outcome of a fierce tug-of-war between Delta Air Lines and American Airlines for a slice of JAL's business. Despite its woes, the airline's access to Asia is a mouth-watering prize for foreign airlines.
A state-backed turnaround agency pledged 900 billion yen (US$10 billion) in financial support for JAL - 600 billion yen in credit lines and a 300 billion yen cash infusion. The bankruptcy is the fourth-largest in Japan, according to figures from Teikoku Databank, which tracks corporate failures.
"This is not the end of JAL," Transport Minister Seiji Maehara told reporters. "Today is the beginning of a process to keep JAL alive."
JAL President Haruka Nishimatsu resigned, bowing deeply as he apologized for the company's troubles. Kazuo Inamori, a Buddhist monk and founder of Kyocera Corp and Japan's No. 2 mobile carrier KDDI Corp, has been tapped as its next leader.
"This is our last chance," Nishimatsu said. "I believe we can be reborn as an airline that can represent Japan again."
JAL said flights will continue uninterrupted and that frequent fliers would not lose their miles. Japan asked foreign governments for cooperation to keep JAL flying around the world.
The day's events culminated a process that began in October when JAL - saddled with debts of 2.32 trillion yen (US$25.6 billion) - first turned to the Enterprise Turnaround Initiative Corp of Japan for help. Under the prepackaged revamp, it will embark on an overhaul to shed the fat and inefficiency.
Staggering under a US$25.6 billion debt mountain, the carrier applied for protection from creditors under the Corporate Rehabilitation Law - Japan's version of Chapter 11 - with the Tokyo District Court.
Japan's flagship airline will slash nearly 16,000 jobs, reduce pensions for retired staff, cut routes and shift to more fuel-efficient aircraft as part of its restructuring.
Some US$10 billion of government cash will keep JAL's planes in the air during the reorganization. Lenders will forgive US$8 billion in debt, and JAL shares will be removed from the Tokyo Stock Exchange on February 20, wiping out investors.
There was no word on the outcome of a fierce tug-of-war between Delta Air Lines and American Airlines for a slice of JAL's business. Despite its woes, the airline's access to Asia is a mouth-watering prize for foreign airlines.
A state-backed turnaround agency pledged 900 billion yen (US$10 billion) in financial support for JAL - 600 billion yen in credit lines and a 300 billion yen cash infusion. The bankruptcy is the fourth-largest in Japan, according to figures from Teikoku Databank, which tracks corporate failures.
"This is not the end of JAL," Transport Minister Seiji Maehara told reporters. "Today is the beginning of a process to keep JAL alive."
JAL President Haruka Nishimatsu resigned, bowing deeply as he apologized for the company's troubles. Kazuo Inamori, a Buddhist monk and founder of Kyocera Corp and Japan's No. 2 mobile carrier KDDI Corp, has been tapped as its next leader.
"This is our last chance," Nishimatsu said. "I believe we can be reborn as an airline that can represent Japan again."
JAL said flights will continue uninterrupted and that frequent fliers would not lose their miles. Japan asked foreign governments for cooperation to keep JAL flying around the world.
The day's events culminated a process that began in October when JAL - saddled with debts of 2.32 trillion yen (US$25.6 billion) - first turned to the Enterprise Turnaround Initiative Corp of Japan for help. Under the prepackaged revamp, it will embark on an overhaul to shed the fat and inefficiency.
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