President Resigns Company Files Bankruptcy
January 19, 2010 - Japan Airlines today, filed bankruptcy petition in
Tokyo District Court. In addition the airline submitted an application
with Enterprise Turnaround Initiative Corporation of
President of Japan Airlines, Haruka Nishimatsu today resigned for causing JAL current situation and it is also expected that all of other directors will resign. However, it is expected that they will cooperate whenever any cooperation necessary to conduct JAL business is requested by the company under the Corporate Reorganization proceedings. Haruka Nishimatsu has been President of Japan Airlines Corp. and JAL Group since June 28, 2006.
The Trustees today obtained comprehensive Court approval authorizing
JALís continued payment of certain commercial transaction claims,
including payments for fuel and other supplies and services, as well as
leases and other related obligations. Also, JAL will be able to obtain
the DIP financing from DBJ and ETIC, the amount of which will be
sufficient to continue business operations.
JAL has reported their frequent flyer miles program will be fully
protected and the frequent flyer program is expected to be continued as
it has been conducted and they believe flight operations will not be
interrupted and their safe flight operations will continue.
While receiving the support from ETIC and sound assistance from related
parties including the Japanese government, and under the supervision of
the Court and the leadership of the Trustees. JAL is confident that the
swift revitalization will be achieved and the company will be reborn as
a leading airline group that could again lead the global airline
Since the establishment of JAL in 1953, the company has been providing a
high-quality air transportation services, based on safe and timely
operations mainly through international airline networks. After the
integration of Japan Airlines Corporation and Japan Air System Co., Ltd.
in 2002, JAL Group had a 66% market share of international airline
services and a 46% market share of domestic airline services in Japan,
and as the largest airline company in Japan providing around 1,100 daily
regular flights, has contributed to the convenience of domestic and
international flight users as well as to public interests.
However, since the beginning of this century, several incidents such as
the September 11th multiple attacks in the
Under such circumstances, the JAL group has made numerous efforts to
improve their groupís business, including a decrease in the number of
employees by improving employee productivity and efficiency, amendment
of the wage system and retirement allowance system, decrease in
employee-related costs by reducing lump-sum payments and other similar
measures, improvements to the cost system by reviewing operation
structures and business processes, intensive analysis of the
profitability of international and domestic flight routes, and
replacement of certain aircrafts and progress in downsizing.
As a result, JAL gained operating profits in the first quarter of fiscal
year 2008 for the first time since their consolidation in 2002, despite
the fact that the first quarter is usually a low-demand quarter.
However, the financial crisis that occurred in the fall of 2008, pushed
the world economy into an unprecedented global recession and JAL Group
also suffered a significant decline in sales due mainly to a decline in
demand for international passenger service for business users and a
sudden decline in demand for international cargo service. As a result of
such circumstances, in June of 2009, JAL Group received loans in the
total amount of 100 billion yen from DBJ and other private financial
Under such business circumstances, on October 29, 2009, ďJAL Task
ForceĒ, a professional Group consisting of business restructuring
specialists and established by the Minister of Land, Infrastructure,
Transport and Tourism for the purpose of ensuring JAL Groupís
restructuring, reported to the Minister of Land, Infrastructure,
Transport and Tourism the results of their examinations to the effect
that it is appropriate that JAL Groupís corporate restructuring should
be conducted with the support of ETIC.
JAL began prior consultations with ETIC regarding support for their
restructuring and, while pursuing the Turnaround ADR Procedure, they had
continued to consult with ETIC.
Today, after prior examination by ETIC, JAL filed, jointly with DBJ and
other Financial Institution Applicants, an application to ETIC for
support for their restructuring and received ETICís decision to provide
ETIC is a joint-stock corporation established and authorized by the
Japanese government to provide support for the revitalization of certain
corporations as stipulated by laws.
With respect to Turnaround ADR Procedure that JAL had begun, today JAL
offered to both of the JATP and appointed mediators (Tetsuzuki Jisshisha)
to terminate the procedure. Having received their offer, as a result of
discussion among the appointed mediators, the appointed mediators
decided that it is appropriate to terminate the Turnaround ADR
Procedure. Upon such decision, JATP decided to terminate the Turnaround
ADR Procedure prior to the filing of the petitions for commencement of
corporate reorganization proceedings.
2. Protection, Etc. of Commercial Transaction Claims
Upon commencement of corporate reorganization proceedings, JAL restructuring will be conducted, while they will receive support from ETIC, under the supervision of the Court and the leadership of the Trustees. In order to ensure safe flight operations and maintain corporate value as much as possible, JAL believes that at least the following measures are indispensable. In this regard, JAL requested and obtained its consent that ETIC will take the following measures and maintain necessary funds for those measures.
(1) Protection of Commercial Transaction Claims
In order to maintain the trust of JAL commercial related parties and to
continue providing safe flight operations, protection of commercial
transaction claims is indispensable. JAL is requesting that commercial
transaction claims be protected under the Corporate Reorganization
(2) Protection of Customersí Frequent Flyer Miles
JALís frequent flyer program has been used by many customers and has
contributed substantially to its business operations. JAL is requesting
that customersí frequent flyer miles be protected under the Corporate
(3) Protection of Leasing Fees
In order for JAL to continue smooth flight operations, payment of the
leasing fees regarding the aircrafts necessary for their flight
operations is indispensable. JAL is requesting that the payment for the
leasing fees will be continued as it has been conducted and that the
leasing fee claims be protected under the Corporate Reorganization
3. Outlook for JAL Business Restructuring Plan
JAL believes that their business revitalization is sufficiently feasible
through the adoption of the following measures:
(1) Renewal of Aircraft and Reviewing Airline Routes
JAL believes that the proactive shift from low-efficiency large
aircrafts to high-efficiency small aircrafts as well as regional jet
aircrafts is necessary and restructuring and consolidation of
underperforming routes are also necessary.
(2) Review of the Workforce
and Organization Structure
JAL believes that the following measures are necessary: the streamlining
of headquarters; improvement of productivity by adjustment of the
workforce, including aircraft mechanics, flight attendants and flight
crews, to an appropriate scale; establishment of a new management system
that will promote appropriate and timely decision-making and the
appointment of younger management team members.
(3) Establishment of the
Business Operation System Optimizing Revenue
JAL believes that the following measures are necessary: establishing an
operating system maximizing revenue by flexibly and swiftly planning
flight routes and aircraft schedules in response to demand changes both
in domestic and international routes; especially for international
flights, conducting business operations under the Open Sky Policy by
leveraging their multiple alliances to expand JAL networks, in addition
to structuring flight routes to match business demand; as for local
flights, by establishing a low-cost flight service model, satisfying
demand for tourism and expanding the local network.
(4) Focused Investment to
Realize Business Strategy
JAL believes that a significant amount of investment is necessary for
the renovation of aircrafts as necessary to maintain their
competitiveness as well as investment in ground infrastructure such as
of the Pension System
With respect to JAL Corporate Pension Funds, the consent of more than
two thirds of each of pension rights holders (i.e., former employees)
and current employees, and the consent of the JAL Labor Union, the
largest labor union of JAL, have been obtained as to the amendment
regarding the significant decrease in pension payments. Therefore, the
amendment regarding the decrease of pension payments will be carried out
subject to the approval of the Minister of Health, Labor and Welfare of
such amendment of the pension plan.
JAL has requested that the intentions of pension rights holders and
current employees who accepted such a great burden for their
revitalization be respected. Appropriate arrangements will be made to
the effect that the pension system of JAL Corporate Pension Funds will
be amended to reduce the pension payments pursuant to the proposed
amendment agreed by the related parties and will be continued under the
Corporate Reorganization proceedings supported by ETIC.
5. Management Structure
The new management structure will be determined in early February. Meanwhile, it is expected that Masato Uehara, the Senior Managing Executive Officer, will be the Group Temporary Chief Operating Officer.
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