Japan Airlines rehabilitation plan approved by court

November 30, 2010 | 15:23

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Struggling Japan Airlines (JAL) on Tuesday said it had won approval from the Tokyo district court for a rehabilitation plan that will see thousands of job cuts, route closures and a debt waiver.

"The court today formally approved the restructuring plan," said Hideo Seto, president of the Enterprise Turnaround Initiative Corp. (ETIC), which is charged with leading the restructuring process.

"A new JAL can now arise," he said.

In January the flagship carrier went under owing $26 billion in one of Japan's biggest-ever corporate failures, but has continued flying while it goes through a painful state-led restructuring process.

The airline, which delisted from Tokyo's stock exchange in February, submitted in August to the Tokyo court its rehabilitation plan, which at the time included a debt waiver worth 521.5 billion yen ($6.2 billion) and the loss of more than 16,000 positions.

The court's decision came after most major banks and creditors of the ailing carrier approved the plan.

"We promise we will be born again," said JAL president Masaru Onishi. With the court's approval, ETIC will inject 350 billion yen into the JAL group.

In August the carrier said it would cut loss-making international and domestic routes by the end of fiscal 2012 while looking into the possibility of launching a low-cost carrier.

JAL said it would achieve personnel cuts by encouraging early retirement and selling subsidiaries, reducing staffing numbers to 32,600 at the end of fiscal 2010 from 48,714 at the end of fiscal 2009.

However, the carrier's restructuring efforts could be hampered by plans to terminate the employment contracts of around 200 pilots and cabin attendants, which have drawn criticism from labour unions who may take strike action.

AFP

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