Japan Airlines files for bankruptcy protection
Almost 16,000 jobs to be jettisoned
Japan Airlines filed for bankruptcy protection on Tuesday and vowed to cut nearly 16,000 jobs and restructure $26 billion in debt in an effort to survive in the uncertain air transport industry.
JAL applied for protection from creditors under the Corporate Rehabilitation Law in Tokyo District Court. Its shares, which had plummeted Monday to the equivalent of six cents Cdn, will be removed from the Tokyo Stock Exchange on Feb. 20.
The company said it would slash 15,661 jobs — or a third of its payroll — by March 2013, cut routes and shift away from its fleet of 747 jumbo aircraft to more fuel-efficient planes as part of its restructuring.
A state-backed turnaround agency said it would assist with the reorganization and pledged to offer the airline "sufficient funding" to keep JAL's planes in the air during the restructuring.
"The aviation industry faces serious uncertainty, and that is another reason we have to move forward on concrete restructuring for JAL," Transport Minister Seiji Maehara told reporters.
JAL serves 220 airports in 35 countries and territories, including 59 destinations within Japan.
Offers from Delta, American
There was no word on the financial tug-of-war between rival American carriers Delta Air Lines and American Airlines, which view JAL's access to Asia as a tempting target.
Delta and its SkyTeam alliance members have offered $1 billion, including $500 million in cash, to lure JAL away from American's Oneworld alliance. American Airlines and its partners say they are ready to inject $1.4 billion into the Japanese airline, up from a previous $1.1-billion offer.
JAL was founded in 1951 and was owned during its early years by the government. It expanded quickly in the decades after the Second World War along with Japan's economy, and was privatized in 1987.
Risky investments in foreign resorts and hotels eroded profits when Japan's property and stock bubble of the 1980s burst at the same time as pension and payroll costs grew and as it struggled to service a big network of unprofitable domestic routes it was politically obligated to maintain.
Despite four government bailouts since 2001, JAL reported a loss of $1.4 billion US in the six months ending in September and is carrying debts of 2.32 trillion yen ($26.3 billion Cdn.).
The company now has a market value of $150 million US, the price of one Boeing 787 jet.
With files from The Associated Press