Global Biz

Japan Airlines files for bankruptcy protection

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

A worker looks down in front of a logo of Japan Airlines (JAL) at the check-in counter at Haneda airport in Tokyo January 14, 2010. [Agencies]

Additionally the firm will dispense with 53 aged, fuel-inefficient 747 liners, in favor of 33 more cost-effective smaller jets and a number of superfluous and domestic and international routes are to be discontinued, in light of falling patronage and rising fuel costs.

JAL President, Haruka Nishimatsu, is to retire his post to the founder of Kyocera Corporation, Kazuo Inamori, well-renown for his entrepreneurial spirit and previous record of turning around stricken organizations. An official announcement on the matter will be made pending confirmation by the turnaround body, sources close to the matter said.

JAL was once seen as a national symbol of Japan's postwar boom, as it transformed a handful of leased planes in 1951 into a nearly 50,000 staff mega-carrier, with a fleet of almost 280 aircraft, but since 2001 the carrier has struck three previous rescue deals with its banks and the government.

The carrier has been hit with irreconcilable issues of safety, including a fatal crash in 1995, as well as failings stemming from government bureaucracy and a flawed corporate structure that allowed for overly-generous pensions and benefits for its employees.

The Japanese government, however, is fully backing JAL's restructuring plans and is urging the public to continue their support of the carrier, claiming that the disruptions will be minimal.

"What's most important is that all people who are working (for the airline) devote all their energies toward its restructuring," Prime Minister Yukio Hatoyama told reporters after the company filed for bankruptcy protection.

"On that premise, the government will support their efforts" so that people can fly on a JAL plane whenever they wish to do so, the premier said.

"The airline business is crucial for people's lives as well as economic activities. We'll strive to stave off any problems that may hamper JAL's operation," said Masayuki Naoshima, Japan's Minister of Economy, Trade and Industry, to the press on Tuesday.

Seiji Maehara, Japan's Land, Infrastructure, Transport and Tourism Minister, added that, "the reconstruction must ensure that JAL will continue its 'safe operation', the government is ready to announce its full support for the airline after the ETIC formally decides to rescue JAL."

Japan Airlines files for bankruptcy protection

An employee of Japan Airlines works in front of its logo at Haneda airport 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]