JAPAN - Airline bankrupt
A worker stands by a fence as a Japan Airlines jet taxies past a construction site at Haneda Airport in Tokyo, Japan, Tuesday. Japan Airlines filed for bankruptcy Tuesday in one of the nation's largest corporate failures, entering a restructuring from which it seeks to emerge leaner, smarter and free of crippling debt. - file
Japan Airlines filed for one of the country's largest bankruptcies ever yesterday, entering a restructuring that will shrink Asia's top carrier and its presence around the world.
Staggering under a US$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 US$10 billion of government cash will keep JAL's planes in the air during the reorganisation. Lenders will forgive $8 billion in debt, and JAL shares will be removed from the Tokyo Stock Exchange on February 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 mouth-watering prize for foreign airlines. A state-backed turnaround agency pledged 900 billion yen (US$10 billion) in financial support for JAL's 600 billion yen in credit lines and a 300 billion yen cash infusion.