ANA's Windfall Expansion

ANA Takes All of Narita Increased Flights
December 25, 2009


Ministry of Land and Transport is going to give almost all of new capacity of flights for Japanese carriers at Narita to All Nippon Airways (ANA) when Narita will add 20,000 international flights annually in March 2010. This will be formally decided in next January. JAL, under corporate rehabilitation, apparently did not request its dividend as the ailing carrier is still in the process of air routes reduction. ANA will expand its international network especially in Asia Pacific region.

Currently ANA operates 26,000 flights annually at Narita while JAL has 47,000. In accordance with extension of one of runways due in March 2010, Narta's capacity to handle flights will increased to 220,000 flights from current 200 thousand.

The Ministry was accepting requests from both JAL and ANA but JAL did not and consequently ANA will be given almost of all increased capacity.

JAL, in its corporate rehabilitation plans, will reduce 21 air routes by the end of March 2012 and the carrier is more likely to fly less from Narita. ANA wants a fair distribution of newly available slots as a result of JAL withdrawal and it may lead to more flights of ANA.

Traditionally JAL had a leading edge to ANA in international flights. The gap may be shrunken as ANA will increase its international service at Narita as well at Haneda where airport expansion is also coming to its completion.

JAL's Former Presidents Are Requested to Pay Back Their Retirement Pays

from Yomiuri Online
19 December 2009

Japan Airlines, in the process of business rehabilitation under public control, are requesting a total of six former presidents to return a part of their rewards as they had received at their retirement.

The current management of the company, before starting formal process to slash corporate pension for retired employees, seemingly reached to a decision to clarify responsibility of past management decisions that consequently led to today's crisis. The company official acknowledged all of them agreed to return their rewards.

The six persons served as presidents of JAL as well as JAL International or JAL Japan, major subsidiary companies, and total amount of repayment may reach to millions of yen.

In the meantime, JAL decided to announce its revision plans of corporate pension scheme where retirees would receive average 30% less while current employees would receive 50% less than present level as they retire on December 18. The company will send letters to all of applicable retirees and employees at early next week to explain how much cut they will see in new plans and asking them to reply if they accept the plans by January 12.

JAL's preliminary survey showed 65% of retirees replied that they would accept the plans but the revision of corporate pension scheme calls for more than two thirds of all of relevant retirees and employees and the chance to adopt the new plans is not certain.

At briefing sessions held by JAL at various cities, there were many opinions from JAL retirees asking current president as well as its former management officers to take responsibility for past mismanagement of the company.

Japan-US Open Sky Agreed: 8 Haneda - US Flights Daily Possible

from Yomiuri Shimbun 12 December 2009

Washington D.C. - Bilateral aviation talks between governments of Japan and USA has reached agreement in the evening of 11th local time or afternoon of 12th by Japan standard time.

(Diagram showing Haneda's new expansion plan with a new runway and international terminal all built on the sea)

'Open Sky accord' will be formally signed by October 2010 and airlines of the both countries would be able to start new air routes freely in principle. This may affect the course of corporate rehabilitation of ailing Japan Airlines.

The two governments agreed comprehensively in the following points: 1) by signing open sky accord, they will apply ATI status, or exemption of US anti-trust law to airlines of the two countries 2) to start daily flights as many as eight in midnight or early morning time zones from/to Tokyo's Haneda Airport, closer to the central part of Tokyo, that will complete its expansion work in October 2010 and 3) to reduce slots held by US carriers at Narita from the current share of 28% to 25% in March 2010 and lower level subsequently.

Tokyo's two international airports, Haneda and Narita, will have no vacant slots even after signing of Open Sky and it is expected to see new airlines, including low cost carriers, start operation from/to Kasai or Chubu airports that have more slots to be used.

United Airlines with alliance with ANA and Delta as well as American Airlines, both in talks with capital/operational tie-up with Japan Airlines are reportedly in preparation of ATI application.

ANA's October Performance: Internatinal Flights Grew by 8.1% while Domestic Passengers Down 12.6%

from Reuter, 8 December　2009

All Nippon Airways (ANA) has released its group-wide performance in October showing a total of 364,726 passengers or 8.1% increase over the same period of the last year, makirng three-month consecutive growth over the last year. This good performance can be attributed to shorter distance tourism from Japan to such destinations as Thailand and Korea. On the other hand, its domestic operations in October showed 3.419 million passengers system wide or 12.6% fewer than the same month of the last year. ANA's domestic passengers decreased 25-month consecutively with its drop in October was larger than September due to increased cancelled flights by a typhoon.

Editor's note: ANA's stock price at Tokyo Stock Exchange was 251 yen per stock as of December 9.

Government mulls ¥700 billion in credit guarantees for JAL

from Japan Times internet edition 6 December 2009

The Japanese government is considering extending credit guarantees worth up to ¥700 billion on loans and investments from financial institutions to struggling Japan Airlines Corp. to shield the carrier from a possible cash shortage.

Standard & Poors Rates JAL as Lowest

From Mainichi Shimbun, 2 December

Standard & Poors lowered the rating of Japan Airlines from CC to SD, the lowest classification and meaning selective default on December 2.

The credit- rating company has explained that JAL had a case for default by the definition of the company on November 30.

JAL applied for corporate rehabilitation ADR (Alternative Dispute Resolution) to suspend its debt payment temporarily on November 13 until it gets a full support from Enerprise Turnaround Initiative Corporation of Japan. S&P will give a new rating to JAL upon analyzing the company's debt-paying ability.

Editor's note: JAL stock price was closed as 92 yen per share, no change from the previous day at Tokyo Stock Exchange on 3 December (Japan time).

Airports, Maveric Governor and Marine Corps

One of thorny issues between Japan and US is how to realize relocation of Futenma Air Station (MCAS FUTENMA) for Marine Corps air wings in Okinawa where the base is situated in the midst of highly dense population.

Even though the two governments reached in agreement back in 1995 to relocate the base to sea shore in the same Okinawa island, it is a fact that many local citizens can not accept the plan. Furthermore with the birth of new government by Democratic Party of Japan who opposed to the agreement concluded by their opposition party, in August, the previous agreement is now in a shaky position.

Now comes T. Hashimoto, a lawyer and popularly elected in 2008 as young governor of Osaka at age of 39. His prefecture of Osaka as well as the Kansai region at large has a big financial burden to maintain three airports (Kansai, Itami and new Kobe airports) with declining air travel market, especially by cancellation of JAL. Among the three airports, Kansai International has been criticized for construction of the second runway while many air routes, domestic and international, stopped their service. The old Itami airport (Osaka International, even though there is no real international flights from this inland airport these days) is still performing as busy domestic airport and Governor Hashimoto has his own solution to the three airports issue: abolish Itami and sell the premises as business part/ residential area. With the sales income, he advocates to construct a maglev train line to connect Osaka business district and Kansai airport which is more distant than Itami.

Then on November 30, Gov. Hashimoto told the press that he is 'willing to join discussion' to reduce military bases concentration to Okinawa by proposing to welcome base function to Kansai International.

His statement took attention of Foreign Minister Katsuya Okada today; he said he wants to listen to Gov. Hashimoto for his real intention.

The second runway （06L/24R）at Kansai is 4,000 meter-long and the airport, on reclaimed land off coast, is enough big to accommodate military installation.

However, there is no precedent case to keep civil and military air services in the same premises in these days in Japan and there is no response found from local community yet.

Today ( Dec. 1) Gov. Hashimoto also mentioned he is looking to see a possibility to use Kobe airport, another underachiever with too large scale air traffic forecast and also built on reclaimed land off Kobe port and city, for US military training purpose.

I wonder Hashimoto's statement might invoke a new discussion within Japan and a new solution might be introduced, if so it would be very interesting.......

(Photos. Kansai International Airport off Osaka coast, above and ,MSAS Futenma below)

JAL's Debts Exceed Assets; Transport Minister Acknowledges

From Yomiuri Shimbun and Sankei Shimbun, 24 November

Minister of Transport, Seiji Maehara said he had been briefed on financial health of excessive debt Japan Airlines, in the process of corporate rehabilitation under public control, on both cases of the corporate liquidation and restructuring cases.

Maehara officially admitted a final report submitted on 29 Oct by JAL Rehabilitation Task Force that described JAL as the company is in excessive debt.

At Tokyo Stock Exchange, JAL stocks (code 9205) were traded with the lowest price of 86 yen per share in the morning of November 24. At the day's closing, the price was 87 yen down 8 yen or 8.42% from the last week.

One of decisive factors to ensure the company's comeback is to reduce its corporate pension scheme expenditure; JAL management proposed on November 23 to its pension recipients to reduce the amount by 30% for retirees and by 50% for would-be-retirees. However, the change should be endorsed by two thirds of all retirees of JAL and the market wonders if this is possible.

Japan Chooses F-35

from Kyodo News Agency, 23 November

Ministry of Defense has started arrangement to introduce F-35 as its long-awaited FX, or next mainstay fighter aircraft. Starting full-fledged study from December, the Ministry will include relevant expenses such as contracting in its budget request for fiscal 2011, according to multiple sources of the ministry and Japan Self Defense Forces.

With China's procurement of the fourth generation fighters, the ministry has decided to increase Japan's air defense by introducing the stealth F-35, assuming to deploy about 40 aircraft.

Tokyo is trying to compile a new basic defense posture policy for force structure and its operations but it postponed to finalize previously in last December. It is expected to clarify to procure F-35 in its new policy.

Hatoyama administration will request FX research budget only in fiscal 2010 budget plans in accordance with the postponed defense policy definition.

However, within the government, there are some cautious opinion to F-35 as the aircraft is still in its development stage and its performance is yet to be confirmed, calling for postponing of the contracting to fiscal 2012.

Tokyo Does Not Endorse JAL Financing

9 November 2009

From Yomiuri Shimbun


Regarding management rehabilitation of Japan Airlines, Prime Minister Yukio Hatoyama conferred with Vice Prime Minister Naoto Kan, Finance Minister Fujii, Minister of Land and Trasport Maehara at official residence of PM on 8th November.

JAL deadly needs emergency financing for keeping its operations, around 100 billion yen within this year, and the governemnt agreed on financing for JAL without the government guarantee with commercial banking consortium on November 9.

JAL's mid term business performance records will be announced on November 13 and that day would a decisive timing to finalize JAL corporate restructure plans.

At ministers' meeting on 8th night, Maehara, as chief of 'JAL Rehabilitation HQS' consisting of seven government divisions, made a presentation of the policy direction. One of the issues is to lower high amount of corporate pension scheme of JAL by legislative measure and the other is support the company financially by the use of public funding from tax revenue. Prime Minister Hatoyama expedited the team to compile a working plans.

The rescue financing was expected to be guaranteed by the government as 'crisis situations solution' but the government now has a different view to JAL's management ciris as 'structural' and not caused by rapid deterioration of economic situations; and the original plan to provide government guarantee was canceled as the government changed its perception toward JAL.

Comment: JAL stock price on November 9 was closed as 106 yen, down 3 yen or 2.75% from the previous week at TSE.

SQ A330 Stuck On Runway in Nagoya

from Mainichi Shimbun

Around 8:25 a.m., November 7, a Singapore Ailines Airbus A330-300, 170 passengers and crew on board, landed on Chubu Inernational Airport (Centrair) became unable to taxi and stuck on the runway. The aircraft was towed and moved to passenger terminal. There was no injury to anyone on board. This trouble caused 20-minute closure of the runway and three flights were delayed as much as 15 minutes.

According to the Ministry of Land and Transport, the aircraft's head landing gear became malfunction to move left and right after the landing.

JAL to Discontinue 16 Routes First by June '10

Deficit-ridden Japan Airlines is now studying suspend flight service of 16 routes of which 8 for domestic and 8 for international. The company is expected to formally decide the abolition of these air routes within this week. JAL has already requested official support from Japan Corporate Revitalization Support Platform (JCRSP), a public-private joint investment firm and it is expected to add more number of money-losing air routes to abolish as a part of the corporate rehabilitation plan to be made by the request of JCRSP.

Domestic lines under study are: Chubu-Kushiro, Chubu-Hananomaki, Chubu-Kumamoto, Kobe-Shin Chitose, Kobe-Tokyo Handa, Kobe-Naha, Kobe-Ishigaki, and Kita Kyushu-Naha. International lines currently under scrutinizing include Narita-Mexici City, Kansai-Hanzhou(China).

HTV Will End Its Flight Soon

Japan's space development agency,JAXA will put HTV, Japan's first unmanned space transporter, into earth's atmosphere on 2 November (Japan standard time). HTV delivered materials to ISS on September 18 and currently being docked at ISS. Reentry will burn most part of the vehicle completing its mission. Successful reentry would increase international credibility of HTV as reliable transportation to ISS.

Before its reentry, HTV, after loading rubbish from ISS, will be moved by manipulator by the station to a proper position. HTV will leave ISS after 1 a.m. October 31 subsequently it will lower its altitude by blasting its engine and it is scheduled to let HTV reenter earth's atmosphere at 6:28 a.m. 2.

HTV, according to JAXA, is mostly made of aluminum and will be melted at its reentry. Its heat resistance compnents as well as its remainings would fall on South Pacific's wide area stretching off coasts of New Zealinad to Chile. JAXA willl monitor operating status of the control devices and the location of the vehicle until last moment before the reentry.

JAL's Business Rescue Plan to be Shown to Banks

A task force of business experts reporting to Seiji Maekawa, Minister of Land and Transportation completed an outline of business reconstruction plan for Japan Airlines mainly based on financial support of 550 billion yen on October 24. The plan will be presented to main banks led by DBJ and when being agreed by them, a path for JAL's salvage would be finalized.

The plan calls for capital reinforcement of 300 billion yen including public funding and request for commercial banks for debt waiver worth 30 billion yen. Financially crunched JAL needs a bridge loan of 180 billion yen as well, and the plan presumes this loan to be guaranteed by the Japanese government.

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