JAL files for bankruptcy protection today
By Tomoko A. Kosaka |
January 19, 2010, Tuesday
|
Print Edition
Print Edition
JAPAN Airlines is expected to file for bankruptcy protection today, ending months-long speculation about its fate and launching a massive overhaul to shed the fat and inefficiency that hobbled Asia's biggest airline.
With debts of 1.5 trillion yen (US$16.5 billion) as of November, JAL will go down in Japanese corporate history as one of its biggest failures.
Despite its woes, the airline's access to Asia is a prized asset for foreign airlines. Delta Air Lines Inc is trying to lure JAL from its alliance with American Airlines.
The bankruptcy filing will be immediately followed by a restructuring plan crafted by a government-backed corporate turnaround body, media reports said. The government itself will offer assurances of support for the airline's rehabilitation and ongoing operations, the Nikkei financial daily said.
Investors yesterday braced for a seemingly inevitable removal of its shares from the stock exchange. The issue, which has lost more than 90 percent of its value in the last week, tumbled another 29 percent yesterday to 5 yen. The company is now essentially worthless, with a market capitalization of about 13.7 billion yen - the price of one Boeing 787 jet.
When Japan's property and stock bubble of the 1980s burst, risky investments in foreign resorts and hotels undermined its bottom line.
JAL also shouldered growing pension and payroll costs, as well as a big network of unprofitable domestic routes it was obliged to maintain.
More recently, JAL's passenger traffic has slowed amid the global economic downturn, swine flu fears, competition from Japanese rival All Nippon Airways Co and a spate of safety lapses that tarnished its image. It lost 131.2 billion yen in the six months through September.
Delta Air Lines and rival American Airlines are courting JAL with massive financial offers as the US carriers seek to expand their Asian networks.
With debts of 1.5 trillion yen (US$16.5 billion) as of November, JAL will go down in Japanese corporate history as one of its biggest failures.
Despite its woes, the airline's access to Asia is a prized asset for foreign airlines. Delta Air Lines Inc is trying to lure JAL from its alliance with American Airlines.
The bankruptcy filing will be immediately followed by a restructuring plan crafted by a government-backed corporate turnaround body, media reports said. The government itself will offer assurances of support for the airline's rehabilitation and ongoing operations, the Nikkei financial daily said.
Investors yesterday braced for a seemingly inevitable removal of its shares from the stock exchange. The issue, which has lost more than 90 percent of its value in the last week, tumbled another 29 percent yesterday to 5 yen. The company is now essentially worthless, with a market capitalization of about 13.7 billion yen - the price of one Boeing 787 jet.
When Japan's property and stock bubble of the 1980s burst, risky investments in foreign resorts and hotels undermined its bottom line.
JAL also shouldered growing pension and payroll costs, as well as a big network of unprofitable domestic routes it was obliged to maintain.
More recently, JAL's passenger traffic has slowed amid the global economic downturn, swine flu fears, competition from Japanese rival All Nippon Airways Co and a spate of safety lapses that tarnished its image. It lost 131.2 billion yen in the six months through September.
Delta Air Lines and rival American Airlines are courting JAL with massive financial offers as the US carriers seek to expand their Asian networks.
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