JAL flies into turbulence
Japan Airlines passengers check in at Haneda International airport in Tokyo yesterday. Japan Airlines shares have nose-dived, hammered by deepening fears that investors will see their stakes wiped out as the spectre of bankruptcy looms large for Asia's biggest carrier. Photo: AFP
Asia's largest carrier Japan Airlines has hit major turbulence in recent years as the mammoth company repeatedly miscalculated tougher business climates.
Flying to 217 airports in 35 countries and regions, the flag carrier of the world's second-largest economy is saddled with huge debt and set to file for bankruptcy as early as next week in a court-led rehabilitation process.
JAL's history has mirrored the bumpy path of the nation's "miracle" economic recovery after World War II and its subsequent stagnation which started with the so-called lost decade of the 1990s.
The airline was established in 1951, half controlled by the government. It made its international debut in 1954, connecting Tokyo, Honolulu and San Francisco.
With the trademark crane logo on its wings, JAL rapidly widened its operations at home and overseas, at one stage becoming the world's largest carrier in terms of regular flights.
Disaster struck in 1985 when a JAL Boeing jumbo jet crashed into a mountainside in central Japan, killing all 520 people aboard in the worst single-airplane accident in aviation history.
As it battled to overcome the tragedy, the carrier was fully privatised in 1987 and expanded its fleet in the early 1990s, a move which soon turned out to be a financial burden as the speculative "bubble" economy burst.
The carrier now has 279 aircraft, including 113 leased planes, most of them Boeing jets. It transported about 53 million passengers last fiscal year, 41 million of them on domestic routes.
As the global aviation industry was battered by the fall-out from the September 11, 2001 attacks as well as the SARS and bird flu scares, JAL plunged into huge losses and sought massive credit lines from the government.
In a bid to survive the tougher business environment, JAL and domestic carrier Japan Air System merged to form JAL Group, changing the logo to the current "Arc of the Sun" resembling the national flag.
The integration, however, led to further losses and a slowdown in restructuring efforts, while its late-coming rival All Nippon Airways (ANA) moved into high gear.
Despite the privatisation, JAL has often come under political pressure to maintain regular flights to more than half of domestic airports even though many are unprofitable, said Makoto Murayama, analyst at Nomura Securities.
Murayama added that JAL also miscalculated international demand.
"ANA predicted the decline in demand for international flights would not recover after the 9/11 terrorist attacks in the United States -- which proved to be right in later years," he said. "JAL thought demand would recover.”
UPS AND DOWNS OF JAPAN AIRLINES
AFP, TOKYO
Japan Airlines shares nose-dived yesterday as the spectre of bankruptcy loomed large for Asia's biggest carrier. Following are milestones in the carrier's half-century history:
1951: Japan Airlines (JAL) is established
1953: Starts operation as a quasi-government flag carrier
1954: Flies first international route to San Francisco via Honolulu
1960s: Expands international routes as economy booms and 1964 Tokyo Olympics boost the number of foreign tourists
1981: Becomes the top international air cargo operator
1983: Becomes the top carrier for overall scheduled international operations
1985: A JAL Boeing-747 domestic flight crashes in central Japan, killing 520 people, the deadliest aviation accident involving one airplane
1987: Airline is fully privatised
1998: Admits ties with organised crime in a massive scandal
2001: Asks for public assistance after air travel falls following the 9/11 terrorist attacks against the United States
2003: Asks for more public assistance amid SARS and Iraq war
2004: Completes merger with Japan Air System
2009: Government launches task force to rescue JAL. Airline reports losses of some 1.5 billion dollars in the six months to September after the aviation industry was hit by the financial crisis
2010: The state-backed Enterprise Turnaround Initiative Corp. of Japan considers JAL's restructuring. JAL is expected to file for bankruptcy protection amid a court-led rehabilitation process
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