TOKYO, Jan 20, 2010 (AFP) - Japan Airlines sought to reassure the travelling public Wednesday that it will keep flying despite declaring bankruptcy as its share price dropped to a new record low of just two US cents.
The debt-laden carrier apologised in full-page newspaper advertisements for causing "tremendous worries to customers" and promised that "JAL will keep flying" and that passengers' air miles will remain valid.
|JAL President Haruka Nishimatsu (L) and JAL group provisional acting COO Masato Uehara (R) bow their heads to aplogize at a press conference in Tokyo on January 19, 2010. AFP photo|
"Please be reassured and use us as before," the company pleaded.
The once iconic airline, a symbol of Japan's rise to prosperity, filed for bankruptcy protection Tuesday with 26 billion dollars in debt in the country's biggest post-war corporate failure outside the financial sector.
It is set to undergo a painful overhaul under a new corporate chief, with more than 15,600 jobs to be cut, reducing the workforce by a third, and many loss-making routes expected to be slashed.
JAL, which carries more than 50 million passengers a year, is set to receive almost 10 billion dollars in public funds and emergency loans under a three-year turnaround plan.
The Tokyo Stock Exchange will delist JAL shares by February 20, a move expected to wipe out shareholders' investments.
JAL shares were trading at a record low of two yen (two US cents), down three yen or 60 percent from Tuesday's close. The price could theoretically fall to a rock-bottom one yen.
"There are still people who are trading JAL, including those who are enjoying a one-month game, with the downside risk limited to one yen," said Hideyuki Higashi, a strategist at SMBC Friend Securities.
The company has made no announcement regarding its tie-up talks with American and Delta Air Lines, which are in a bidding war for a slice of the carrier, eyeing its lucrative Asian landing slots.
JAL is understood to prefer switching its alliance from the American Airlines-led oneworld grouping to SkyTeam with Delta.
But it is expected to take some time for JAL and Delta to clear anti-trust hurdles and get approval from US authorities for joint operations.
The government has tapped Kazuo Inamori, a 77-year-old entrepreneur, business guru and ordained Buddhist monk, to run the stricken airline during its overhaul, replacing Haruka Nishimatsu, who resigned as president Tuesday.
Yasuhiro Matsumoto, a credit analyst at Shinsei Securities, voiced optimism JAL will successfully implement the restructuring plan but said the company still lacks a solid long-term vision.
He said the turn-around plan involves "getting rid of money-losing businesses to return to profit and is not based on unfounded optimism that travel demand will grow in the future."
However, he said, the government still "has no growth strategy. It doesn't have a strategy on how JAL should design its international network."
The bankruptcy, shocking to many Japanese, dominated newspaper front pages.
The Nikkei business daily said debt-ridden JAL's failure should serve as a warning to other companies and the government in a country where the public debt now stands at about 180 per cent of gross domestic product.
"If you shun the pain that is ahead of you, greater pain will come someday," the Nikkei warned. "The fall of JAL, which shone in the past, sends this message to the state and companies."