Well if it all was just the beginning, the crumps and pieces of the financial turmoil are spattering on the entire fiscal setup. Following the Dubai debacle Japan Airlines (JAL) has become one of the biggest corporate defaults after filing for bankruptcy just two days back.
Owing to non money making luxurious flights since past two decades the company has been running huge losses ever since and has sought the Japanese government’s intervention through a bailout program nearly four times till now. However with the credit crunch in all major markets around the world this time the situation is much more gruesome. The largest aviation company of Asia is no longer going to be in business the same as it was before.
Development Bank of Japan (DBJ) and the Japanese government have taken over the work of restructuring of the airlines in conjugation with Delta airways.
Asia is going to be the prize for the delta airways whose Sky team alliance is going to enter the Asian market in an entire new way with the exit of OneWorld alliance of which JAL was a part previously.
JAL the largest aviation carrier in the Asia once used to be a part of OneWorld with member airlines like-- American Airlines, British Airways, Iberia, Cathay Pacific, Finnair, LAN, Malev, Mexicana, Qantas and Royal Jordanian – who had offered JAL all possible support through this difficult period and support however in light of recent market destabilisation and the restructuring being done by the Japanese government they have gone out of the picture. With such huge debt they were not able to generate apt income to sustain the alliance.
Under the government-supported rescue plan, creditors will be asked to forgive Y730bn ($8bn) in debt, the airline will withdraw from 31 unprofitable routes and dispose of non-core subsidiaries and other assets.
In perhaps the most symbolic divestment, JAL will retire its entire fleet of Boeing 747-400 wide-body jets, ageing and fuel-thirsty aircraft that have become too expensive to fly. This is going to cost a huge load on the aircraft.
Added to these troubles the airline is going to cut nearly 15000 jobs and the existent workers will feel the heat or their allowances and pension funds as the restructuring takes place.
Tokyo however promised an infusion of new capital and credit lines to keep Asia's largest carrier by revenues operating until it completes a radical three-year restructuring.
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