TOKYO, Jan. 19 (Xinhua) -- Japan's top carrier, Japan Airlines Corporation (JAL), formally filed for bankruptcy protection on Tuesday, paving the way for state-led restructuring.
JAL filed for bankruptcy protection with the Tokyo District Court, with its liabilities, including those of group firms totaling 2.32 trillion yen (25.8 billion U.S. dollars), the largest ever loss by a Japanese nonfinancial business.
The Tokyo Stock Exchange said JAL shares will be delisted from its First Section from Feb. 20, through 100 percent equity reduction. Shares in the carrier dropped to a record low of 3 yen at one point during trade on Tuesday.
The Japanese government said in a statement it will seek "the understanding and cooperation of foreign governments" to enable JAL to continue its flight operations and implement its rehabilitation program.
Asia's largest carrier in terms of revenue will continue its operations under the sponsored support of the state-backed Enterprise Turnaround Initiative Corporation of Japan (ETIC), who will seek through wholesale restructuring procedures, to free itself from the burdening constraints of its crippling debt.
The rehabilitation plan will involve the ETIC injecting 300 billion yen (3.3 billion U.S. dollars) of fresh funds into the struggling carrier and creditor banks and other financial institutions have been asked to waive about 350 billion yen in liabilities to help eat away at JAL's debt.
Additionally the Japanese government is preparing at least 900 billion yen in new equity and credit lines to keep the airline operating while in bankruptcy.
According to sources briefed on JAL's financial situation, the financial estimate of the restructuring charges combined with the foreseen operating losses amount to a 265 billion yen loss for the year to March 30, compared with a 51 billion yen marked in the previous year.
The state-led rehabilitation plan is largely expected to slash the number of JAL's subsidiaries by around 50 percent and around 15,700 jobs, roughly 30 percent of its group workforce, will be cut by the business year through March 2013, according to sources with knowledge of the matter.
Additionally the firm will dispense with 53 aged, fuel- inefficient 747 liners, in favor of 33 more cost-effective smaller jets and a number of superfluous and domestic and international routes are to be discontinued, in light of falling patronage and rising fuel costs.
JAL President, Haruka Nishimatsu, is to retire his post to the founder of Kyocera Corporation, Kazuo Inamori, well-renown for his entrepreneurial spirit and previous record of turning around stricken organizations. An official announcement on the matter will be made pending confirmation by the turnaround body, sources close to the matter said.
JAL was once seen as a national symbol of Japan's postwar boom, as it transformed a handful of leased planes in 1951 into a nearly 50,000 staff mega-carrier, with a fleet of almost 280 aircraft, but since 2001 the carrier has struck three previous rescue deals with its banks and the government.
The carrier has been hit with irreconcilable issues of safety, including a fatal crash in 1995, as well as failings stemming from government bureaucracy and a flawed corporate structure that allowed for overly-generous pensions and benefits for its employees.
The Japanese government, however, is fully backing JAL's restructuring plans and is urging the public to continue their support of the carrier, claiming that the disruptions will be minimal.
"What's most important is that all people who are working (for the airline) devote all their energies toward its restructuring," Prime Minister Yukio Hatoyama told reporters after the company filed for bankruptcy protection.
"On that premise, the government will support their efforts" so that people can fly on a JAL plane whenever they wish to do so, the premier said.
"The airline business is crucial for people's lives as well as economic activities. We'll strive to stave off any problems that may hamper JAL's operation," said Masayuki Naoshima, Japan's Minister of Economy, Trade and Industry, to the press on Tuesday.
Seiji Maehara, Japan's Land, Infrastructure, Transport and Tourism Minister, added that, "the reconstruction must ensure that JAL will continue its 'safe operation', the government is ready to announce its full support for the airline after the ETIC formally decides to rescue JAL". (1 U.S. dollar = 90.45 Japanese yen)
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