Japan Airlines has filed for bankruptcy protection after struggling for years. The largest airline in Asia will continue operating flights but the Japanese government is acting quickly to pull JAL out of its economic mess.
Japan Airline's bankruptcy filing is one of Japan's largest corporate failures in decades.
The former state-owned carrier once symbolized the strength of the country's post-war economic boom. But its financial fortunes declined in the last decade with the fallout from the September 11 attacks, a surge in fuel prices, and the worldwide economic slowdown. The company racked up more than $20 billion in debt and its share price has dropped to a record low of about three cents.
The Japanese government bailed out the airline three times in the last 10 years but it could not save the company from bankruptcy this time.
Japan's finance minister, Naoto Kan, vows the government will do all it can to reverse JAL's economic fortunes.
The airline will continue to operate daily flights but the government is planning restructuring efforts that will significantly reduce JAL's size. About a third of the work force is expected to be cut, along with more than a score of international and domestic routes.
A state-backed group will oversee the restructuring plan, with a new chairman at the helm. The government has asked Kyocera founder Kazuo Inamori to lead JAL.
In exchange for the bankruptcy filing, JAL will get about $3 billion in capital from the government. The company's lenders will be asked to forgive about $3 billion in loans.
Although the restructuring plan is expected to take three years, Land, Transport, and Tourism Minister Seiji Maehara says the government will act swiftly, without disrupting service to passengers.
Maehara says they will look to maintain stability and safety in the air as they move forward with this process.
The Japanese airline's financial failure has opened up a bidding war among American airlines. Delta and American Airlines have both offered a $1 billion in financial support, in an attempt to form closer alliances with JAL.