oneworld news

[Pieter C. 5]

BA To Accept 50-50 In Iberia Merger

 

July 13, 2009

 

British Airways is ready to accept close to a 50-50 ownership deal for a merger with Iberia, Spanish newspaper El Economista said on Monday, citing sources close to the talks.

 

In exchange, the Spanish airline is prepared to shoulder its share of a shortfall in BA's pension fund, the paper said.

 

The financial headquarters of the new group would be located in Madrid, added the sources.

 

Both Iberia and its main shareholder, Spanish savings bank Caja Madrid, declined to comment on whether they had received an improved offer from BA.

 

British Airways and Iberia have been in merger talks for a year but the ownership split has proved an obstacle.

 

BA has been dogged by a yawning pensions deficit, seen as another stumbling block to the deal.

 

But El Economista's report comes after the chairman of Iberia stepped down on Thursday and was replaced by proven dealmaker Antonio Vazquez, an appointment seen as boosting merger chances.

 

Meanwhile, BA has secured shareholder backing for a possible rights issue, British weekly newspaper the Observer said on Sunday.

 

(Reuters)

[Cornelis Boersma 0]

03:50 pm - Friday

Finnair CEO resigned

Vantaa, Finland - The carrier reported strong losses in second quarter of 2009

(WAPA) - Jukka Hienonen, Finnair CEO, resigned today following strong losses recorded by the carrier in the second quarter of 2009: €32,5 million. In the same period last year the Finnish airline had reported an € 20 million profit.

 

"I am not satisfied with the results achieved; the rate of change has been insufficient", Hienonen stated. The carrier issued a note explaining that this decision has been taken by the former CEO on his own.

 

"My four years in Finnair's service -the manager added- have included both periods of success as well as the increasingly adverse development of the entire sector, and now a clear change of course is required".

 

48-year-old Jukka Hienonen is likely to lead the airline until February, as his contract requires a six-month advice. Possible successors have not been unveiled yet.

[Pieter C. 5]

He seems to have been very unpleased with the results by 'handling' the unions over concessions...

[Cornelis Boersma 0]

What would you say? Place for me in the Finnair Management now?

[Pieter C. 5]

You speak Finnish and Swedish ?

[Pieter C. 5]

British Airways In Talks To Buy bmi

 

September 6, 2009

 

British Airways is considering a possible bid for rival UK airline bmi and talks between BA and bmi's German owner Lufthansa have already taken place, according to the Sunday Times.

 

The report said BA Chairman Martin Broughton flew to Germany for talks with Lufthansa representatives last week.

 

It said that any deal with Lufthansa would be secondary to BA's continuing merger talks with Spanish carrier Iberia but that it would consider financing a move for bmi through a share issue.

 

Virgin Atlantic, also said to be interested in bmi, said in a statement: "BA want to merge with Iberia, American Airlines and now bmi. They are trying to gain more slots (at Heathrow), wipe out rivals and become a pure monopoly."

 

BA and bmi declined to comment, while Lufthansa was unavailable for comment.

 

(Reuters)

[Pieter C. 5]

Finnair Adjusts Fleet To Cope With Weak Demand

 

September 7, 2009

 

Finnair said it may buy three new aircraft rather than lease them, and would also cut leisure and domestic route capacity, in an effort to cut costs in the face of weak demand.

 

Finnair is set to receive its fifth Airbus A330 this November, and is scheduled to get two more A330s in the first quarter of next year and a third in the last quarter, as it upgrades its fleet.

 

Spokesman Taneli Hassinen said that as leasing prices had risen by up to a fifth in the wake of the credit crunch, it was becoming more cost-efficient for Finnair to buy the three aircraft due next year.

 

"There is no final decision yet, but based on current knowledge we will with great probability take them onto our balance sheet," Hassinen said. "We have the situation that we can get financing."

 

Hassinen said the planes are worth around EUR100 million euros (USD$143.4 million) each. The company has flagged capital expenditure of below EUR300 million for next year.

 

Like other airlines, state-controlled Finnair has been hit as the economic slowdown throttles demand and pressures ticket prices. The firm has forecast a clear operating loss in the current quarter and said its 2009 result would be in the red.

 

Scandinavian rival SAS said earlier on Monday its August passenger traffic slid 17.1 percent from a year ago.

 

The industry has had to cut capacity to keep pace, and Finnair said earlier in a statement it would withdraw three leased Boeing 757 aircraft next summer.

 

Hassinen confirmed Finnair would also cut capacity by loaning two Embraer planes to domestic rival Finncomm Airlines, confirming a report by national Finnish daily Helsingin Sanomat.

 

(Reuters)

[Pieter C. 5]

JAL Shares Jump On American, Delta Talks

 

September 14, 2009

 

Shares in Japan Airlines jumped 8 percent on Monday on news American Airlines and Delta Air Lines are considering rival investments in the struggling carrier to secure partnership ties and boost revenue from Asia.

 

JAL, Asia's largest airline by revenue, lost about USD$1 billion last quarter and is under growing pressure to raise money and cut costs after securing a JPY100 billion yen (USD$1.1 billion) government-backed loan earlier this year.

 

American Airlines is in talks to invest in JAL and form a joint venture, a source with direct knowledge of the talks said on Sunday.

 

American Airlines, which like JAL is a member of the oneworld airline alliance, wants to increase its ties and block JAL from switching over to a rival airline network.

 

Delta, a member of the SkyTeam group along with Air France-KLM, Korean Air and Russia's Aeroflot, has also made an offer to invest in JAL, a source said on Friday.

 

"American will be totally left out if JAL decides to join hands with Delta because ANA is already a Star Alliance member," said Yoshihisa Miyamoto, analyst, Okasan Securities.

 

All Nippon Airways (ANA) is Japan's No.2 carrier.

 

"Considering how desperate American is, it's likely that they'll offer more than what Delta has been reported as ready to spend," Miyamoto said.

 

According to Japanese media, Delta would inject up to JPY50 billion into JAL and wants a tie-up that would include code-sharing on international flights.

 

Code-sharing with JAL would allow Delta to sell seats on JAL flights out of Japan directly to customers and expand its network in Asia. This would be at a time when the US and Japan are discussing an "open skies" agreement which would allow closer cooperation on flight scheduling and profit sharing.

 

SHARES SOAR

 

JAL shares closed up 8 percent, their biggest single-day jump in 11 months and the top performing stock on the benchmark Nikkei average, which fell 2.3 percent.

 

The number of outbound flights from Japan is due to grow at Haneda and Narita airports as they extend runways or flight brackets. The newly elected Democratic Party of Japan has also promised to lower airport fees, which could increase demand.

 

Delta, which became the world's largest carrier when it bought Northwest Airlines last year, runs a hub at Narita airport but is without a Japanese partner.

 

But now that American Airlines has raised its hand, "teaming up with American would make more sense," said Takahiko Kishi, a senior analyst at Mizuho Investors Securities.

 

Switching network alliances, which pool the frequent flier points of member airlines, would force JAL to spend significantly to change its computer systems, Kishi said.

 

UNDER PRESSURE

 

JAL, which is headed for its second straight annual loss, is working an overhaul expected to include job cuts, a reduction in routes and asset sales after agreeing to accept government funds.

 

One large headache is JAL's pension system. JAL, which posted a JPY99 billion net loss in April-June, has said it could make a one-time saving of JPY88 billion this business year by cutting pensions.

 

But more than one-third of JAL's retirees and those planning to retire intend to vote against the move, according to an online poll on a website run by former JAL employees.

 

The stake sale in JAL, which has a market cap of roughly USD$5 billion, will be capped by Japanese aviation law, which says that the total stake by non-Japanese persons or entities in a Japanese airline cannot exceed one third of the voting rights.

 

JAL is also considering raising an additional JPY250 billion by March to help fund restructuring, including a new share issue worth JPY100 billion, the Nikkei business daily said on Sunday.

 

(Reuters)

 

Why Are Delta And American Courting JAL?

 

September 14, 2009

 

Delta Air Lines and American Airlines are in rival talks to invest in Japan Airlines (JAL) and form an operational alliance with the loss-making carrier, Asia's largest by revenue.

 

Following are questions and answers on how JAL got here and why Delta and American are keen to invest in it.

 

WHY IS JAL SEEKING OUTSIDE INVESTORS?

 

JAL is headed for its second straight annual loss in the year to March 2010, hit along with other airlines by a downturn in global travel in the wake of the financial crisis.

 

The slump has exposed JAL's bloated cost base, including generous pension payouts to a growing group of retirees.

 

JAL secured a JPY100 billion yen (USD$1.1 billion) state-backed loan in June but needs more money to fund a restructuring plan that must be submitted to the government this month. It may seek as much as JPY250 billion more through a mixture of equity and debt financing, the Nikkei business daily reported.

 

Issuing stock would help bolster its shareholders' equity ratio, which fell to around 9 percent at the end of June, well below the 20-30 percent that is considered a healthy level for airlines. It has about USD$9 billion in interest-bearing debt.

 

By forming a capital tie-up with either Delta or American it could also secure a viable business partner to help it weed out unprofitable routes and lower its operating costs.

 

WHY WOULD DELTA INVEST IN JAL?

 

Delta, the world's largest airline, wants ties with JAL to help it expand in Asia. Delta operates a hub at Japan's Narita airport, where it operates 21 international routes from, including nine to other points in Asia. That could be joined with JAL's much larger network of 258 international routes from Japan.

 

Partnering with JAL would also allow Delta to tap the growth potential of Haneda, Japan's main domestic airport. Haneda is scheduled to open a fourth runway next year as part of an expansion expected to increase annual capacity by 40 percent by 2012.

 

Delta or American would likely invest as part of a group of investors that could include trading houses and aircraft makers.

 

WHAT WOULD AMERICAN GET OUT OF A DEAL WITH JAL?

 

American Airlines is also in talks to invest in JAL with the aim of expanding their existing business ties while also blocking a deal with Delta, which could lead to JAL defecting to a rival frequent-flyer group.

 

American and JAL have had a code-sharing agreement for a decade and both are members of the oneworld alliance. Delta would likely persuade JAL to join the rival SkyTeam network, which would weaken American's presence in the Asian market.

 

American has four international routes from Tokyo on its own planes, all to North America. In addition, American has code-sharing agreements for 26 international flights on JAL planes. American would look to expand code-sharing with JAL.

 

American has also proposed forming a joint venture through which the two would eventually share revenues and offer business customers joint contracts. Both of these hinge on the enactment of an "open skies" agreement between Japan and the US.

 

WHAT ROLE WILL THE JAPANESE GOVERNMENT PLAY?

 

Japan's transport ministry regulates JAL and therefore could play a key role in which airline is chosen as JAL's partner.

 

Hiroaki Taniguchi, Vice Minister of the transport ministry, was quoted by media as saying on Monday that a tie-up with a foreign carrier could help JAL expand its international network and improve its business, suggesting state approval of a deal.

 

But some trade ministry officials have been quoted by Japanese media as saying a deal with Delta would make more sense because many of their international routes overlap and JAL could cut more of them to lower costs.

 

The Democratic Party of Japan, which won an election and is due to take office on Wednesday, could change the situation if it decides to take a harder stance than the outgoing Liberal Democratic Party government, which had put its weight behind a state-assisted revamp of JAL. The Democrats have vowed to place a greater scrutiny on the use of state funds.

 

(Reuters)

[Pieter C. 5]

Rivals Jostle For JAL Stake; Asia Access Prized

 

September 15, 2009

 

Japan Airlines is likely to opt for a tie-up with Delta Air Lines or American Airlines, among rivals seeking to invest in the loss-making carrier, if Japan and the United States can reach an "open skies" agreement.

 

The US airlines, and others, are chasing a stake in Asia's biggest carrier by revenue to help them grow in China and get access to JAL's other Asian routes via code-sharing agreements.

 

One source, not authorized to discuss the talks publicly, said the carriers were each discussing investing USD$200 million - USD300 million in JAL for a minority stake and a code-sharing deal.

 

Asked if JAL would choose either Delta or American as a partner, CEO Haruka Nishimatsu told reporters on Tuesday: "Yes, I think so, if an open skies agreement looks likely."

 

Such a deal would allow closer cooperation on flight scheduling and profit-sharing between US and Japanese airlines.

 

Air France-KLM is also in talks to invest in JAL, said the source who was familiar with the matter. Air France-KLM said it had no comment.

 

Investing in JAL would bring access to Haneda, the world's third-busiest airport by passenger numbers. Both Haneda and Tokyo's Narita airport are expanding, adding international flights and airline slots.

 

The decision by JAL, which is undergoing a state-supervised restructuring after years of losses, could reshape the alliances that dominate the global airline industry. The company said it hoped to wrap up the capital tie-up talks by mid-October.

 

ONEWORLD

 

If JAL opts for investment from Delta or Air France-KLM, it would be defecting from the oneworld alliance, a move analysts say would deal a huge blow to a group that includes British Airways, Cathay Pacific and American.

 

Oneworld would lose JAL's more than 400 slots a week at Narita, twice those of Japan's No.2 carrier All Nippon Airways (ANA), as well as JAL's growing business in China.

 

JAL flies to nine cities in mainland China using its own fleet, three cities in South Korea, two in Taiwan, as well as to Manila, Singapore and Bangkok.

 

ANA is in the Star Alliance, with Air China, Singapore Airlines and others.

 

"Losing JAL would mean oneworld suddenly has to rely more on American Airlines' few slots in and out of Narita," said Nomura analyst Makoto Murayama. "American in particular would be harmed, and is likely to fight that at all costs."

 

American Airlines, which is seeking US approval by next month to form a transatlantic alliance with British Airways and Spain's Iberia, is the No.4 international carrier at Narita, with about 70 slots a week. Northwest Airlines, acquired by Delta last year, is the leading foreign airline at Narita.

 

Analysts said JAL would have to weigh the advantage of teaming up with Delta, the world's biggest airline, against the significant cost of leaving oneworld.

 

"If you just look at what the companies can offer, then Delta would make more sense as an ally because it has more services between Japan and North America," Credit Suisse analyst Osuke Itazaki said, adding that a tie-up with Air France-KLM would not expand JAL's network by much.

 

Delta and Air France-KLM are members of SkyTeam, with Korean Air and Russia's Aeroflot. JAL, which joined oneworld in 2007, has a separate flight incentive partnership with Air France-KLM.

 

BIG JOB CUTS

 

JAL prefers American Airlines because of the oneworld alliance, the source said, but the Japanese government prefers the financially healthier Delta or Air France-KLM.

 

JAL lost about USD$1 billion last quarter and is under growing pressure to raise money and cut costs after securing a JPY100 billion yen (USD$1.1 billion) government-backed loan.

 

The airline has forecast a net loss of JPY63 billion (USD$693 million) for the year to end-March.

 

As of end-March JAL had total liabilities of JPY1.44 trillion, with the Development Bank of Japan its biggest long-term lender.

 

As it looks to cut operating costs by 30 percent, CEO Nishimatsu said JAL faced its "largest-ever downsizing", with plans to cut 6,800 jobs, or 13 percent of its total staffing by 2011.

 

Nishimatsu was talking briefly to reporters after meeting an independent panel reviewing JAL's turnaround.

 

The carrier will also cut its overseas routes to below half its total flights, Transport Ministry official Yasuhiro Shinohara told reporters.

 

Kyodo news agency said Korean Air was also in talks with JAL.

 

(Reuters)

[Pieter C. 5]

American, BA, Qantas Eye Joint Offer To JAL

 

September 18, 2009

 

American Airlines plans to team up with British Airways and Qantas Airways to make a joint alliance offer to Japan Airlines, two sources with direct knowledge of the talks said.

 

The offer will include an investment from American Airlines and may or may not include an investment from British Airways and Qantas, the sources said, speaking on condition of anonymity because the negotiations are not public.

 

American is keen to thwart a rival offer from Delta Air Lines, which is also in talks to invest in Japan Airlines, sources have said.

 

(Reuters)

[Pieter C. 5]

JAL's Lenders Seek Drastic Overhaul

 

September 21, 2009

 

Japan Airlines' lenders may approach the Japanese government for a drastic overhaul of the struggling carrier, including a move to separate its profitable operations from money-losing segments, the Nikkei business daily reported without citing sources.

 

The Development Bank of Japan and other lenders are pressing for increased government involvement in JAL's rehabilitation, citing a major deterioration in its operations, and are reluctant to provide additional loans, the paper said.

 

Last week, Japan's new transport minister Seiji Maehara said Japan Airlines must not be allowed to fail, indicating the state would support the loss-making carrier as it seeks fresh funding for a drastic cost-cutting plan.

 

The Development Bank and the other lenders are calling for streamlining of the carrier's operations by separating them into distinct entities -- the "new" section would comprise profitable routes and healthy operations, while the "old" section would absorb unprofitable routes and segments, the daily said.

 

Another proposal under consideration would have the government provide capital to JAL's new entity as part of a temporary nationalisation of these operations, the business daily said.

 

The old entity would then be subject to a liquidation of assets over time, while taking into account the interests of local communities that would be impacted by such a move.

 

JAL lost about USD$1 billion last quarter and has been putting together a revival plan this month to submit to the transport ministry, which is supervising its restructuring after the state backed a JPY100 billion yen (USD$1.1 billion) loan.

 

(Reuters)

[Pieter C. 5]

JAL Hits Record Low After Break-Up, Bailout Reports

 

September 24, 2009

 

Japan Airlines' shares dropped 18 percent to a record low on Thursday after sources said lenders might seek to break up the company and media reported that the carrier may ask for a government bailout.

 

Two sources familiar with the matter said this week that JAL's lenders may seek to divide the carrier into its profitable and loss-making parts.

 

The banks' suggestion of a break-up plan comes as Delta Air Lines and a rival group of carriers led by American Airlines hold separate talks to invest in and deepen ties with JAL, eyeing growth in Japan and the rest of Asia.

 

"Nothing's sure about JAL's future. It's already Japan's GM," said Mizuho Investors Securities analyst Takahiko Kishi.

 

"JAL would have to come up with really drastic restructuring to convince lenders or the government, but even if they do, the market would doubt whether such measures could really be implemented," he said.

 

National broadcaster NHK said the struggling carrier, swamped by JPY1.4 trillion yen (USD$15.4 billion) of debt, is considering asking for public funds to boost its capital.

 

JAL lost about USD$1 billion last quarter and has been putting together a revival plan this month to submit to the transport ministry, which is supervising its restructuring after the state backed a JPY100 billion loan for the company.

 

JAL chief executive Haruka Nishimatsu will meet Transport Minister Seiji Maehara on Thursday to discuss the restructuring plans. Maehara will also meet JAL's lenders including the state-owned Development Bank of Japan.

 

Last week, Maehara said JAL must not be allowed to fail, indicating the state would support the indebted carrier which is seeking another JPY250 billion in funding to carry it through to the end of its financial year in March.

 

SHARES DIVE

 

JAL shares sank almost 18 percent to a lifetime low of JPY141 before ending the day down 15.8 percent at JPY144. The fall wiped about JPY62 billion off JAL's market value.

 

The benchmark Nikkei stock average advanced 1.7 percent. Tokyo markets were closed from Monday to Wednesday due to a string of public holidays.

 

JAL will cut up to 6,800 jobs and 50 unprofitable routes by March 2012, with operational costs lowered by 30 percent under a draft plan submitted last week. Tokyo to Rome and Osaka to Dalian are among the 21 international routes earmarked to go.

 

But the Development Bank of Japan and other lenders want to see more drastic cuts as well as deeper government involvement before they lend more. They may push for a break-up of the company into "good" and "bad" parts, similar to the restructuring of US automaker General Motors, the sources said.

 

The lenders want the government to get involved further and inject public funds into JAL. Otherwise, the banks can't lend more, one of the sources said.

 

Okasan Securities' analyst Yoshihisa Miyamoto said that investors are becoming increasingly sceptical about JAL's future as the carrier doesn't seem to be able to stay afloat on its own.

 

"It won't be able to stay alive as it is. It's got to sharply downsize operations or sell off businesses in bits and pieces to other companies," said Miyamoto.

 

"Our image of JAL as Japan's national carrier no longer exists."

 

(Reuters)

 

Rumours are, TYO-AMS will also be cut late 2010...

[Pieter C. 5]

Wow, this is getting serious...

 

Japan Airlines Asks Government For Bail-Out

 

September 24, 2009

 

Japan Airlines on Thursday pleaded for a government bailout, but the new transport minister withheld support on concerns the carrier's cost-cutting plans would not go far enough.

 

The request by JAL chief executive Haruka Nishimatsu for a capital injection from the state came as the carrier's shares dropped 16 percent to a record low, hit by media reports lenders might seek to break up the company and of the likely bailout plea.

 

JAL, weighed down by USD$15 billion of debt and headed for its second straight annual loss, is being wooed by both Delta Air Lines and a rival group led by American Airlines offering capital in return for closer business ties.

 

Asia's largest airline by revenue has been scrambling to put together a restructuring plan to submit to the government this month, a condition of a state guarantee on a JPY100 billion yen loan earlier this year.

 

The likelihood of further state support has been thrown into doubt by a change in government in August which brought the Democratic Party to power, ending the rule of the Liberal Democratic Party, which had supported state help for JAL.

 

Transport Minister Seiji Maehara met JAL's Nishimatsu on Thursday. He reiterated he did not want to see JAL go bankrupt but he said he was not ready to approve a request for the state to prop up the carrier by buying shares.

 

"I have doubts about the feasibility of JAL's restructuring plan. So I was not in the position to say yes about the request in the meeting," Maehara told reporters, adding he wanted to finalise restructuring plans by the end of October at the latest.

 

JAPAN'S GM

 

JAL is seeking another JPY250 billion through a mixture of equity and debt to meet its financing needs through the financial year end in March. Bankers have said they would not lend more to JAL unless there is deeper state involvement, either through loan guarantees or a capital boost.

 

Some creditors to JAL have floated the idea of breaking up the company into "good" and "bad" parts, similar to the restructuring of US automaker General Motors, banking sources have said.

 

It is unclear how such a plan would impact the offers from American and Delta, which are from the rival Oneworld and SkyTeam global airline alliances and are eyeing JAL to gain access to its network in Asia and high-paying Japanese customers.

 

"Nothing's sure about JAL's future. It's already Japan's GM," said Mizuho Investors Securities analyst Takahiko Kishi.

 

"JAL would have to come up with really drastic restructuring to convince lenders or the government, but even if they do, the market would doubt whether such measures could really be implemented."

 

Nishimatsu, talking to reporters after meeting Maehara, said JAL needed government help but did not give an exact amount.

 

"Considering debt repayments planned ahead, we thought asking for the public fund injection would make the most sense," he told reporters, adding that JAL was not considering a break up of the company.

 

"If we were a manufacturer, then that could have been a choice. But for us, an airline company, that's not an option."

 

JOBS, ROUTES TO GO

 

Up to 6,800 jobs and 50 unprofitable routes will be cut by March 2012 and operational costs lowered by 30 percent under a draft plan submitted by JAL last week. Tokyo to Rome and Osaka to Dalian are among the 21 international routes earmarked to go.

 

The fall in JAL's share price wiped off JPY62 billion in market value, taking its total capitalisation down to JPY393 billion. Tokyo markets were closed from Monday to Wednesday for public holidays.

 

Okasan Securities' analyst Yoshihisa Miyamoto said that investors are becoming increasingly sceptical about JAL's future.

 

"It won't be able to stay alive as it is. It's got to sharply downsize operations or sell off businesses in bits and pieces to other companies," said Miyamoto. "Our image of JAL as Japan's national carrier no longer exists."

 

(Reuters)

[Y. J. Foo 0]

Things must've gotten really dire for JAL...

 

UPDATE 2-Govt task force: breaking JAL up an option

 

 

Fri Sep 25, 2009 12:03am EDT

 

* Task force says bankruptcy not being considered

 

* Aims to compile restructuring plan by end of November

 

* JAL shares drop 7.6 pct vs 2.6 pct fall in Nikkei (Recasts with comments from government task force)

 

By Nobuhiro Kubo

 

TOKYO, Sept 25 (Reuters) - A government task force set up to help revive Japan Airlines Corp (9205.T) said on Friday it would review the carrier's turnaround plans from scratch and that splitting it into "good" and "bad" parts was an option.

 

JAL, swamped by $15 billion of debt and headed for its second straight annual loss, pleaded on Thursday for a government bailout, but the new transport minister withheld his support on concerns the airline's cost-cutting plans would not go far enough.

 

Shares of JAL continued to tumble, falling another 7 percent, as the former state-owned national flag carrier's fate remains highly uncertain.

 

Delta Airlines (DAL.N) and a rival group of carriers led by American Airlines (AMR.N) are holding separate talks to invest in and deepen ties with JAL, eyeing growth in Japan and the rest of Asia.

 

The idea of breaking JAL into "good" and "bad" parts, similar to the restructuring of U.S. automaker General Motors [GM.UL] has been floated by creditors, banking sources have told Reuters.

 

But the task force also reiterated the transport minister's stance that bankruptcy was not being considered.

 

"We are not thinking about using legal procedures. We can work things out among interested parties," the head of the task force Shinjiro Takagi told reporters.

 

Takagi, an advisor for Nomura Securities, also served as chairman of a state-backed corporate turnaround body, the Industrial Revitalisation Corp of Japan.

 

The task force was assembled to draw up restructuring plans for JAL by the end of November after the struggling carrier's own plans failed to satisfy government officials.

 

The government's Chief Cabinet Secretary Hirofumi Hirano said urgent action was needed but also added that the government was not necessarily assuming that there would be an injection of public funds.

 

"The stock price is falling... We need to work on this urgently," Hirano told a news conference. JAL's shares dropped 7.6 percent to 133 yen, following a 16 percent dive on Thursday, and underperforming the benchmark Nikkei Average .N225 which lost 2.6 percent. (Additional reporting by Yoko Kubota and Taiga Uranaka; Editing by Edwina Gibbs)

 

 

© Thomson Reuters 2009 All rights reserved

[C.Foo 3]

Japanese media Manichi on 24SEP09 reported a list of 50 routes that JAL plans to suspend in the next 3 years. It is canceling 21 International and 29 Domestic routes. The cancellation also sees the pull out for 9 International destinations and 7 domestic ports.

 

Osaka Kansai Airport takes the hardest hit as JAL plans to cut over 50% of its International service. Although the list is reported, it is expected that strong objections for local communities in Japan as service by JAL is seen as their "lifeline" for air traffic service.

 

The Fiscal Year noted below ends the March 31 of the following year. For Instance, FY2009/2010 runs from 01APR09 to 31MAR10.

 

The affected Routes are following:

Note that for FY2009/10, some of the route suspension has been announced already

 

INTERNATIONAL

FY2009/10

Tokyo - Hangzhou

Tokyo - Mexico City (service currently via Vancouver, but the latter not affected)

Tokyo - Qingdao

Tokyo - Xiamen

Osaka - Dalian

Osaka - Hanoi

Osaka - London

Osaka - Busan

Osaka - Seoul Incheon

Osaka - Singapore*

Nagoya - Paris CDG

Nagoya - Seoul Incheon

 

*Assuming service to Kuala Lumpur will also be suspended as it operates Osaka - Singapore - Osaka

 

FY2010/11

Tokyo - Amsterdam

Tokyo - Brisbane

Tokyo - Rome

 

FY2011/12

Tokyo - Kaohsiung

Tokyo - Sao Paulo (via New York JFK)

Osaka - Bangkok

Osaka - Denpasar

Nagoya - Bangkok

 

 

DOMESTIC

FY2009/10

Osaka Kansai - Aomori

Osaka Kansai - Asahikawa

Osaka Kansai - Kushiro

Osaka Kansai - Memanbetsu

Osaka Kansai - Obihiro

Osaka Itami - Tanegashima

Okinawa - Aguni

Nagoya Chubu - Hanamaki

Nagoya Chubu - Kumamoto

Tokyo Haneda - Kobe

 

FY2010/11

Nagoya Chubu - Kushiro

Kobe - Ishigaki

Kobe - Okinawa

Kobe - Sapporo

Kitakyushu - Okinawa

Sapporo Okadama - Hakodate

Sapporo Okadama - Kushiro

Hakodate - Asahikawa

Hakodate - Kushiro

Hakodate - Okushiri

Hakodate - Sapporo Chitose

Hiroshima Nishi - Kagoshima

Hiroshima Nishi - Miyazaki

Okayama - Kagoshima

 

FY2011/12

Matsumoto - Fukuoka

Matsumoto - Osaka Itami

Matsumoto - Sapporo Chitose

Shizuoka - Fukuoka

Shizuoka - Sapporo Chitose

 

From http://www.airlineroute.net/2009/09/jal-50-routes-cancellation-list.html

[Ryan Soh 3]

This has been a long time coming. Better this that the airline failing altogether, yes? Routes like JFK-GRU should have been canned a long time ago together with RIO as this VFR-heavy route was a disaster from the start. Gone are the days of prestige routes especially when the shareholders now are clamouring for a piece of divident.

 

ANA seems to have the correct model of having a significantly smaller international network, but they are all profitable.

 

All the best to JAL.

Edited September 25, 2009 by Ryan Soh

[BC Tam 2]

Thumbs up for honesty here

 

Shame about what must be mismanagement and/or bad calls that have led to current state

[Seth K 3]

JAL is too expensive to fly with...

Edited September 25, 2009 by Seth K

[Naim 6]

I guess this is inevitable.

 

===

 

Page last updated at 07:28 GMT, Friday, 25 September 2009 08:28 UK

British Airways sets seat charges

 

British Airways passengers may have to pay to choose their seats before they travel, the airline has said.

 

The charges will affect those seeking to ensure they sit together on a flight and people with a preference for window, aisle or emergency exit seats.

 

People will pay from 7 October. Prices range from £10 per person for European economy flights, to £60 for long haul trips in business class.

 

BA said it would "give customers more control over their seating options".

 

The airline currently allows passengers to reserve seats in the 24 hours prior to departure.

 

The charge will be £20 on long-haul economy or short flights in business class, while a seat in an emergency exit row will cost £50 and can be booked between 10 and four days before take-off.

 

A BA spokeswoman said: "Customers frequently request specific seats, but in the past we've only been able to confirm them 24 hours in advance or on the day.

 

"We know people want to secure them in advance and have real control over their flying experience. This will allow them to do that."

 

The move comes as the airline attempts to bolster its balance sheet after a £401m loss in the last financial year.

 

And it follows BA's decision to cut luggage allowances and abolish free meals on short flights.

 

http://news.bbc.co.uk/2/hi/uk_news/8274200.stm

[Pieter C. 5]

Govt. Task Force Says JAL Break Up An Option

 

September 25, 2009

 

A government task force set up to help revive Japan Airlines said on Friday it would review the carrier's turnaround plans from scratch and that splitting it into "good" and "bad" parts was an option.

 

JAL, swamped by USD$15 billion of debt and headed for its second straight annual loss, asked on Thursday for a government bailout, but the new transport minister withheld his support on concerns the airline's cost-cutting plans would not go far enough.

 

JAL shares continued to drop, falling another 7 percent, as the former state-owned national flag carrier's fate remains highly uncertain.

 

The plunge in JAL's stock price has wiped out nearly JPY100 billion yen in market value in the past two days, taking its total capitalisation down to JPY361 billion -- nearly half that of smaller rival All Nippon Airways.

 

Delta Air Lines and a rival group of carriers led by American Airlines are holding separate talks to invest in and deepen ties with JAL, eyeing growth in Japan and the rest of Asia.

 

The idea of breaking JAL into "good" and "bad" parts, similar to the restructuring of US automaker General Motors, has been floated by creditors, banking sources have said.

 

But the task force also reiterated Transport Minister Seiji Maehara's stance that bankruptcy was not being considered.

 

"We are not thinking about using legal procedures. We can work things out among interested parties," the head of the task force, Shinjiro Takagi, told reporters.

 

Takagi, an adviser for Nomura Securities, also served as chairman of a state-backed corporate turnaround body, the Industrial Revitalisation Corporation of Japan, under which retailer Daiei and cosmetics maker Kanebo were reconstructed.

 

"JAL could go through schemes similar to what Daiei and Kanebo did," a banking source familiar with the matter said.

 

Kanebo was split into profitable and loss-making segments while Daiei was rescued by a rival retailer after reducing its debts.

 

The task force was assembled to draw up restructuring plans for JAL by the end of November after the struggling carrier's own plans failed to satisfy government officials.

 

The government's Chief Cabinet Secretary Hirofumi Hirano said urgent action was needed but also added that the government was not necessarily assuming there would be an injection of public funds.

 

"The stock price is falling .. We need to work on this urgently," Hirano told a news conference.

 

Prime Minister Yukio Hatoyama told a group of reporters in Pittsburgh, where he is attending a G20 meeting, that public money might be needed to rescue JAL.

 

"Public funds may become necessary in some form. But as to the scheme, I need to consult with Mr. Maehara and reach a conclusion in the shortest time possible."

 

JAL's shares dropped 7.6 percent to 133 yen, following a 16 percent dive on Thursday and underperforming the benchmark Nikkei average, which lost 2.6 percent.

 

(Reuters)

[Pieter C. 5]

Tuesday September 29, 2009

 

British Airways launches its all-business-class service between London City and New York JFK today. The service, which will be offered twice-daily by mid-October, will be operated on specially configured A318s with 32 lie-flat business class seats. The launch flights bear numbers formerly used for Concorde services, BA001 to BA004. "For the first time, New York has a tailor-made premium service to the London Canary Wharf area on its doorstep," said BA Executive VP-Americas Simon Talling-Smith. The flights will feature OnAir inflight connectivity enabling passengers to use their mobile and smart phones to send and receive text messages and e-mails and for Internet access. Passengers departing LCY will be able to check in for a flight as late as 15 min. before departure. Westbound flights will stop for refueling at Shannon, where passengers will be able to clear customs and immigration before reaching New York.

[Pieter C. 5]

Japanese Government Ready To Back JAL

 

September 30, 2009

 

Japan's prime minister and transport minister said on Wednesday the government was ready to support Japan Airlines, aiming to dispel worries over the viability of the loss-making carrier.

 

The public statement of support came after at least two companies showed reluctance to do business with JAL.

 

An Australian insurance company has refused to offer its guarantee to refund JAL's tickets in case the airline goes bankrupt, according to a JAL spokesman. A British credit company, meanwhile, has stopped accepting transactions to issue JAL tickets, according to a transport ministry official.

 

"Recent media reports about JAL have fuelled concerns," Transport Minister Seiji Maehara told a news conference on Wednesday.

 

"I believe JAL still has more than enough reserve power, but in case the worst happens, the government will back it up."

 

Prime Minister Yukio Hatoyama told reporters that the state would be willing to step in if the company were to fall into trouble, but that he didn't expect it to come to that.

 

"I hope JAL can rebuild itself on its own, and I think it can," said Hatoyama, leader of the Democratic Party, which took power in a landslide election last month, defeating the long-ruling Liberal Democratic Party.

 

JAL, swamped by USD$15 billion of debt and headed for its second straight annual loss, asked the government for a bailout last week, but Maehara withheld his support on concerns the airline's cost-cutting plans would not go far enough.

 

The transport minister set up a special task force to put together a turnaround plan for the struggling carrier by the end of November.

 

(Reuters)

[Pieter C. 5]

BA Still Hopes To Conclude Iberia Deal

 

October 1, 2009

 

British Airways has a chance of concluding its proposed merger with Iberia by the end of the year, BA chief executive Willie Walsh told the Financial Times.

 

Walsh said talks with Iberia to form Europe's third largest airline had gone on too long, but added that progress was being made and a deal by year-end was possible "with a fair wind." The talks were first announced in July last year.

 

Walsh said he stood by his comment made two months ago that BA would not accept a stake of less than 53 percent in any merged company.

 

"The deal has got to make sense to our shareholders, and if it doesn't make sense, I'm happy to walk away from it," he said.

 

(Reuters)

[Pieter C. 5]

Japan Airlines Fate In Hands Of Task Force

 

October 1, 2009

 

With losses mounting, rival airline alliance groups facing off and a new government in power, the fate of troubled Japan Airlines has been put in the hands of a five-man task force.

 

An aggressive restructuring is on the cards as four of the five members are former officials of a state-backed corporate turnaround body, the Industrial Revitalisation Corporation of Japan.

 

In the past five years, retailer Daiei and cosmetics maker Kanebo went through drastic rehabilitations under the IRCJ before being sold.

 

The task force, set up by the government last week, aims to put together a draft plan by the end of October.

 

It is widely expected that the state will have to give JAL a capital infusion to keep it afloat.

 

Following are possible scenarios for Asia's largest carrier by revenue.

 

SPLITTING UP "GOOD" AND "BAD" PARTS

 

JAL submitted a restructuring plan last month under which it pledged to cut operating costs by 30 percent through various measures including cutting 6,800 jobs, or roughly 14 percent of its workforce, and eliminating 50 routes.

 

But transport minister Seiji Maehara said the cost-cutting measures did not go far enough.

 

According to sources familiar with the matter, a more drastic idea of splitting the airline into "good" and "bad" parts, as US automaker General Motors did, has been suggested by some lenders.

 

Cosmetics maker Kanebo was separated into profitable and loss-making parts under the IRCJ.

 

But analysts have doubts the technique can apply to airlines. "Air carriers use the same aircraft and workforce in the whole network. It will be impossible to separate it," said Ryota Himeno, a transport analyst at Mitsubishi UFJ Securities.

 

MERGING INTERNATIONAL OPERATIONS WITH RIVAL ANA

 

With "open sky" deregulation proceeding worldwide, the transport minister has said JAL's restructuring must be considered in the broader context of how to bolster Japan's airline industry. Some analysts say two international carriers, JAL and All Nippon Airways, is one too many for Japan.

 

In the United States and Europe, where the deregulation began earlier, Northwest was bought by Delta Air Lines and Air France and Dutch KLM merged.

 

Kazuhiko Toyama, a key member of the JAL task force and former chief operating officer of the IRCJ, is exploring the possibility of carving out JAL's international operations and merging it with ANA, according to a source who discussed it with Toyama.

 

JAL would then become a local airline focusing on domestic and short-haul international flights, although such a plan might meet with opposition from ANA which has performed better than its larger rival.

 

ALLIANCE WITH FOREIGN CARRIER

 

Delta Air Lines and American Airlines are in rival talks to invest in JAL to expand their business in Asia. By forming a capital tie-up with either of them, JAL could also secure a viable business partner to help it weed out unprofitable routes and lower its operating costs.

 

But unlike the previous government which welcomed the negotiations, the new transport minister Maehara has withheld a comment on this matter so far.

 

A task force member said last week that they would end the discussions if they found out a tie-up would not raise JAL's corporate value.

 

Toyama has said he prefers American, which is in the same Oneworld group as JAL, according to the source who has discussed the matter with him.

 

Toyama has questioned the logic of having Delta support JAL given that both Delta and Northwest Airlines, which Delta acquired, have been through bankruptcy proceedings themselves, the source said.

 

BANKRUPTCY

 

The transport minister has said JAL must not be allowed to fail and that the government is ready to support the airline in case the "worst happens". But Maehara has not defined exactly what would constitute a worst case scenario.

 

But some experts have argued that restructuring JAL is so complicated that it can only be done effectively in the courts.

 

JAL has eight in-house unions with which it is struggling to come to an agreement on pension and salary cuts seen as vital to its survival.

 

Some securities analysts are also sceptical about JAL's ability to revive on its own.

 

"Bankruptcy is the worst scenario for investors," said Himeno of Mitsubishi UFJ Securities. "But it might not be bad for JAL's turnaround, considering it would be able to cut legacy costs without unions' approval," he added.

 

(Reuters)

[Pieter C. 5]

EU Watchdog Charges Oneworld Airline Pact

 

October 2, 2009

 

A pact to cooperate on schedules and prices between British Airways, American Airlines and Iberia may have violated EU antitrust rules, European Union antitrust regulators said on Friday.

 

The airlines, part of the Oneworld alliance, had planned their transatlantic tie-up to take advantage of the US/EU "Open Skies" agreement, with the focus on routes between the United States, Mexico, Canada, the EU, Norway and Switzerland.

 

The European Commission, which in April launched a probe into both the Oneworld alliance and the Star Alliance, said it had sent a charge sheet to the Oneworld members.

 

"The Commission's statement of objections concerns agreements... regarding the coordination of the parties' commercial, operational and marketing activities in relation to passenger traffic on transatlantic routes," the EU executive said in a statement.

 

Virgin Atlantic on Friday said the antitrust concerns were justified.

 

"This alliance between British Airways and American Airlines is a monster monopoly which, if given the go-ahead, will allow these dominant carriers to increase their stranglehold at Heathrow by setting prices and agreeing schedules," Virgin's chief executive, Steve Ridgway, said in a statement.

 

The Commission, the EU competition watchdog, said its investigation into the Star Alliance was continuing.

 

(Reuters)

 

Iberia To Explain AA, BA Alliance To EU

 

October 2, 2009

 

Spain's Iberia is ready to explain its pact to cooperate on schedules and prices with British Airways and American Airlines to the European competition authority after the watchdog expressed antitrust concerns, a spokesman said on Friday.

 

"The EU is saying that they see a series of matters that need to be resolved. We're looking forward to sitting down and looking for remedies," the spokesman for Iberia said.

 

Earlier, the EU said the airlines' pact may violate EU antitrust rules.

 

(Reuters)