Japan Airlines Corp will reportedly require a further JPY100 billion (USD1.1 billion) in financial aid, with the carrier forecasting a larger-than-expected write-down of losses from asset valuations (Dow Jones/Mainichi Japan/Asahi Shimbun, 18/19/21-Jun-2010). JAL's debts are expected to surpass its assets by JPY950 billion (USD10.5 billion) or JPY90 billion (USD994 million) more than predicted. The airline will reportedly request banks to waive loans in excess of JPY500 billion (USD5.5 billion), up more than JPY150 billion from initial estimates, and the Enterprise Turnaround Initiative Corp of Japan (ETIC) to increase its investment in the airline. The carrier's negative net worth is approximately JPY1 trillion (USD11.0 billion), a notable increase from the USD9.6 billion disclosed in Jan-2010. The carrier is expected to announce its progress and restructuring plans by the end of Aug-2010 to the Tokyo District Court.
JAL to request further financial aid as debts surpass assets
You may also be interested in the following articles...
Finnair accelerates capacity growth, led by long haul; seeks cost efficiency through fleet & labour
In 2016 Finnair accelerated its rate of capacity growth after a modest return to expansion in 2015, following cuts in 2014. It also experienced a fall in unit revenue (as did most European airlines), most notably in the regions of highest capacity growth, i.e. the long haul markets North America and Asia.
Asia is Finnair's most important long haul market (Japan and China are its two biggest markets by ASKs) and its ranking by seats on routes between European and NE/SE Asia is disproportionate. It has ambitious growth plans in the region and will increase frequencies to Tokyo and Hong Kong this summer. Its long haul network, which will also extend to San Francisco this summer and Goa next winter, is largely founded on connecting traffic via its Helsinki hub.
Finnair's return to capacity growth has coincided with a return to profit, but lower fuel prices were the main driver of its bottom line improvement. Its profit margins remain slim and, beyond the vagaries of fuel price benefits, Finnair aims for more sustainable unit cost cuts. Fleet strategy and labour productivity form a two pronged attack on its cost base.
Vueling NEXT Part 2: new CEO to lead IAG's LCC in restructuring bid to achieve IAG targets
Vueling's new CEO, Javier Sanchez-Prieto, is leading a programme ('Vueling NEXT') to improve its profitability, both through revenue enhancement and cost efficiency gains. Among other aims this hopes to reduce Vueling's high levels of seasonality, to raise aircraft utilisation and to improve labour productivity. Given ambitious financial targets by IAG – action is needed.
Part 1 of CAPA's analysis of Vueling examined its capacity growth and profitability trends since its acquisition by IAG in 2013. Vueling's operating margin and return on invested capital are on a downward trend, hence the new initiative to reverse these trends.
This second part of CAPA's analysis considers the profit improvement programme. During this programme Vueling's fleet will remain broadly flat to 2018, before resuming growth thereafter. Focus markets for Vueling are domestic Spain and Spain-Europe. It has strengths in these markets but faces growing competition from its lower-cost rival Ryanair, which has also been raising its service quality – closing the gap to Vueling's more premium positioning on the LCC spectrum.