Monday, 28 September 2009

Privatised JAL after public money

I have only ever flown with JAL once and that was not by choice. But I had to get from Kansai to Hong Kong on an Air France endorsed ticket, and they had booked me with JAL. The JAL flight turned out to be an experience I could well have done without. When the surly stewardess came round with the free newspapers she glared at my non-Japanese face and said, “I haven’t got one for you!”, (despite the fact that I lived in Japan and could read some Japanese, not that she bothered to find out). I think in all my years of frequent flying I had never, and have never since, experienced such downright rudeness. JAL was an airline that I then proceeded to forget all about, until recently, when I heard that Japan’s transport minister, Seiji Maehara, has just said that he will not force the struggling JAL to go bankrupt.

So it turns out that the Japanese government has appointed a team of corporate experts to create a restructuring plan for the airline, because JAL’s own draft reconstruction plan has been described as “insufficient”. This crack team will be making recommendations by late October or early November.

So what has forced JAL to come to this pretty pass? Well, the airline has just notched up its biggest-ever quarterly net loss of 99 billion yen ($1 billion) in the quarter up to June, and it is forecast that there will be a net loss of 63 billion yen ($701 million) for the current fiscal year up to March 2010.

JAL was privatised back in 1987, but the company has had to turn to public funds, with 60 billion yen ($668 million) in loans from the government-owned Development Bank of Japan in June, and apparently further requests for cash. So much for the free market economy.

It will be interesting to see how the airline copes in the months ahead.

Newspapers, anyone?

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