How things change. Japan Airlines, once revered as a symbol of corporate Japan and one of Asia’s biggest business success stories, has finally collapsed under the weight of its multibillion-dollar debts and filed for bankruptcy. The company – which is now worth less than the price of a single jumbo jet – reckons it will continue flying, although it been forced to submit to a painful restructuring that will involve shedding over 15,000 jobs and 30 unprofitable routes. Its collapse is also terrible news for BA and the other members of the Oneworld alliance, who are about to lose their key Asian partner. As Willie Walsh awaits the outcome of another union strike ballot, this is another headache he really doesn’t need...
JAL’s demise hardly comes as a shock. It’s been struggling for years, having already received three government bailouts in the past decade. Losses at the airline have spiralled lately, ballooning from ¥52bn to an expected ¥265bn for the year to the end of March. Not surprisingly, its share price has taken a pounding as a result, falling in value by 90% since the beginning of January as speculation about the future of the company mounted. It’s now worth about 2p a share or £55m – less than the price of a jumbo. Its fall from grace will be complete if it’s now de-listed from the Tokyo stock exchange, as expected.
Nonetheless, its decline and fall will be a huge embarrassment for Japan; this will be the country’s largest corporate failure outside the banking sector, and it could prove a potentially devastating blow to all the small businesses who supply it (hence the importance of keeping some planes in the air). But the repercussions will also be felt more widely. As part of the restructuring, JAL is apparently likely to leave the Oneworld alliance and join the rival Sky Team – a big blow for BA and its partners American Airlines and Quantas. In fact, with the news that BA staff might well be taking to the picket lines during the lucrative Easter holiday period, this is turning into a pretty rotten week for BA boss Walsh.
But it’s those 15,600 staff we feel most sorry for. Earlier this week, Japanese finance minister Naoto Kan made the curious statement that he wanted people to work shorter hours so they have more time for dates on weekday evenings. But we’re not sure this is really what he had in mind.
In today's bulletin:
Cadbury surrenders - but Milks Kraft for £12bn
Record jump in inflation as VAT and fuel prices rise
Editor's blog: Cadbury goes the same way as our cars
Japan Airlines' crash-landing adds to BA's woes
The Parent Project: How pregnancy translates abroad