2010-04-27

JAL Reports Record-High Deficit Ever



Japan Airlines, under corporate rehabilitation, will report around 160 billion yen ($1.7 billion) of operating deficit in its corporate account closed  in March 2010. The deficit level is the largest since 2002 as the result of big drop in passenger revenue; the company reported 50.8 billion yen of deficit a year ago.

The worsening revenue will hasten its restructuring such as a further trimming of payroll as well as stopping of money-losing air routes.

JAL's international passenger revenue saw over 40% shrinking in a period from April to December last year while its domestic passenger revenue also showed over 10% drop. Its passenger revenue after January still shows no sign of recovery.

However, its principle subsidiary, Japan Airlines International as operating company has found a turnaround in March with a small amount of black ink with the effect of replacement of its fleet  by smaller and fuel-efficient aircraft.

JAL and its supporter, Enterprise Turnaround Initiative Corporation has submitted its restructuring plans consisting of withdrawal from 47 air routes after October and slashing over 16,000 personnel by the end of March 2011 to its main transaction banks.

But the banks felt the plans was insufficient for JAL to gain profit and calling for more stringent measures such as addition of international service to withdraw. In response to their objection, JAL and ETIC will postpone their submission of corporate rehabilitation to the Tokyo District Court to August from original June.