JAL Bailout

[Dogen Z]

As Astro Boy mentioned, JAL looks like it will be another GM. The DPJ administration has already started proceedings to downsize the company after a bailout, bypassing plans that current management had in mind. The DPJ has a seasoned team in place to do this and is not wasting any time. Looks like they studied Obama's techniques very well.

http://www.yomiuri.co.jp/dy/business/20090927TDY03104.htm

 

[JerseyBoy]

I am betting JAL will just squander the tax payer financed bail out and end up belly up. It seems its core corporate culture is so bureaucratic and uncompetitive that the only salvation is to sell it to other major airlines to recoup to stop the loss any further or do a whole sale liquidation to get it over with it. When the company's innards are rotten, it's difficult to steer it away from its own demise.

The latter option is a political suicide. This is what happens when a tax payer funded intervention starts pumping money in a fundamentally uncompetitive corporation. If there were no public funds, there could have been a slight chance the J-gov would let this lumbering uncompetitive beast to where it belongs, a corporate graveyard.

 

[Astroboy]

Poor JAL .... until recently, they were always told by government to go into service at every regional airports throughout Japan as government (+ local governements) continued to open new airports because politicians need to hear voice of locals. Needless to say, local airports mean money-losing business.

Restructuring JAL partly means closure of unprofitable airplane route, which means closure of many local airports.

 

[Dogen Z]

JAL undoubtedly will be a much smaller airline after restructuring, but I wonder if management will be the same. Besides all the legacy operational problems, JAL's management seemed to be operating like it was still a government-owned monopoly. It reacted to events rather than initiate new programs to deal with potential problems as ANA did. Perhaps management should be changed along with the reorganization.

That said, I have to admit that I like JAL's service and its frequent flier mileage program, which is bound to become much more restrictive from here on.

 

[JerseyBoy]

Back in the days, my Japanese friends and acquaintances say they like JAL's service. I just didn't understand why JAL's service was so good as I had not found their service any different from other major airlines, except for additional Japanese flight attendants onboard. About several weeks ago, I used JAL because its fair was the lowest out of New York. If not, I would have used other carriers. But, that flight was code shared with AA; so, I stopped following which airline is operating the plane.

 

[Elizabeth]

Poor JAL .... until recently, they were always told by government to go into service at every regional airports throughout Japan as government (+ local governements) continued to open new airports because politicians need to hear voice of locals. Needless to say, local airports mean money-losing business.
Restructuring JAL partly means closure of unprofitable airplane route, which means closure of many local airports.

I am skeptical restructuring can be done in such a drastic, complicated situation outside the courts. But bankruptcy definitely would have meant renegotiated regional airport contracts. Which is probably a big reason it wasn't allowed.

Japan needs a new airline development policy that doesn't make carriers responsible for subsidizing government rural revitalization + the entire tourism/hospitality industry so lawmakers can fly home more conveniently.

 

[Dogen Z]

Bankruptcy

As you probably know by now, JAL ultimately wasn't bailed out and is now undergoing radical reconstruction under bankruptcy proceedings. And as Elizabeth pointed out, Japan's aviation policy will also be severely revised. This was a win for taxpayers. JAL stockholders and lenders had to take it on the chin. Such an historic failure hopefully should show some parts of the gov't that it shouldn't get its hands too deep into companies' policies. (OTOH, the financial meltdown showed that gov't can't take a hands off policy either.) It was an unfortunate lesson from the school of hard knocks.

 

[Tokugawa Ieyasu]

Hopefully JAL can emerge from the restructuring as a leaner and stronger international carrier. I had pleasant memories of flying on JAL as a child decades ago and my feelings of goodwill toward the carrier remain to this day

The NHK program "50 Voices" had a behind-the-scenes segment of the pilots, flight attendants, maintenance crews…etc of JAL and ANA in Haneda. It was interesting to see the faces behind the headlines.