Major blow for ‘oneworld’ alliance while thousands of jobs are at stake
Japan Airlines, once the pride of Asia and a symbol of Japan’s global economic advance, yesterday agreed to file for bankruptcy and axe 15,600 jobs in the country’s biggest corporate failure outside the banking sector.
The move, which was well anticipated by the markets, triggered yet another sell-off of JAL stock: the shares traded yesterday for the equivalent of Y3 each and, by market capitalisation, the entire company is now worth US $90 million - less than the price of a single 747 jumbo jet.
The airline has vowed to stay in the air, but analysts have warned that the collapse could potentially be hugely destabilising for corporate Japan. The company has 13,000 business partners and flies to 35 countries: people close to the government believe that a mass exodus of corporate customers is now inevitable.
“The Government will back up efforts to achieve (JAL’s) revival while ensuring the continuation of stable and safe operations,” said Seiji Maehara, the Japanese Transport Minister. Also, the Japanese diplomatic corps has been co-opted into helping deal with the fallout from the bankruptcy – manning the phones to deal with complaints from fuel suppliers and other concerned business partners.
Haruka Nishimatsu, the serving president of JAL, has also announced his resignation and handed over his succession - nwith the task of restructuring the company - to Kazuo Inamori, a 77-year old management guru from the electronics sector who has prior training as a Buddhist monk.
The bankruptcy draws a line under months of speculation and highly politicised negotiation: several Japanese commentators described the JAL bankruptcy as a cause for “national shame” and representative of the country’s wider – perhaps incurable – economic decline.
The JAL bankruptcy could deal a heavy and immediate blow to a number of major international airlines who form part of the oneworld alliance, namely: British Airways, American Airlines, Finnair (Finland) Iberia (Spain) Lan (Argentina/Ecuador) Malev (Hungary) Mexicana (Mexico) Qantas (Australia) and Royal Jordanian (Jordan).
JAL represented the grouping’s biggest asset in Asia, but is now expected to leave the alliance and join Delta Air Lines and the rival Sky Team – an option thought to be the favourite of the state-backed turnaround body now responsible for restoring JAL to viability.
The declaration of bankruptcy is designed to accelerate JAL’s efforts to revive its dismal business after decades of mismanagement and malign government pressure. The airline was long treated as a political tool: many of its losses arose from its tacit obligation to serve dozens of domestic airports that had themselves been built only to create construction jobs. Those routes never made any money, but JAL was never allowed to make the commercial decision to abandon them.
