JAL to cut 15,600 jobs, file for bankruptcy
11 Jan 2010
Japan Airlines (JAL), burdened with 860 billion in liabilities, is expected to cut 15,600 jobs (about 30 per cent of the group's workforce) over the next three years, ie, by March 2013, under a state-backed bankruptcy plan.
The embattled airline will also have to cut dozens of routes following the government's decision to approve court-led rehabilitation plan, reports quoting official sources said.
The rehabilitation plan, being compiled by the government-backed Enterprise Turnaround Initiative Corp of Japan, estimates the liabilities of JAL, Japan's top carrier, to exceed its assets by over 860 billion yen, reports said.
Under the ETIC package, JAL will file for bankruptcy protection under the Corporate Rehabilitation Law. ETIC will guarantee over 470 billion yen in receivables for payments of fuel and other commercial transactions necessary to keep JAL flying. It will also invest 300 billion yen in JAL.
The bankruptcy option, as proposed by ETIC, would limit JAL's liabilities to 730 billion yen and add 300 billion yen to its capital base, helping the carrier shore up assets to a level that it exceeds its liabilities by over 160 billion yen, the reports said.
Under the revival package, a new team led by Kazuo Inamori, the 77-year-old honorary chairman of Kyocera Corp, will take over management of JAL during the turnaround process.
JAL is expected to file for bankruptcy by 19 January at the Tokyo district court and ETIC plans to be ready with the bailout package by then.
JAL flights will continue while the company undergoes rehabilitation proceedings.
The ETIC plans to seek 350 billion yen in financial assistance from JAL's creditor banks. JAL's largest creditor, the government-owned Development Bank of Japan, has already lent more than 300 billion yen to the airline.
