Japan Airlines Corp., restructuring under bankruptcy protection, won court approval for a turnaround plan that includes slashing jobs, cutting debt and paring routes.
Five lenders have also agreed to provide loans to refinance debt, Enterprise Turnaround Initiative Corp. of Japan, the state-backed fund overseeing JAL’s restructuring, said today. It didn’t say how large the loans were.
The turnaround body will work toward an initial public offering of the airline, Hideo Seto, ETIC chairman, told reporters in Tokyo. He also said he expects to have implemented the restructuring plan by the end of March.
Enterprise Turnaround plans to invest 350 billion yen ($4.2 billion) in JAL to help pay for restructuring after the carrier filed for Japan’s fourth-largest bankruptcy in January. The airline is slashing a third of its workforce, eliminating 49 routes and cutting 103 aircraft to pare costs.
The Tokyo-based carrier made an operating profit of 23 billion yen in October, according to the statement today. It had an operating profit of 110 billion yen for the April-September period, compared with a loss of 96 billion yen a year earlier.
The lenders providing refinancing funds include Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group, Mizuho Financial Group Inc. and state-owned Development Bank of Japan, which were owed 429 billion yen by JAL at the end of March 2009. State-owned Japan Bank for International Cooperation will also give the carrier loans, according to the statement.
JAL, which was delisted from the Tokyo Stock Exchange earlier this year, has said it eliminated 8,000 jobs by September and aims to cut another 8,000 by the end of March through early retirements, attrition and shedding or closing units.
The carrier had sold 33 Boeing Co. 747s and MD-80s as of the end of August, according to spokeswoman Sze Hunn Yap. It had 278 planes at the end of March, according to its website.
“The most difficult thing in turning around JAL has been changing bureaucratic thinking,” Chairman Kazuo Inamori told reporters in Tokyo.