Japan Airlines Corp. (JALSF.PK,JALSY.PK) may seek bankruptcy reorganization as one of the options in a turnaround plan proposed by a government-affiliated turnaround entity, the Nikkei business daily reported Monday.
According to the Nikkei report, a plan submitted by the Enterprise Turnaround Initiative Corp. of Japan, or ETIC, to the Development Bank of Japan and the three megabanks over the weekend includes a proposal that JAL file for protection from creditors under the Corporate Rehabilitation Law, with the ETIC to then become a potential sponsor of the airline.
Under this scheme, lenders are expected to be asked to waive debt and JAL's pension obligations will likely be reduced.
The struggling JAL, Asia's biggest carrier by sales, had requested financial assistance from the ETIC in October. The ETIC had been assessing the firm's assets in addition to drawing up a rehabilitation plan. The Japanese government has pledged to keep JAL operating as it bails out the unprofitable carrier for the fourth time since 2001.
Separately, the Nikkei also reported that delay in crafting JAL's rehabilitation plan will push back the airline's integration of air cargo operations with Nippon Yusen KK (NPNYY.PK)to July 2010 at the earliest.
The two companies had initially hoped to merge their air cargo business in April 2010. Plans call for Nippon Cargo Airlines Co., or NCA, a subsidiary of Nippon Yusen, to absorb the air cargo operations to be spun off by JAL.
However, details as the equity stake, and the number of workers and aircraft at the new entity cannot be decided until the ETIC approves a bailout. Due to the delay in the air cargo merger, the two companies are now scrambling to boost their earnings through other steps, including restructuring measures, the Nikkei reported.
In June, JAL secured a 100 billion yen bridge loan from a state-affiliated bank and is trying to persuade staff and retirees to accept pension cuts as it struggles to avoid collapse. It has also received competing investment offers from Delta Air Lines Inc. (DAL) and American Airlines, which is owned by AMR Corp. (AMR).
Earlier this month, American Airlines reaffirmed its commitment to JAL, saying it may raise its $1.1 billion offer to recapitalize Asia's largest flyer and retain it in their Oneworld airline alliance.
After meeting with Japanese transportation officials, American's chief executive Gerard Arpey had noted that the OneWorld Alliance countered an offer from rival Delta Air Lines and its SkyTeam partners, which bid $1 billion to lure JAL.
JAL, Asia's biggest carrier by sales, has been incurring losses in the past few years. The airline on November 13 reported a loss of 131.2 billion yen or $1.46 billion for the six months ended September 30.
JALSY.PK last traded at $5.31 on December 22, down $0.34 or 6.02% on a volume of 2,000 shares.
JALSF.PK last traded at $1.14 on December 22.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.