Asia's biggest airline has gone bust. In the country's largest-ever corporate failure outside the financial sector, Japan Airlines (JAL) has just filed for bankruptcy to get protection from its estimated liabilities of 2.32trn (£15.6bn). Its state-ordered restructuring, a similar process to Chapter 11 in the US, will see shareholders wiped out, the sacking of a third of its workforce and lenders being asked to waive around $8bn of debt.
What the commentators said
This is no surprise, said Lex in the FT. It has been "on a steady descent" for years. The credit crunch "just changed the angle": the average quarterly loss has more than doubled since it hit. High costs were a major problem. At one stage, it leased limousines to bring pilots to work. It seems "surreal", however, that governments everywhere have been propping up airlines, but only Japan "has pushed its flag carrier into bankruptcy".
JAL's "humbling" highlights how some of Japan's biggest corporate names "have failed to keep up with rapid shifts in the world economy", said Hiroko Tabuchi in the International Herald Tribune. But in dealing with the problem, "a new government in Tokyo has promised to make a break with the past". Yet "the biggest question remains unanswered", said John Foley on Breakingviews. "Does Japan really need two global airlines (JAL and ANA)?" International competition is ferocious. Cutting costs and debt "are all for the good, but there may be a case for restructuring JAL out of existence altogether".
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