Global Biz

Japan Airlines files for bankruptcy protection

(Xinhua)
Updated: 2010-01-19 19:40

Japan Airlines files for bankruptcy protection

Japan's Transport Minister Seiji Maehara attends a news conference about Japan Airlines in Tokyo January 19, 2010. Japan Airlines Corp will lay off about 15,700 employees, or 30 percent of its entire workforce including contract workers, by the end of the fiscal year 2012, the government document showed on Tuesday. [Agencies]

TOKYO: Japan's top carrier, Japan Airlines Corporation (JAL), formally filed for bankruptcy protection on Tuesday, paving the way for state-led restructuring.

JAL filed for bankruptcy protection with the Tokyo District Court, with its liabilities, including those of group firms totaling 2.32 trillion yen (US$25.8 billion), the largest ever loss by a Japanese nonfinancial business.

The Tokyo Stock Exchange said JAL shares will be delisted from its First Section from February 20, through 100 percent equity reduction. Shares in the carrier dropped to a record low of 3 yen at one point during trade on Tuesday.

The Japanese government said in a statement it will seek "the understanding and cooperation of foreign governments" to enable JAL to continue its flight operations and implement its rehabilitation program.

Asia's largest carrier in terms of revenue will continue its operations under the sponsored support of the state-backed Enterprise Turnaround Initiative Corporation of Japan (ETIC), who will seek through wholesale restructuring procedures, to free itself from the burdening constraints of its crippling debt.

The rehabilitation plan will involve the ETIC injecting 300 billion yen (US$3.3 billion) of fresh funds into the struggling carrier and creditor banks and other financial institutions have been asked to waive about 350 billion yen in liabilities to help eat away at JAL's debt.

Additionally the Japanese government is preparing at least 900 billion yen in new equity and credit lines to keep the airline operating while in bankruptcy.

According to sources briefed on JAL's financial situation, the financial estimate of the restructuring charges combined with the foreseen operating losses amount to a 265 billion yen loss for the year to March 30, compared with a 51 billion yen marked in the previous year.

The state-led rehabilitation plan is largely expected to slash the number of JAL's subsidiaries by around 50 percent and around 15,700 jobs, roughly 30 percent of its group workforce, will be cut by the business year through March 2013, according to sources with knowledge of the matter.

Japan Airlines (JAL) former chief executive officer Haruka Nishimatsu bows during a news conference in Tokyo January 19, 2010. Japan Airlines Corp filed for bankruptcy protection on Tuesday owing more than $25 billion and vowed to slash 15,700 jobs and unprofitable routes as part of a plan to survive an industry beset by volatile fuel costs and fickle flyers. [Agencies]