Struggling Japan Airlines (JAL) yesterday said it had won approval from the Tokyo District Court for a rehabilitation plan that will see thousands of job cuts, route closures and a debt waiver.
“The court today formally approved the restructuring plan,” said Hideo Seto, president of the Enterprise Turnaround Initiative Corp (ETIC), which is charged with leading the restructuring process.
“A new JAL can now arise,” he said.
In January the flagship carrier went under owing US$26 billion in one of Japan’s biggest-ever corporate failures, but has continued flying while it goes through a painful state-led restructuring process.
The airline, which delisted from Tokyo’s stock exchange in February, submitted in August to the Tokyo court its rehabilitation plan, which at the time included a debt waiver worth ￥521.5 billion (US$6.2 billion) and the loss of more than 16,000 positions. The court’s decision came after most major banks and creditors of the ailing carrier approved the plan.
“We promise we will be born again,” JAL president Masaru Onishi said.
With the court’s approval, ETIC will inject ￥350 billion into the JAL group. In August the carrier said it would cut loss-making international and domestic routes by the end of fiscal 2012 while looking into the possibility of launching a low-cost carrier.
JAL said it would achieve personnel cuts by encouraging early retirement and selling subsidiaries, reducing staffing numbers to 32,600 at the end of this fiscal year from 48,714 at the end of the last fiscal year.
“There is a surplus of personnel. We have decided to reduce it. The approval of the court came based on that plan,” JAL chief executive Kazuo Inamori said.
The government earlier this year asked charismatic entrepreneur Inamori, founder of high-tech company Kyocera and an ordained Buddhist monk, to turn around the former state-run company.
“We must be lean and muscular,” he added of the restructuring. “It will cause great pain, but we have to ask employees for their understanding.”
However, the carrier’s restructuring efforts could be hampered by plans to terminate the employment contracts of around 200 pilots and cabin attendants, which have drawn criticism from labor unions who may take strike action.