Japan Airlines Basically Just A Total Mess Right Now

January 5, 2010 at 9:12 AM | by Omri | Comments (0)

What. A. Clusterfark. Japan Airlines stock lost 25% of its value on the last trading day of 2009, as the airline declared that it might declare bankruptcy on account of its $15 billion debt. The next day they followed up by announcing that they might cut international flights, effectively upending the airline industry. That got folks' attention.

Before trading opened yesterday morning, the Japanese government revealed that JAL might not have to go into bankruptcy at all. Instead government officials are asking the state-owned bank to double the airlines' credit line, giving the company valuable oxygen while it tries to get back on its feet.

Another alternative being floated is some kind of half-restructing/half-bankruptcy plan that would allow the company to retain its listing on the Tokyo Stock Exchange while its outlook improves.

How might such a dramatic turnaround take place? Here's where things begin to get particularly headspinning. If you've been following the JAL / American Airlines / Delta poker game, you know that there are literally billions being thrown around in attempts to solidify alliances with Japan's ailing flagship carrier. American recently raised the stakes even higher, promising to let JAL be their exclusive NE Asia partner. And yet JAL is still leaning towards embracing Delta and switching from oneworld to SkyTeam.

Of course JAL can't keep bleeding money indefinitely, all the while keeping everything else in limbo. That's why they've committed to making a final decision some time around... umm... October 2010.

[Photo: Uryah / Wiki Commons]

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