Japan Airlines: Bankruptcy and loss

Hard times for Japan Airlines

It would appear that airlines all over the world are struggling to stay in the air and in Asia, it is no different. Last month, Japan Airlines entered bankruptcy protection, but it seems even that has not prevented a massive increase in losses.

According to reports, the airline has lost US$1.99 billion (177.9 billion yen) in the last nine months of 2009, an increase from the 1.9 billion yen lost a year earlier. Despite losses that would cripple any other company, Japan Airlines is still continuing to operate flights while it undergoes restructuring under court supervision. It is expected that the airline will severely cut routes, staff and aircraft numbers in a bid to get back in the black, just as many airlines in Europe have done.

Rebuilding from the ground up

The Arline has been dismayed by the company's failure and has repeatedly apologise to shareholders, creditors and customers for the situation they all find themselves in.

"[We are] working fervently... to draw up an effective corporate revitalisation plan to rebuild the airline, while continuing to provide safe and stable flight operations and services to customers," the airline said in a statement.

Currently, the airline has debts of over US$16.5 billion and is one of the most high-profile airlines to fall to the global recession. The economic downturn saw fuel prices rise and customer numbers fall, leaving many airlines in the red.

In Europe and Asia, the increase in high-speed rail services have seen short-haul flights suffer as customers become more environmentally conscious, not to mention embracing cheaper prices. As a result, many airlines are attempting to restructure their organisations, however the likes of Lufthansa and British Airlines have faced major industrial strikes as a result.

In January, 2009 was described by the International Air Transport Association as the worst year for air passenger traffic since the post-war era. Passenger traffic dropped by 3.5 percent, while freight traffic fell 10.1 percent as the downturn hit demand.

Relevant articles:

Why are European airlines struggling? | Qantas dropping first-class seats? | China's high-speed rail hurting air travel?

Timon Singh

Timon Singh is a graduate of Liverpool University where he received a degree in Social and Economic History. He has previously worked for BBC Magazines on BBC Who Do You Think You Are? Magazine, the publication for the popular genealogy show.

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