JAL Emerges from Court-Led Rehabilitation Process

Tokyo, March 28 (Jiji Press)--Japan Airlines completed its corporate rehabilitation process on Monday, emerging from court supervision 14 months after its bankruptcy filing in January last year.
The end of the process does not mean JAL's full resurrection, said Hideo Seto, chairman of the decision-making committee of Enterprise Turnaround Initiative Corp. of Japan.
It remains to be tested whether the carrier has really established an efficient management structure, he told a press conference.
JAL took out 255 billion yen in new loans from the government-owned Development Bank of Japan and other lenders and used the funds to repay all liabilities left by the bankruptcy.
Eight companies, including Daiwa Securities Group Inc. <8601> and Kyocera Corp. <6971>, newly invested 12.7 billion yen in JAL to add to the capital infused by government-backed ETIC, the bankruptcy administrator, and others.
JAL has taken drastic restructuring measures including the abolition of domestic and international passenger flight services on a total of 45 loss-making routes during the second half of fiscal 2010, which ends on Thursday.
Furthermore, the firm slashed 16,000 jobs, including 165 employees forcibly dismissed.
Thanks to the restructuring steps, the firm enjoyed a consolidated operating profit of 174.9 billion yen for the 11 months through February this year. It is expected to log a record operating profit at the end of the business year.
JAL hopes to return to the stock market in 2012, in order to repay 350 billion yen in public funds used for its recapitalization.
But the company faces negative factors. Particularly, the number of foreign visitors to Japan is falling due to the March 11 earthquake and tsunami as well as to the subsequent radiation leak accident at Tokyo Electric Power Co.'s <9501> Fukushima No. 1 nuclear power plant.
Demand for the firm's international and domestic flights has fallen 20 pct below an estimate since the disaster devastated northeastern Japan, JAL officials said.
JAL Chairman Kazuo Inamori said his firm will respond to those negative developments by carefully analyzing route-by-route profitability.