JAL submits rehabilitation plan to return to black by March+

TOKYO, Aug. 31 Kyodo -
Japan Airlines Corp. submitted to the Tokyo District Court on Tuesday a
rehabilitation plan featuring debt waivers, cuts in jobs and closures of
unprofitable domestic and international routes as the airline aims to return to
the black by March with the help of public funds.
Even as major creditor banks gave the green light to the revival plan,
submitted two months later than initially planned, the former national flag
carrier faces an uncertain business outlook as JAL and the banks have put off
negotiations over the airline's new loan requests worth 319.2 billion yen until
September or later.
''The submission of the rehabilitation plan marks the start of JAL's
restructuring,'' JAL Chairman Kazuo Inamori said at a joint press conference
with officials from its bankruptcy administrator, the state-backed Enterprise
Turnaround Initiative Corp. of Japan.
ETIC aims to end its support by January 2013 after overseeing the carrier's
three-year revival efforts, its officials said.
The plan, which JAL aims to have approved by the court on Nov. 30, features a
521.5 billion yen debt waiver mainly from Mizuho Corporate Bank, the Bank of
Tokyo-Mitsubishi UFJ and Sumitomo Mitsui Banking Corp., and a 350 billion yen
investment in JAL by ETIC with the use of public funds.
ETIC will also provide additional financial aid as necessary in the wake of the
spread of influenza or other events that could undermine airline demand,
according to the plan.
For its part, JAL will cut by the end of March roughly 16,000 jobs, or about 30
percent of its 48,714 group workforce as of the end of fiscal 2009, to 32,600,
and 45 money-losing domestic and international flight routes.
At the end of fiscal 2012, JAL's international flight routes will come down to
65 from 75 at the end of fiscal 2009, and domestic routes to 109 from 148, the
plan showed.
Among its restructuring measures, JAL will retire 103 aging aircraft including
jumbo jets and use smaller, more energy-efficient aircraft.
It will also merge with four subsidiaries including Japan Airlines
International Co. and be renamed Japan Airlines Co. on April 1, 2011.
The carrier thus aims to record a consolidated operating profit of 64.1 billion
yen in the current business year through March 31 and 117.5 billion yen in
fiscal 2012, and to eliminate 959.2 billion yen in liabilities in excess of
assets by the end of fiscal 2010.
It will also consider creating a low-cost carrier amid the growing presence of
such budget carriers globally.
JAL President Masaru Onishi said JAL is on track with regard to job cuts, in
response to remarks by transport minister Seiji Maehara expressing concern over
the carrier's ability to slash jobs as scheduled while showing appreciation for
the plan in general.
Other government officials and airline industry experts also gave good marks to
the plan.
Yoshihisa Akai, representative director of Japan Aviation Management Research,
said, ''I believe the conditions are now in place for JAL to be profitable,''
citing job cuts and the downsizing of aircraft and routes.
As for JAL's management, Inamori said he would like to ''unearth'' people who
can revitalize JAL, indicating a change in management within the year that will
see younger executives, and that he is thinking of stepping down in two years
after being appointed in February, instead of a full three years.
''Initially, I said I would assume the post for around three years, but I would
like to be relieved of it in two years,'' Inamori, 78, said, indicating he
would depart in February 2012, citing his advanced age and the performance of
JAL's mainstay business which he said has been doing well in recent months.
Hideo Seto, an ETIC trustee, said JAL's relisting during the three-year
restructuring process is ''one option'' being considered. At the same time he
did not rule out selling JAL shares if JAL's relisting does not go ahead.
JAL was delisted from stock exchanges in February after filing for bankruptcy
protection on Jan. 19 in the biggest nonfinancial corporate failure in Japan's
postwar history.
The revival plan was delayed from the initial deadline of June due mainly to
protracted negotiations between JAL and its major creditor banks over its
request for increased debt waivers. Eventually, the negotiations made headway
after JAL made the terms more palatable for the banks.
==Kyodo
2010-08-31 23:43:05


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