I mean, seriously: JAL are bleeding money, at more than 15 billion USD in debt, with almost no assets to cover for it... except for some high-cost undertakings and a couple of valuable duopoly-slots at HND and NRT that will dive in value, come 2010 (if JAL can make it that far).
How much longer??
I'ld say: break it up and let it die. It's time for some real competition in the Japanese aviation market.
Fair use:
By REUTERS
Published: September 24, 2009
TOKYO — Japan Airlines has asked for a government bailout, the company’s chief executive said Thursday, as the struggling carrier battles for survival by canceling flights and laying off workers.
Before the announcement, the company’s shares tumbled to a record low on reports that lenders might seek to break up the carrier and a media report of the bailout plea.
JAL, swamped by ¥1.4 trillion, or $15.4 billion, of debt amid a global slump in aviation, has been wooed by rival airlines seeking to gain access to its valuable route network and high-paying Japanese passengers.
“Nothing’s sure about JAL’s future. It’s already Japan’s G.M.,” said Takahiko Kishi, a Mizuho Investors Securities analyst, ...
JAL’s chief executive, talking to reporters after meeting Japan’s new transport minister, said that the indebted carrier needed government help.
Mr. Nishimatsu rejected suggestions that some JAL creditors may seek to break up his airline in an effort to separate out the worst parts of the company. ...
The former national carrier was privatized in 1987. ...
But the Development Bank of Japan and other lenders want to see more drastic cuts, as well as deeper government involvement, before they lend more.
Yoshihisa Miyamoto, an analyst with Okasan Securities, said investors are becoming increasingly skeptical about JAL’s future as the carrier doesn’t seem to be able to stay afloat on its own.
“It won’t be able to stay alive as it is. It’s got to sharply downsize operations or sell off businesses in bits and pieces to other companies,” said Mr. Miyamoto.
“Our image of JAL as Japan’s national carrier no longer exists.”
Shares of JAL sank almost 18 percent to a lifetime low of ¥141 before recovering a little to end the day down 15.8 percent at ¥144.
I mean, seriously: JAL are bleeding money, at more than 15 billion USD in debt, with almost no assets to cover for it... except for some high-cost undertakings and a couple of valuable duopoly-slots at HND and NRT that will dive in value, come 2010 (if JAL can make it that far).
How much longer??
I'ld say: let it die. It's time for some real competition in the Japanese aviation market.
Fair use:
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The aviation chief already said bankruptcy is NOT an option. And what competition would it be if there's only ANA in Japan? If JAL fails, next time you will have to pay more than 1500 euros when EK screws up your reward ticket :p
BackFromAwayAndBackAwayAgain
Sep 26, 09, 9:16 pm
The aviation chief already said bankruptcy is NOT an option.
Hmm, I know. But that's exactly what the Belgian and the Swiss prime ministers and aviation chiefs were saying right up the very moment when Sabena and Swissair went under. ...
Apparently the company has enough cash to make it through the end of November. Nevertheless, I would be very careful, e.g. not booking my tickets too far in advance. And if doing so, of course use an international credit card (for fund protection) !!
Meanwhile the share price went down a further 7 procent on Friday, closing down at an all time low, going down as low as JPY130.
Maehara, however, also ruled out the option of allowing the ailing airline to go under, saying its bankruptcy "must never happen". He pledged to maintain the current order of the domestic airline industry with two major players, JAL and All Nippon Airways Co. His remarks suggest the new government's basic policy stance toward JAL's rehabilitation is not radically different from that of the previous administration.
.... man, that's not what I have been asking for... I have said they should break it up and let it die, and let some real competition enter the market... instead of "maintaining the current order of the domestic airline industry". It's not as if doing so has supported the financial well-being of both companies involved. They should never have allowed JAL to acquire JAS. I guess that was the biggest mistake in the first place. Alternatively, they can probably try to blame it on Pikachu. ...
Anyway, some further news on the demise of JAL: (all fair use)
Another JAL rehab task force launched
The transport ministry launched a new task force Friday to help Japan Airlines Corp. fundamentally revise its turnaround plan by the end of November.
The task force, which will submit an outline of the new restructuring plan by the end of October, consists of five experts on corporate restructuring, including team leader Shinjiro Takagi, a special adviser to Nomura Securities Co. and former chairman of the Industrial Revitalization Corporation of Japan.
"JAL is the main body that will create the rehabilitation plan, but we will check whether it is fair and feasible from the viewpoints of third parties, experts and ordinary citizens," Takagi said at a news conference.
The team will also send another 20 to 30 experts to examine the debts and assets of the ailing flagship carrier, which posted a record group net loss of ¥99.04 billion in the April-June quarter.
...
JAL received emergency loans in June from several financial institutions, including the government-backed Development Bank of Japan, and is obliged to submit a rehabilitation proposal to the ministry by the end of this month.
But an outline of the restructuring steps JAL has proposed so far, including the elimination of 6,800 jobs and 50 routes, is far from satisfactory, Maehara said.
"When we held a hearing with JAL, I myself had doubts about the timeline and feasibility, and the banks that have been providing financial support seemed to have the same thought," Maehara said.
JAL thus needs to revise its plan with the help of professionals and its creditor banks, Maehara said.
Under the Liberal Democratic Party-New Komeito government, the transport ministry had a different panel of private-sector experts delving into JAL's problems, but Maehara abolished the panel when he took over as minister last week.
...
The Japan Times: Saturday, Sept. 26, 2009
(C) All rights reserved
http://search.japantimes.co.jp/cgi-bin/nb20090926a2.html
Japan Air to Be Reorganized by Government, Avoid Bankruptcy
Sept. 25 (Bloomberg) -- Japan Airlines Corp., seeking a fourth state bailout since 2001, will be reorganized under a government plan designed to avert a bankruptcy at the nation’s largest carrier.
A government-appointed panel will draft a new turnaround plan by the end of next month after officials snubbed a JAL proposal that Transport Minister Seiji Maehara said didn’t include enough cost-cutting or fundraising.
“The question is whether the restructuring plan is realistic,” Prime Minister Yukio Hatoyama said at a Group of 20 meeting in Pittsburgh. “I want to see with my own eyes whether they can really carry out a plan that cuts personnel costs.”
The airline tumbled for a second day in Tokyo trading on concerns it will be broken up or forced to sell new shares under government plans. JAL wants to buy time to secure an investment from American Airlines or Delta Air Lines Inc., cut staff and axe the most routes in its history.
“If JAL is split up, current shareholders will lose their place”, said Mitsushige Akino, who oversees the equivalent of $656 million at Ichiyoshi Investment Management Co. “More funds without drastic restructuring won’t solve the problems anyway. The best way is to just let JAL collapse”.
...
The carrier, which is planning to eliminate 6,800 jobs by 2011, has enough cash to get through December, Maehara said.
...
Bankruptcy is unlikely to be part of the restructuring plans, Hatoyama said. “We don’t want it to go that way,” he said. The prime minister added that he wants to make a decision on JAL’s request for funding “soon.”
‘Bit Embarrassing’
Hatoyama may back a deal to save Japan from the loss of face suffered by Switzerland and Belgium when Swissair and Sabena SA collapsed in 2001.
“It’s always a bit embarrassing for a flag carrier” to be struggling, said Keith McMullan, managing director of London-based Aviation Economics, a consulting company. “It’s almost inevitable that Japan Air will have to get bailed out.”
The carrier fell 7.6 percent to 133 yen today in Tokyo after tumbling a record 16 percent yesterday.
The airline may need to raise 150 billion yen ($1.7 billion) in capital by the end of November, Nikkei English News said today, without citing anyone. A further 100 billion yen may be needed by March 31 to continue operating, the report said.
In June, the carrier received a 100 billion yen loan from state-owned Development Bank of Japan, Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc.
JAL had total liabilities of 1.5 trillion yen as of June 30, according to an Aug. 7 statement. The airline may collapse unless it shrinks operations, reforms its high-cost structure and regains lenders’ confidence, Maehara said on Sept. 17.
...
To contact the reporter on this story: Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net; Sachiko Sakamaki in Tokyo at ssakamaki1@bloomberg.net
Last Updated: September 25, 2009 03:53 EDT
http://www.bloomberg.com/apps/news?pid=20601209&sid=a9yE0QzoQi6E
Can reform help Japan Airlines soar again?
Stanley Kubrick's film "2001: A Space Odyssey," features space planes operated by Pan American World Airways (Pan Am). At the time the film came out in 1968, Pan Am was the United States' flag carrier.
For Japanese living at a time when overseas travel was something people admired, the Pan Am logo was a symbol of American affluence. But by 2001, the airline had already disappeared. The carrier collapsed in 1991, and the brand name alone was carried on by another company.
It was the debt that emerged in the 1970s that claimed the life of Pan Am, which had dominated the world's skies against a background of American power and prosperity. After the collapse, the United States was described as a country without a flag carrier. It is a rule of the market economy that if a company loses out to competition, then it will disappear, even if is an airline representing a great country.
Japan Airlines was born shouldering the earnest desire of Japanese in the postwar period to once again take to the skies. The airline was semi-private until 1987, when it became fully privatized. But for Japan Airlines, being a flag carrier appeared to have meant that it relied on the government to foot the bill, and the airline's chronic deficits brought on by high costs were preserved.
In addressing the issue of Japan Airlines' financial reconstruction, Minister of Land, Infrastructure, Transport and Tourism Seiji Maehara scrapped a panel of experts set up by the former government administration and set up a new team of specialists to consider how to revitalize the airline's business. The team will lead Japan Airline's business plans, and is set to outline the framework in about a month.
As a flag carrier under politics of the past, Japan Airlines was saddled with such burdens as being made to fly on unprofitable routes due to the construction of regional airports. Will the change of government administration open the way to revival and independence for Japan Airlines? It is not only the directors of futuristic films who are watching the situation.
("Yoroku," a front-page column in the Mainichi Shimbun)
Struggling Japan Airlines Corp. could receive a much-needed injection of public funds through a new corporate rehabilitation agency to be set up by the government, sources said.
If the carrier receives public money through the Enterprise Turnaround Initiative Corp. of Japan, a new management team will be called in to replace current executives in return for funding.
JAL President Haruka Nishimatsu told transport minister Seiji Maehara on Thursday that the company plans to seek public funds under the revised Industrial Revitalization Law.
Maehara is cautious about applying this law, however, because it does not require JAL to clarify its management responsibilities in exchange for receiving public funds.
However, Maehara is also wary of having JAL file for bankruptcy under the Civil Rehabilitation Law or undertake similar procedures.
If the government injects public funds through the Enterprise Turnaround Initiative Corp. of Japan, JAL would be able to avoid bankruptcy and work toward rehabilitation under a new management team.
In addition, the agency is expected to make it easier for JAL to handle complex pension liabilities and liabilities for unions.
The corporate rehabilitation agency, to be funded by the public and private sectors, will start operations in early October.
It is the successor of the Industrial Revitalization Corp., which was disbanded in March 2007 after assisting rehabilitation of such companies as retailer Daiei Inc. and cosmetics manufacturer Kanebo Inc.
...
Maehara said Thursday he would not approve JAL's plan in its current form, calling it unfeasible.
"JAL's reconstruction plan is hidebound by past practices," he told a news conference. "I expect experts without such constraints to put together a new plan from scratch."
Prime Minister Yukio Hatoyama also told reporters Friday in the United States that his government must examine whether JAL's reconstruction plan is realistic.
The JAL rehabilitation task force is expected to outline a new plan by late October and finalize it by the end of November.
Four of the five members served on the former Industrial Revitalization Corp., including Shinjiro Takagi and Kazuhiko Toyama.
At a news conference Friday after the team's first meeting, Takagi, who leads the task force, said JAL's management team may be reshuffled.
However, Takagi said he believed JAL would not have to file for bankruptcy.
If JAL fails to come up with a convincing reconstruction plan under the guidance of the task force, the government is expected to instead consider handing responsibility to the Enterprise Turnaround Initiative Corp. of Japan, the sources said.
(IHT/Asahi: September 26,2009)
http://www.asahi.com/english/Herald-asahi/TKY200909260056.html
.
Flyingfox
Oct 14, 09, 10:50 pm
sniff sniff..........I hope they stay afloat!
maeharasmuse
Oct 15, 09, 2:35 am
Share price is down more than 10% today, hitting a low of 111.00 JPY.
.
JALPak
Oct 15, 09, 9:34 am
Share price is down more than 10% today, hitting a low of 111.00 JPY.
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Cuz the market worries the creditors won't be as forgiving as JAL wish and won't waive part of its debt
maeharasmuse
Oct 15, 09, 9:47 pm
Cuz the market worries the creditors won't be as forgiving as JAL wish and won't waive part of its debt
Oh Oh Oh !!!
Share price just lost another 10% in heavy trading, hitting a new low of 100 JPY.
How low can you go??
(fair use)
Japan Air Falls to 7-Year Low on Report It May Not Sell Assets
By Chris Cooper and Kiyotaka Matsuda
Oct. 16 (Bloomberg) -- Japan Airlines Corp., seeking its fourth state bailout since 2001, fell to the lowest in seven years in Tokyo trading after Kyodo News said the carrier may drop a plan to sell a stake in JALways Co.
The airline declined for a fourth day, slumping as much as 11 percent to 101 yen as of 9:43 a.m. JAL had forecast a profit of 90 billion yen ($992 million) from the sale of stakes in the resort-focused carrier and other units, according to Kyodo.
JAL has plunged 40 percent in the past month after Prime Minister Yukio Hatoyama’s new government took office and rejected a turnaround plan drawn up by the carrier. The airline is now working with a state-appointed panel on a new restructuring program and seeking help from lenders.
“The future of JAL is uncertain and so investors are selling,” said Satoshi Yuzaki, a section manager at Takagi Securities in Tokyo. “It seems like it will be difficult to get the support of banks.”
JAL may hold on to JALways if it is able to win support from financial institutions, Kyodo said. Taro Namba, a JAL spokesman, declined to comment on the report.
The Tokyo-based airline predicts a loss of 63 billion yen this fiscal year as a global recession causes a slump in demand for air travel. President Haruka Nishimatsu has already said the airline will cut 6,800 jobs and have the biggest-ever reduction in its network of routes.
To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net
Share price just lost another 10% in heavy trading, hitting a new low of 100 JPY.
How low can you go??
(fair use)
.
I don't know why it is bad for JAL to hold on to JALways. If they have enough funding why not keep it and operate resort flights at a lower cost.
It's time to buy some JAL stocks :p
maeharasmuse
Oct 16, 09, 2:36 am
It's time to buy some JAL stocks :p
Stock first went down to 100 JPY, then ended Friday's session at 119 JPY.
I hope you bought yourself some stock when you said you would/should: you would have made quite some money in only a cple of hours.
Anyway, I believe that is quite a lot of volatility for a TOPIX stock, company is far from out of the woods. Who knows what will happen next??
And 119 JPY isn't even where they started the session on Thursday... :eek:
Maybe now is the time to sell your JAL stocks ??
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JALPak
Oct 16, 09, 2:58 am
Stock first went down to 100 JPY, then ended Friday's session at 119 JPY.
I hope you bought yourself some stock when you said you would/should: you would have made quite some money in only a cple of hours.
Anyway, I believe that is quite a lot of volatility for a TOPIX stock, company is far from out of the woods. Who knows what will happen next??
And 119 JPY isn't even where they started the session on Thursday... :eek:
Maybe now is the time to sell your JAL stocks ??
.
This should be a long term investment ;) Not to mention shareholders get domestic ticket discounts :D
maeharasmuse
Oct 18, 09, 2:02 am
This should be a long term investment ;)
Is now beginning to look like the banks want to liquidate the company (i.e. the present shareholders) after all...
Watch out for what happens to the share price when market opens on Monday!!
(fair use)
Japan Air Plan to Be Rejected by Biggest Banks, Nikkei Reports
Oct. 18 (Bloomberg) -- Japan’s three largest banks have decided to reject the Transport Ministry’s rehabilitation plan for their loan customer Japan Airlines Corp., the Nikkei newspaper reported.
Mitsubishi UFJ Financial Group Inc., Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. have determined that the plan “lacks a robust business strategy” and doesn’t resolve uncertainty about public fund injections and debt guarantees, the Nikkei reported, without saying where it got the information.
The Ministry of Finance and the Development Bank of Japan have also said the restructuring plan may not be feasible, Nikkei English News reported yesterday, without saying where it got the information.
A task force set up by Transport Minister Seiji Maehara to rescue Japan Airlines may use a quasi-public agency to restructure the Tokyo-based carrier, the Sankei newspaper reported, without saying where it got the information. The Enterprise Turnaround Initiative Corp. of Japan may use public funds to take a majority stake in the airline, the Sankei said.
Masako Shiono, a spokeswoman for Mizuho, declined to comment. Spokespeople for Mitsubishi UFJ and Sumitomo Mitsui didn’t answer calls to their mobile phones, and a spokesman for Japan Airlines wasn’t available to comment.
To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net
Last Updated: October 18, 2009 01:41 EDT
Struggling Japan Airlines is seeking a tie-up with low-cost carriers for its Asian operations, a Japanese news report says.
JAL, looking for another public bailout to keep flying, is putting together an emergency turnaround plan under the supervision of a government taskforce.
In its cost-cutting efforts, JAL will expand code-sharing operations with budget carriers in Asia, replacing its less profitable flights for tourist destinations, such as Hawaii, Thailand and Indonesia, the Asahi daily reported on Saturday.
The move would enable JAL to focus on more profitable business flights to North America, Europe and China, the daily said without citing sources.
Asia's largest carrier, which lost more than $US1 billion ($A1.09 billion) in the April-June quarter, announced last month plans for 6,800 job cuts, a drastic reduction in routes and a tie-up with a foreign carrier.
But the new centre-left government said the measures were insufficient and was refraining from granting another injection of public funds.
Under a new turnaround plan to be unveiled later this month, JAL is expected to seek 9,000 job cuts and a debt waiver from creditors of Y250 billion ($A2.99 billion), as well as the departure of president Haruka Nishimatsu.
Japan Air Has Record Weekly Drop; S&P Cuts Rating (Update1)
Oct. 16 (Bloomberg) -- Japan Airlines Corp., seeking its fourth state bailout since 2001, completed a record weekly drop in Tokyo trading and was downgraded two levels by Standard & Poor’s on concern it may issue new shares to pare debts.
The airline, known as JAL, fell 11 percent for a second day to close at 101 yen, extending losses for the week to 26 percent. S&P cut its long-term debt rating to B-, six grades below investment level. Moody’s Investors Service also downgraded a unit of the carrier.
A government-appointed panel restructuring JAL may seek debt forgiveness from banks and debt-for-equity swaps or, possibly, bankruptcy, according to S&P. JAL may also scrap plans to sell stakes in units including leisure carrier JALways Co., from which it expected to raise a 90 billion yen ($990 million) profit, Kyodo said late yesterday.
“The future of JAL is uncertain and so investors are selling,” said Satoshi Yuzaki, a section manager at Takagi Securities in Tokyo. “It seems like it will be difficult to get the support of banks.”
The carrier may hold on to the stakes in JALways and other units if it can win support from financial institutions, Kyodo reported, with saying where it got the information. Taro Namba, a Japan Air spokesman, declined to comment.
Shares Plunge
JAL has plunged 40 percent in a month since new Prime Minister Yukio Hatoyama’s government rejected an in-house turnaround plan drawn up following a collapse in international travel demand.
The state-appointed restructuring panel may propose “drastic measures” to restore JAL to profit, Moody’s said. The ratings company, which doesn’t cover Tokyo-based JAL directly, cut Japan Airlines International Co. to B1, four grades below investment level, on concerns about support from the government and lenders for the parent company. The unit may be downgraded further, it added.
JAL predicts a loss of 63 billion yen this fiscal year as a global recession hammers demand for air travel. President Haruka Nishimatsu has said the airline will shed 6,800 jobs and carry out record cuts in its network to pare costs.
To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net
Last Updated: October 16, 2009 05:19 EDT
Watch out for what happens to the share price when market opens on Monday!!
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Yup! JAL jumps 11% to 112 yen :D One rumor pushes down the stock price another one pushes it back up. The latest one is about using public funds to buy a majority stake in JAL :)
But JAL gained 11.0% to Y112.00, even as doubts continued about its restructuring plan. The Nikkei reported in its Sunday edition that the three megabanks that had lent heavily to JAL had decided the Transport Ministry's rehabilitation plan was unacceptable, though the Sankei Shimbun said on the weekend the government was set to now bail the carrier out.
JALPak
Oct 19, 09, 4:55 am
I hope you bought yourself some stock when you said you would/should: you would have made quite some money in only a cple of hours.
Just to clarify, I did not buy any JAL stock. I was just kidding when I said it's time to buy :p
WSJ warns investors that JAL shares may be diluted which I think is fair. If JAL employees, creditors, and retirees have to take a hit, its shareholders shouldn't be left alone.
This is risky. If the government does take a hard line, investments in JAL could be difficult to recover.
Back in 2004 the IRCJ said that Daiei shareholders would be "substantially diluted." That's an understatement, and something to which buyers of JAL shares should pay heed.