Bankrupt JAL scrambles to reassure passengers

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TOKYO: Japan Airlines sought to reassure the travelling public yesterday that it will keep flying despite declaring bankruptcy as its share price dropped to a new record low of just two US cents.

JAL ASSURANCE: Passengers checking in at the Japan Airline counter in the Haneda International airport in Tokyo yesterday. Japan Airlines sought to reassure the travelling public that it will keep flying despite declaring bankruptcy as its share price dropped to a new record low of just two US cents. — AFP photo

JAL ASSURANCE: Passengers checking in at the Japan Airline counter in the Haneda International airport in Tokyo yesterday. Japan Airlines sought to reassure the travelling public that it will keep flying despite declaring bankruptcy as its share price dropped to a new record low of just two US cents. — AFP photo

The debt-laden carrier apologised in full-page newspaper advertisements for causing “tremendous worries to customers” and promised that “JAL will keep flying” and that passengers’ air miles will remain valid.

“Please be reassured and use us as before,” the company pleaded.

The once iconic airline, a symbol of Japan’s rise to prosperity, filed for bankruptcy protection Tuesday with US$26 billion in debt in the country’s biggest post-war corporate failure outside the financial sector.

It is set to undergo a painful overhaul under a new corporate chief, with more than 15,600 jobs to be cut, reducing the workforce by a third, and many loss-making routes expected to be slashed.

JAL, which carries more than 50 million passengers a year, is set to receive almost US$10 billion in public funds and emergency loans under a three-year turnaround plan.

Cabin crew have changed their inflight announcements, now promising passengers that the airline is “striving for an early revival.”

“We ask for your continued patronage of the JAL group,” a cabin attendant said in a choked voice as she rehearsed the announcement before television cameras at a meeting at Tokyo’s Haneda airport.

The Tokyo Stock Exchange will delist JAL shares by Feb  20, a move expected to wipe out shareholders’ investments.

JAL shares closed at a new record low of two yen (two US cents), down three yen or 60 per cent from Tuesday. The price could theoretically fall to a rock-bottom one yen.

“There are still people who are trading JAL, including those who are enjoying a one-month game, with the downside risk limited to one yen,” said Hideyuki Higashi, a strategist at SMBC Friend Securities.

The company has made no announcement regarding its tie-up talks with American and Delta Air Lines, which are in a bidding war for a slice of the carrier, eyeing its lucrative Asian landing slots.

JAL is understood to prefer switching its alliance from the American Airlines-led Oneworld grouping to SkyTeam with Delta. But it is expected to take some time for JAL and Delta to clear anti-trust hurdles.

The government has tapped Kazuo Inamori, a 77-year-old entrepreneur and ordained Buddhist monk, to run the stricken airline during its overhaul, replacing Haruka Nishimatsu, who resigned as president Tuesday.

JAL’s woes, analysts said, are the result of years of bad management, high costs stretching back to its days as a state-owned flag carrier as well as government pressure to service unprofitable routes to small domestic airports.

JAL was also hit particularly hard by the global economic downturn because it has a bigger network of overseas flights than its smaller rival All Nippon Airways, which was supported by relatively stable demand on domestic routes. — AFP