This is a good question. For the novice: modern accounting (US GAAP, or Internation IFRs with IFRIC13 being the relevant rule) require airline to capitalize as debt their FFP obligations, valuing the miles at the cost of the award tickets to be issued in the future. The cost must be a fair value cost (such as some average fare or the price at which such awards can be sold) rather than a marginal cost. See:
http://www.kpmg.ch/docs/200803_Faste..._Seatbelts.pdf

All major airlines in the world have done it either because IFRs have been adopted as accounting rules by most countries or on a voluntary basis. Typically the FFP is a debt of several billion US$ on the balance sheet.
Wonder if JAL did it or whether FFP liability does not show on the books. Anyone knows?

If it did, that is a debt that can be easily reduced by reducing FFP benefits (AF/KL did it last year). If it did not, then the balance sheet is even worse than reported. In both cases, the JMB miles are at serious risk.
If I had significant amount of JMB miles, I would quickly book and issue an award ticket on another OW airline. Once the ticket is issued by the other airline it should not matter if JAL goes bankrupt.

I wouldn't be so sure , if you are using JMB miles wouldn't the ticket be issued by JL on JL stock ? I am not sure that other OW carriers would be obligated to accept JL tickets if they went under .

If indeed the ticket is issued on JL stock rather than the other airline stock, then you are not protected.

So the bright idea is to fly on JL with other airlines' miles. You get a nice flight if everything works out and you can get the miles back or use them elsewhere if things go bad.

(and no one has said a thing about what happens to the JL subsidiaries that aren't fully owned by them if the whole thing collapses- RAC and JTA, for instance)

Well the Saga is about to get interesting again....
http://atwonline.com/aeropolitics-re...loans-jal-0702
Oh My..... They should have filed bankruptcy sooner and gone for more massive cost cutting move...

deleted

They are putting the food service company on the block.....

The JAL's fall began already in 1987, the year the company fully privitized.
They managed the company like a government subsidy.
The privitized company was managed by ex-government officials old boys network. No wonder the company could not managed efficiently.
Like in many problems in Japan, it's the politics stupid.
Too close interreelationship between the corporations and the government & LDP.
They know the problem, but no one is willing to take an initiative.
That is what made the fall of JAL possible.

JAL to sell 1/3 of it's fleet.....
 

Article has its numbers wrong. 41 B747s. JAL doesn't even have that many.

According to wikipedia, that would be the approximate number of their passenger + freight 747s.

http://en.wikipedia.org/wiki/Japan_Airlines#Fleet

(which is just to add fuel to the fire -- I am not saying wikipedia is right).

Not that I care but airfleets is pretty accurate with their numbers!

http://www.airfleets.net/ageflotte/Japan%20Airlines.htm
http://www.airfleets.net/flottecie/Japan%20Airlines.htm

As of March 31 2010, JAL had 42 747.

http://www.jal.com/en/corporate/gaiyo/flight.html

Since then, JAL has at least delivered ONE 747-400 (JA8922, http://www.flyertalk.com/forum/13977368-post56.html) to its buyer

Maybe they are including the 747's already stored/sold?

It does.