Japan Airlines Files for Bankruptcy Protection
January 19th, 2010Via: AP:
Japan Airlines filed for bankruptcy Tuesday in one of the nation’s biggest corporate failures ever, entering a restructuring that will shrink Asia’s top carrier and its presence around the world.
Staggering under a $25.6 billion debt mountain, the carrier applied for protection from creditors under the Corporate Rehabilitation Law — Japan’s version of Chapter 11 — with the Tokyo District Court.
Japan’s flagship airline will slash nearly 16,000 jobs, reduce pensions for retired staff, cut routes and shift to more fuel-efficient aircraft as part of its restructuring.
Some $10 billion of government cash will keep JAL’s planes in the air during the reorganization. Lenders will forgive $8 billion in debt, and JAL shares will be removed from the Tokyo Stock Exchange on Feb. 20, wiping out investors.
There was no word on the outcome of a fierce tug-of-war between Delta Air Lines and American Airlines for a slice of JAL’s business. Despite its woes, the airline’s access to Asia is a mouthwatering prize for foreign airlines.
A state-backed turnaround agency pledged 900 billion yen ($10 billion) in financial support for JAL — 600 billion yen in credit lines and a 300 billion yen cash infusion. The bankruptcy is the fourth-largest in Japan, according to figures from Teikoku Databank, which tracks corporate failures.
Personally, I welcome our new Singapore Airlines overlord, with their warm towels and their palatable food….