JAL unveils restructuring plan

Japan Airlines, the carrier that filed for the country's biggest non-financial bankruptcy protection ever, has unveiled a final, more-aggressive version of its restructuring plan that speeds up a big cut in its workforce and slashes more unprofitable routes, reported Dow Jones Newswires.

But JAL still faces challenges as it pushes ahead with its reform efforts. The carrier seeks to refinance its current debt load of about US$3.55 billion by the end of March 2011, according to a person familiar with the matter, ensuring months of protracted negotiations with its main lenders in months to come.

The struggling airline earlier in the day submitted its final revamp plan to the Tokyo District Court, seven months after it filed for bankruptcy protection.

The new plan was short on details on how JAL would increase its revenue in the coming years – a crucial factor as it faces increased competition from low-cost carriers and other international airlines as both Narita International Airport and Haneda airport, the main gateways into Tokyo, expand their capacity. The former flag carrier said it was considering launching a low-cost airline subsidiary, but declined to elaborate further.

Under the latest plan, JAL aims to cut its workforce by about 16,000 staff to about 32,600 by March 31, 2011. In the initial plan submitted in January, it aimed to spend three years to cut 15,600 jobs.

The company plans to scrap a combined 49 unprofitable international and domestic routes and flights by the end of March 2013. This is a more drastic cut than the reduction of 31 routes and flight reductions targeted in the same time frame under its initial plan.

"This is the start of JAL's restructuring," said Kazuo Inamori, the chairman of JAL, at a press conference. "We will work [on restructuring] hard so that we can post better numbers than we are targeting."

The government-backed Enterprise Turnaround Initiative Corp (ETIC), which decided to support JAL's restructuring, will inject $4.14 billion in JAL's international flight service unit, larger than its earlier plan of $3.55 billion. JAL will ask for a debt-waiver of $6.17 billion from its lenders.

Once JAL rebuilds itself, the company's shares--which were delisted in February-- might be re-listed.

"We are responsible for recouping our investment. As a way to do that, we are eyeing the possibility of listing [JAL shares] again," Hideo Seto, the chairman of ETIC Committee, said at the press conference.
(Source:www.cargonewsasia.com)