Japan Airlines is expected to file its bankruptcy on 19 January for simultaneous start of its corporate rehabilitation by Enterprise Turnaround Initiative Corp. (ETIC) while expecting support by the government of Japan. The outline of its rescue plans was revealed yesterday: according to the plans, more than 15,000 employees, equivalent of 30 percent of the entire group would be slashed in three years. ETIC would confer with JAL and its main commercial banks for details of the plans.
ETIC seems to see JAL as having excess liability of over 800 billion yen and would ask JAL's creditors to write off 730 billion yen while ETIC itself would invest 300 billion yen to capitalize JAL so that the balance sheet would turn into positive.
Both Delta Airlines and American Airlines had express their intention of financial assistance to JAL for over $1 billion respectively, but ETIC assumes JAL should not accept American capitalization on the ground their capital investment might influence the course of JAL's rehabilitation. However JAL will choose its partner for joint operations under Open Skies between Japan and USA.
ETIC is now preparing to request Mr. Kazuo Inamori, 77, honorable chairman of Kyocera, Kyoto-based integrated manufacturer of electronics and industrial ceramics, to assume CEO after the process of legal liquidation starts in January.
ETIC is also studying if JAL stocks should be maintained listed in stock exchange; currently the fund is reportedly comparing two plans to maintain the listing after capital reduction by over 90% or delist JAL stocks after 100% capital reduction.
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