（っ゜Д゜）っ英字新聞

JAL's dependence on govt invited bankruptcy

Japan Airlines, which has been suffering serious financial difficulties, at last filed for bankruptcy protection under the Corporate Rehabilitation Law on Tuesday.
This is a corporate failure of the once-proud flagship carrier that led the nation's air transportation industry. Now, under the supervision of the Tokyo District Court, JAL sets out to reconstruct itself with assistance from the state-backed Enterprise Turnaround Initiative Corporation of Japan. However, it has a tough road ahead.
It is necessary to immediately shape the company's new senior management to support Kazuo Inamori, founder and honorary chairman of Kyocera Corp. who assumes the post of chief executive officer, and for labor and management to work cooperatively to rebuild the company.
To rid itself of the ingrained management culture that has been far too dependent on the government, it was unavoidable for the company to declare bankruptcy. However, the company and its core subsidiaries have liabilities of more than 2 trillion yen--the most ever left by a failed business outside the financial industry since World War II--and does business with 3,000 companies in Japan alone.
Although credit will be guaranteed for payments of commercial transactions and user mileage points will be safeguarded, unexpected problems may come up as this is the failure of a giant corporation. Relevant parties must do their best to prevent confusion and secure passenger safety.
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Huge infusion of tax money
The turnaround body will become JAL's largest shareholder, providing more than 300 billion yen. Financial institutions will forgive debts of more than 350 billion yen and provide bridging loans of a maximum 600 billion yen to assist JAL's reconstruction. The amount of public funds to be injected may reach 1 trillion yen.
Meanwhile, JAL is to proceed with streamlining, cutting 30 percent of its employees and withdrawing from a significant number of unprofitable routes. The turnaround body predicts that the airline will return to profitability in the 2011 business year through such assistance and restructuring.
However, it is indispensable to secure new sources of revenue for rebuilding the company. The turnaround body says that JAL's ability to earn profits will be recovered through having efficient international flight schedules. But many observers argue that the reconstruction scheme is too optimistic.
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State must justify bailout
There has been no clear explanation of why JAL is being bailed out by pouring a massive sum of public funds into it or why the nation's airline industry's two-carrier structure with All Nippon Airways should be maintained.
If JAL's reconstruction efforts do not proceed as initially scheduled, the turnaround body should examine further strict measures, such as transferring JAL's international routes to other airlines.
It is also indispensable to resolve a long-pending labor-management issue in order to gain public backing for the airline's reconstruction.
Even after its full privatization in November 1987, the airline was unable to refuse demands from lawmakers and influential local figures and so was forced to launch services on unprofitable routes. The responsibility for driving JAL into bankruptcy also lies with the government. The air transportation administration must start afresh at the same time as JAL's reconstruction.
The circumstances in the nation's skies have been drastically changing because of an increase in the departure and arrival slots at Narita and Haneda airports as well as the full liberalization of the civil aviation markets in Japan and the United States.
The government should reconstruct the administration of air transportation, by reexamining the special account for airport improvement and by opening up more international flight slots at Haneda Airport.