Japan Airlines Corp (JAL) filed for bankruptcy protection yesterday, owing more than US$25 billion, and said it would slash 15,700 jobs and unprofitable routes as part of a plan to survive an industry beset by volatile fuel costs and fickle flyers.
JAL, Asia? largest airline by revenues, will remain in the skies thanks to almost ? trillion (US$11 billion) in support from a state-backed fund, but must go through a sweeping restructuring under a new board and management.
Shareholders will be wiped out and lenders will forgive a larger-than-expected ?30 billion in debt as part of the deal with the fund, the Enterprise Turnaround Initiative Corp of Japan (ETIC).
PHOTO: AFP
Bankruptcy will only be the beginning for an airline with depleted capital, facing headwinds such as rising fuel prices and shrinking passenger numbers, on top of hefty restructuring costs.
JAL, which has been bailed out by the Japanese government three times in the past 10 years, will replace many of its older, larger and less fuel-efficient planes.
It also faces tough decisions about foreign capital and alliances.
JAL? bankruptcy listing ?.3 trillion in total debts as of Sept. 30 ranks as Japan? fourth-largest ever.
Shares of JAL, which have fallen more than 90 percent since the start of the month, closed flat at ? after trading down ? to ?. They will be de-listed on Feb. 20, the stock exchange said.
With a market value of about US$150 million, JAL is now smaller than minor carriers Croatia Airlines and Jazeera Airways and is worth less than a Boeing 747.
? thought that there was no way that JAL would fail,?said Akiko Saito, a 63-year-old retiree returning from Sydney to Tokyo? Haneda Airport. ?ven when the value of my JAL shares fell from ?00,000 to below ?20,000, I was convinced that it would recover and I held on to my stock.
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