JAL, Asia’s largest airline by revenues, will remain in the skies thanks to nearly 1 trillion yen ($11 billion) in support from a state-backed fund and must go through a sweeping restructuring under a new board and management.
Shareholders will be wiped out and lenders will forgive a larger-than-expected 730 billion yen in debt as part of the deal with the fund, the Enterprise Turnaround Initiative Corp of Japan (ETIC).
JAL, which has now been bailed out by the Japanese government four times in the past 10 years, will cut 31 routes and replace many of its older and less fuel-efficient planes. JAL’s 2.3 trillion yen bankruptcy ranks as Japan’s fourth-largest ever and its biggest by a non-financial firm. The airline’s debt figure was as of the end of September, meaning the actual number could considerably higher. Its core airline business had at least 1.5 trillion yen in debt as of the same period.
Shares of JAL, which have fallen more than 90 percent since the start of the month, closed flat at 5 yen after trading down 2 yen to 3 yen. They will be delisted on Feb. 20, according to the stock exchange.
