JAL files for restructuring
Sunday, 19 Jan, 2010
0
Japan Airlines filed for court-led restructuring with the Tokyo District Court today.
The Enterprise Turnaround Initiative Corp. of Japan said it had decided to support the restructuring of JAL, Asia’s top carrier by revenue.
JAL will revitalise its unprofitable operations with a capital injection from the agency, and by cutting its workforce and routes, ETIC said.
Under JAL’s revamp plans, the carrier will reduce its capital to zero and ask for a debt-waiver worth Y730 billion on a group basis, while cutting costs by reducing its workforce by 15,700 staff.
The airline’s president Haruka Nishimatsu resigned and it is expected that other directors will also quit “in order to take responsibility for causing our current situation,” a JAL statement said.
A new management structure will be determined by early next month.
JAL issued a “sincere apology” for the “great inconvenience and concern this situation might cause”.
ETIC’s backing means that the carrier will receive public support for the restructuring, JAL said.
The group said the September 11 terror attacks on the US, SARS and the Iraq war had “contributed to the decline in demand especially for international flight services, which significantly affected JAP group. In addition there was a decline in foreign tourism demand due to unprecedented soaring fuel prices and high fuel surcharges”.
JAL achieved first quarter operating profits in 2008 for the first time since 2002.
“However, the financial crisis that occurred in the fall of 2008 pushed the world economy into an unprecedented global recession and JAL Group also suffered a significant decline in sales due mainly to a decline in demand for international passenger service for business users and a sudden decline in demand for international cargo service.”
As a result the airline received a Y100 billion cash injection from the Development Bank of Japan and other private institutions.
The revamp will include a shift away from low efficiency large aircraft to smaller plans and regional jets together with a “restructuring and consolidation of underperforming routes”.
JAL’s headquarters staff will be streamlined, there will be improved productivity due to cuts in flight attendants, mechanics and flight crew to “an appropriate scale”.
A low cost model will be investigated for short haul flights.
A new management system will see the appointment of younger executives
by Phil Davies
Phil Davies
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