JAL bankruptcy fears delay NCA merger

POOR Japan Airlines (JAL). At the start of December it looked like it had been given a reprieve from having to sell itself to a US carrier by the Japanese government giving it a loan for ¥700 billion (US$7.8 billion) – its fourth handout since 2001. Now the sense of relief looks a little premature as talk moves to possible bankruptcy to handle its massive debts of $15 billion (between July and September alone it lost $364 million).Enterprise Turnaround Initiative Corporation (ETIC), the government agency which is overseeing JAL’s ‘rehabilitation’, is now suggesting that bankruptcy is the only way forward, so that it can waive some of those debts and reduce its equally massive pension obligations. ETIC says that a filing will be made on 22 January, although some analysts are sceptical that this will indeed go ahead. ETIC has also asked JAL’s creditors, which includes the state-owned Development Bank of Japan, to waive an additional ¥300 billion in loans to ease the recovery.However, JAL’s creditors have made it clear that they would prefer more conventional restructuring, claiming that legal bankruptcy would adversely affect JAL’s reputation and its future success. There have already been widespread network cuts and a stated aim to reduce the global workforce by 14 per cent.For the full story read the latest issue of Air Cargo News, dated 15 January. To subscribe, click on ‘Subscribe’ above.