After months of speculation, Japanese flagship carrier Japan Airlines (JAL) filed for bankruptcy protection Wednesday. Saddled by 2.32 trillion yen (US$25 billion) in debt, the airline will receive Japanese government funding to restructure and cut up to a third of its workforce.
In a move that promises to shake up the airline industry in the coming years, JAL will enter into a three-year restructuring period to cut 15,700 jobs, reduce routes, and slash spending, according to the company. According to a Wall Street Journal report, JAL will reduce about 34 routes in Japan and internationally.
The move will likely be a boon to JAL’s competitors in the Asia market, especially fierce rival All Nippon Airways, the second-largest airline in the Japan. Other regional competitors such as Hong Kong’s Cathay Pacific, Korea’s Korean Air, and Australia’s Qantas will likely benefit as well.
Both AMR Corp., the parent of American Airlines, and Delta Airlines are both looking to invest in a minority stake in JAL, seeking a piece of the fast-growing Asian air travel market. JAL is currently in the One World airline alliance, which is also home to American and British Airways. Delta, on the other hand, belongs to Star Alliance.
In a conference call this week with analysts, AMR CEO Gerard Arpey said JAL’s possible switch to Star Alliance “would be a very unwise course for them.” He plans to “object vigorously” if JAL plans to switch alliances.
A number of Japanese media have reported that JAL’s management prefers a tie-up with Delta, but the news has not been confirmed by either airline.
In a move that promises to shake up the airline industry in the coming years, JAL will enter into a three-year restructuring period to cut 15,700 jobs, reduce routes, and slash spending, according to the company. According to a Wall Street Journal report, JAL will reduce about 34 routes in Japan and internationally.
The move will likely be a boon to JAL’s competitors in the Asia market, especially fierce rival All Nippon Airways, the second-largest airline in the Japan. Other regional competitors such as Hong Kong’s Cathay Pacific, Korea’s Korean Air, and Australia’s Qantas will likely benefit as well.
Both AMR Corp., the parent of American Airlines, and Delta Airlines are both looking to invest in a minority stake in JAL, seeking a piece of the fast-growing Asian air travel market. JAL is currently in the One World airline alliance, which is also home to American and British Airways. Delta, on the other hand, belongs to Star Alliance.
In a conference call this week with analysts, AMR CEO Gerard Arpey said JAL’s possible switch to Star Alliance “would be a very unwise course for them.” He plans to “object vigorously” if JAL plans to switch alliances.
A number of Japanese media have reported that JAL’s management prefers a tie-up with Delta, but the news has not been confirmed by either airline.
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