New CEO for JAL

Shares plummet amid bankruptcy rumours

Japan Airlines (JAL) has gained a new chief executive in the same week the company's shares fell by more than 80%.

Kazuo Inamori told reporters in Tokyo that he has accepted the position of ceo at JAL, after being asked to by the government.

Inamori, a corporate turnaround specialist with no background in aviation, said he would work three to four days per week, so was not asking for any salary.

There have been reports that the airline will file for bankruptcy next week, with the support of the Enterprise Turnaround Initiative Corporation of Japan.

The Oneworld member airline is thought to have around $16bn in debts, including a pension fund with a deficit of €2.49bn (JPY330bn).

In a bid to retain its membership in the Oneworld alliance, British Airways (BA) has offered a rescue deal worth between $165m and $240m.

BA said: "British Airways is committed to playing a full part in supporting the recovery of Japan Airlines within the oneworld alliance.

"As part of a $2 billion package of enhanced benefits for JAL put together with oneworld partners, we have proposed a radical extension of our co-operation with the airline.

"This would involve: British Airways and JAL establishing a joint business for flights between Japan and Europe; doubling the number of JAL codeshares on British Airways' European flights.

"We estimate the incremental value to JAL of these initiatives would be between $165m and $240m over three years."

Delta, a member of rival alliance Skyteam, has offered a deal worth $1bn to JAL, in the form of capital investment, short-term revenue guarantee, asset-backed financing and compensation for the cost of switching teams.

"As we have said from the beginning, the primary goal for Delta is building a long-term strategic alliance with Japan Airlines, benefiting both airlines tremendously," said a spokesperson from Delta.
 
"Delta stands ready to back this partnership with financial assistance, but for us this isn't a necessary component of an agreement.

"Delta and SkyTeam in November announced a US$1bn offer to JAL... A long-term SkyTeam partnership would provide hundreds of millions of dollars in additional annual revenue to JAL.

"Delta could provide far more passengers (3.2 million customers annually) to JAL than its current partnership (just 400,000 annually)."

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