The DPJ government’s decision last weekend to go back on an earlier "understanding" by five cabinet ministers to provide financial support to Japan Airlines (JAL) is possibly pivotal in the way the saga will play out. It implies that, despite some apparent wavering, the new government has recaptured its resolve to play it tough with the flag carrier. Also, maintaining bankruptcy as a clear option on the table means that outcome permutations multiply.
A 28-Dec-2009 report in the Nikkei suggested that the Enterprise Turnaround Initiative Corporation of Japan (ETIC) has now told the Development Bank of Japan and three major banks that they should be prepared for JAL to file for protection from creditors under the Corporate Rehabilitation Law. According to the Nikkei, ETIC would then become a potential “sponsor” of the airline.
As oneworld and SkyTeam alliances circle the strickened airline with propositions of large investments in return for enhanced access, the expanded scenario could be valuable. Many key questions remain, not least the effect on JAL’s holding of slots at the capacity-constrained Tokyo airports. Last week, the Ministry allocated all of JAL’s proposed new slots to All Nippon Airways (over the cries of other domestic competitors).
But, as JAL reduces capacity – presumably more severe in case of bankruptcy – its existing slots also will become available. Presumably any prospect of US antitrust immunity for the “new” JAL and its partners will depend on transparency in their allocation, just one of the many dimensions of this massively complex transaction.