JAL future still up in air – for now
TOKYO – Speculation continues to grow about the fate of Japan Airlines after its shares plunged to record lows this week.
JAL is undergoing major restructuring to get itself back on solid footing.
Kyodo News agency said a government-backed corporate turnaround body, which is responsible for restructuring JAL, has proposed to the airline’s creditor banks that the struggling carrier be placed in court-backed bankruptcy proceedings – a move similar to Chapter 11 in the United States.
But the Yomiuri Daily, Japan’s top-selling newspaper, said the banks rejected the liquidation proposal because of fears of widening losses and concern that bankruptcy could disrupt the airline’s operations.
The Centre for Asia Pacific Aviation said the renewed uncertainty over JAL’s future creates ever-widening ripples.
The new bankruptcy concerns appear certain to force a downgrading of the carrier’s credit rating, and already the premium it must pay to insure its loans has increased significantly, CAPA said.
A further issue noted by CAPA was that in the event of JAL bankruptcy and any sharp reduction in airline size, the government would be anxious not to allow a scramble for any airport slots consequently released at Tokyo’s capacity constrained airports.
Delta Air Lines, the world’s biggest airline operator, and its rival American Airlines, are vying for a stake in JAL in a bid to expand their Asian networks.
JAL and American Airlines are in the oneworld alliance. Delta and its SkyTeam partners have offered US$1 billion to lure JAL from American.
Ian Jarrett
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