Japan Airlines Files for Bankruptcy

It is Asia's largest air carrier, so this move is termed as the biggest corporate failure in Japan. Yes, Japan Airlines (JAL) has filed for bankruptcy protection. All of its board members have voted to resign, and most probably there will be some 15,000 jobs lost, nearly a third of the total work force of the carrier. This has just been a case of Japan not taking care of their major carrier when needed the most. But now one good thing is the announcement by the Japanese government that flights will continue as normal even while restructuring goes on. Restructuring and reorganization of JAL will take place under the watchful supervision of Enterprise Turnaround Initiative Corporation (ETIC), a state-backed enterprise.

JAL's bankruptcy is a result of diminishing passenger numbers, which in turn is a result of the economic recession. JAL will receive 300 bn yen, a 600 bn yen credit line, and get a 730 bn yen debt waiver. JAL's shares have fallen to an all-time low. In fact they are so low now that the whole organization is valued at just $150 m, which is even less than the cost of a jumbo jet. It has debts worth $25 bn. Tokyo Stock Exchange will be delisting the carriers shares in mid February. Investors in JAL are most likely to lose most of their money.

Now it is just left to be seen whether the Japanese government and Enterprise Turnaround Initiative Corporation will be successful in bringing JAL back up to being the most prominent airline in the region.