Japan Airlines May Succumb to Bankruptcy

Japan Airlines may succumb to filing bankruptcy next week after Prime Minister Yukio Hatoyama refused to bail out the carrier that has at least 1.5 trillion yen ($16 billion) of liabilities, reports Bloomberg.


Bloomberg says that Hatoyama's decision breaks with tradition of predecessors who bailed out the carrier three times in the past nine years. The carrier, headed by Chief Executive Officer Haruka Nishimatsu, previously obtained emergency loans from a state- owned bank under LDP governments following the Sept. 11 terrorist attacks in 2001, the 2003 SARS outbreak and again last year as Japan suffered its worst postwar recession.


“Bankruptcy is the best way to ensure a speedy revival for JAL,” Osuke Itazaki, an airlines analyst at Credit Suisse Group AG in Tokyo, told Bloomberg. The airline has opposed bankruptcy on concerns it would deter passengers from booking trips.


But the filing doesn't seem to worry Delta Air Lines Inc. and AMR Corp.’s American Airlines, the world’s two largest carriers, which are competing to invest in JAL. Both carriers revealed last week that a bankruptcy filing wouldn’t deter their plans. The carriers want a stake to access JAL’s networks in China and Japan, says Bloomberg.

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