JAL - still reeling from the huge losses - has secured a brief lifeline from its troubles. In Japan the line between government and industry is not as clearly defined as in other economies. This is not a criticism - just a statement of observation. The loan was secured from a company (Development Bank of Japan Inc) 100% owned by the Japanese Government's Ministry of Finance.
According to media reports in Japan the size of the loan is over 100 billion Yen (approx $1.1 Billion) roughly equivelent to the past 6 months worth of losses.
Effectively JAL its management and the Government entity charged with fixing broken companies in Japan - Enterprise Turnaround Initiative Corp. of Japan - has 6 months to right the ship. This is hardly enough time for them at the moment to do that. So the clock is ticking.
It seems that a Billion here a Billion there is the game for JAL. The ETI Corp and JAL have three basic tasks in front of them. In a normal economy and in a normal world any of the three would be regarded as a significant challenge. These are not normal times.
The Three Challenges are:
1. Restructure the corporate financial structure of JAL all without appearing to file the equivalent of Chapter 11.
2. Restructure the company work practices and functions to streamline the company and make it effective as an entity against the competition of ANA and in a new more competitive local market.
3. Secure an international partner who will help power the business to a sustainable position outside of the domestic market.
I have commented before that the size and scale of JAL's issues are greater than most people had imagined. The amount of unhappy people will be legion. These range from workers who will lose their jobs, to investors who will lose their stock value to bankers who will also be out their cash. At this point I find it hard from the international perspective to see how American/OneWorld can benefit JAL more than Delta and Skyteam.
Against this backdrop are some interesting negotiations on OpenSkies between Japan and the USA. The new Japanese Administration are getting a baptism by fire. I can only wish for the best for everyone concerned. But as in many cases the answers do not lie in the old ways. The Government of Japan has an opportunity to foster the development of a new order in Air Transport in Japan. Opening the market to Low Cost Air services would be a way to expand the market and ultimately to turn one of the most closed markets into a true example of open competition where land (high speed rail) and air can compete fairly. Lowering the cost of flights to Japan could open up a huge tourist market. Perhaps the Japan of 2010 is ready for this.
Now that's a thought
Cheers
