Forbes has announced that Japan Airlines filed for bankruptcy Tuesday in one of the nation’s largest corporate failures, entering a restructuring from which it seeks to emerge leaner, smarter and free of crippling debt. Asia’s biggest carrier by revenue, staggering under a $25.6 billion debt mountain, applied for protection from creditors under the Corporate Rehabilitation Law – Japan’s version of Chapter 11 – with the Tokyo District Court.
The airline, known as JAL, will slash nearly 16,000 jobs, cut routes and shift to more fuel-efficient aircraft as part of its restructuring. Government cash will keep JAL’s planes in the air during the reorganization. Its shares will be removed from the Tokyo Stock Exchange.
There was no immediate word on the outcome of a fierce tug-of-war between Delta Air Lines and American Airlines for a slice of JAL’s business. Despite its woes, the airline’s access to Asia is a mouthwatering prize for foreign airlines. A state-backed turnaround agency said it had decided to assist with the reorganization and pledged to offer the money-losing airline “sufficient funding” during the process. The transport ministry also said in a statement the government would offer “necessary support” without giving details
“The aviation industry faces serious uncertainty, and that is another reason we have to move forward on concrete restructuring for JAL,” Transport Minister Seiji Maehara told reporters.