Guppy10

Apologies if this is covered elsewhere, searched and can't see anything obvious...

Given the media coverage of JAL's potentially looming bankruptcy and that they've got partial rescue offers from AA (which includes a condition that JAL remain in OneWorld) and Delta, which want it to join SkyTeam, what does it all mean for BA?

I recall reading something that one of the senior execs from BA had been having talks in Tokyo about the situation recently too.

What do the potentially different scenarios mean for BA? Would JAL leaving OneWorld really be that bad for BA?

DavidJBell

My guess is that, for BA, JAL leaving won't be that big a deal. BA's home continent is europe, so it is more interested in taking people from europe to somewhere in Asia (vv), without having to use a partner as BA's coverage is quite extensive.

It's more of an issue with AA, as they don't have any real flights to Asia (their main market is europe and central/south america), so AA are very reliant on JAL/CX for getting their passengers to asian cities. So much so that AA has offered JAL all of its tokyo bound (trans-pacific) passengers as part of the deal, if I remember rightly from a news article. I think, for the same reasons, that is why Delta are keen on JAL.

TTL

AY will profit from the UK to HEL to Nagoya, Narita, and Osaka. In case they will get the package handlers working again...

bazzatel

This is highly debatable if you are talking about BA metal to N and SE Asia.

BKK, SIN, NRT, PEK, HKG and PVG are all you get on BA. Granted this is more than AA, but nowhere near LH/LX or AF/KL.

That being said, I think BA use CX codehsares more than JL for intra-asian connect pax.

Raffles

Someone at BA thinks otherwise, as BA is talking about giving up some precious BA Heathrow slots to JAL as part of a rescue package. BA wouldn't be giving up its crown jewels if it wasn't worried about the consequences.

BAHumbug

I would guess BA (and AA) are also worried about the perception of OneWorld as a brand if JAL were to exit and end up with SkyTeam.

BAH

CXBA

LH and AF have roughly the same number of direct routes than BA in Asia, but they can rely more on other alliance members, while as you noticed BA is using CX (not even for KA) for their connections. Losing JL (and that is far from a given in my opinion) would not alter the situation much in the present. Anyway as many and many times pointed out in the forum OW needs to quickly change its main focus from transatlantic to far eastern one, and keeping JL in the fold is only a step.

johnny5a

I think Japan is big market, as you know Japanese love travelling. So I think OneWorld presence in Japan is an important one.

Though I think they should be tapping the Chinese market which is even bigger!

allthebestnameshavegone

JAL’s kamikaze bankruptcy
Posted by Gwen Robinson on Jan 19 09:13. 2 comments.

It gives new meaning to the word kamikaze… In a move that the FT attributed on Tuesday to “self-inflicted wounds”, Japan Airlines formally nosedived into bankruptcy on Tuesday, filing with the Tokyo District Court for a court-led restructuring.

From Bloomberg:

The carrier, founded in 1951, will restructure following a 131 billion yen first-half loss on plunging global travel and domestic competition from All Nippon Airways Co. and bullet trains. Prime Minister Yukio Hatoyama’s four-month-old government is ending unconditional support after the nation’s flag carrier received four state bailouts in nine years.

“JAL’s culture is all about the interests of stakeholders, and bankruptcy is the only way to solve this,” Mitsushige Akino, who oversees about $450 million in assets at Tokyo-based Ichiyoshi Investment Management Co., said before the filing. “JAL has received capital so many times for so many years, but it’s still failed.”

Enterprise Turnaround Initiative Corp. of Japan, a state- affiliated fund, previously said turnaround plans included continuing to pay vendors and aircraft lessors, as well as maintaining the carrier’s frequent-flyer program.

As the FT reported, the airline will cut 15,700 jobs, or a third of its workforce, under a radical restructuring plan drawn up as part of its bankruptcy filing and announce the sale or closure of half the group’s subsidiaries, of which there are almost 100, in a move aimed at raising cash and cutting operating costs by 25 per cent.

The measures are aimed at returning the troubled Japanese flag carrier within two years.

The Wall Street Journal added that under JAL’s revamp plans, the carrier will reduce its capital to zero and ask for a debt-waiver worth Y730bn on a group basis. The government-backed investment fund will inject Y300bn into the airline to prop up the ailing carrier’s finances and help it carry out restructuring measures.

The knock-on effects will be substantial, as we noted last week.

But among the real losers from JAL are the myriad small businesses that supply and service the airline, which according to a new report by Tokyo Shoko Research are going to be very hard hit. Not only that, here’s a revealing list from Reuters of the major shareholders and creditors.

Then there are all JAL’s fuel hedges – considerable for what was until recently Asia’s biggest airline by market cap. Reuters, quoting a source familiar with the matter, reports on Tuesday that about Y40bn ($441m) of JAL’s fuel hedges, mostly in Brent forward contracts, is estimated to be exposed in the event of an automatic termination of hedging contracts.

Meanwhile, as Bloomberg reported, JAL’s bonds plunged and yields soared ahead of the bankruptcy filing.

It all makes what would otherwise be a rather cute pronouncement by Japan’s new finance minister, Naoto Kan, on Tuesday look a little – err, frivolous. As Bloomberg stated:

Japanese Finance Minister Naoto Kan wants his staff to set an example for the bureaucracy by working shorter days and having more time for dates.

Kan created a panel to examine ways to improve employment conditions, including “establishing a work environment where people can date on weeknights,” the ministry said in a statement today.

With priorities like these, no wonder some problems in Japan – apart from bureaucratic stress – fester and finally explode.