Monday, January 18, 2010

Japan Airlines: Imminent bankruptcy to result in loss of 15,700 jobs

by B. N. Sullivan

JAL logoJapan Airlines (JAL), which has been struggling financially for some time, is expected to file for bankruptcy tomorrow. As a part of its restructuring plan, the airline will eliminate 15,700 jobs -- one third of its work force, according the the Financial Times. The staff reductions are expected to occur over a period of up to three years, rather than all at once.

"JAL’s bankruptcy could be the largest of a Japanese group outside the financial services sector and would be one of the country’s fifth or sixth-largest," says the Financial Times.

JAL is expected to continue operations during its restructuring. The airline will cease operating more than 20 unprofitable routes.

In 2009, JAL asked pilots, cabin crew, and ground workers to volunteer for two months of unpaid leave, and even suspended part of its pilot training programs to save money. Pensions of pilots and other workers also were reduced.

Two U.S.-based carriers -- American Airlines and Delta Air Lines -- have been embroiled in a bidding war for some of JAL's routes. JAL and American are both members of the Oneworld alliance, but JAL is reportedly considering a move to SkyTeam, which would ally it more closely with Delta, which is already a member of SkyTeam.

Reuters reports:
In recent days, reports have suggested that Atlanta-based Delta, with its strong transpacific route structure, could be irresistible for JAL.

A Japanese newspaper reported on Saturday that JAL has already agreed on a tie-up with Delta.
Reuters also reported that while the Japanese government does not have an official stance on who JAL should ally with, some senior officials in the transport ministry are pushing for JAL to defect to SkyTeam.