One more step towards bankruptcy and more route cancellations coming

After the cabinet meeting held yesterday, Transport Minister Seiji Maehara said the Japanese government will let ETIC decides on Japan Airlines' fate. ETIC and DBJ were rumored to favor reviving JAL through court-led bankruptcy. Nikkei now reports that JAL's main creditors, who originally opposed the bankruptcy option, are now reluctantly agreed to the bankruptcy option.

There are two dates to watch out for. January 12 and 19 2010. Restructuring meeting will resume on January 12 and ETIC may complete its plans for JAL on that day. The rumored date for bankruptcy filing is January 19 according to Nikkei. So stay tuned next week for the announcement from ETIC and be prepared for the bad news :(

Below are some highlights of the rumored JAL restructuring plan:

• ETIC will turn around JAL in three years.
• ETIC will serve as JAL's administrator.
• ETIC and DBJ will offer 600 billion yen bridge loan.
• 13,000 job cuts.
• Write down value of JAL
• Additional 26 domestic and overseas routes suspension.
• Delisting JAL, i.e. wipe out existing shareholders. But JAL and creditors are still lobbying against that.

There are some more proposals about route cancellations. There are three proposals

1. JAL to withdraw from routes outside Asia and rely on international partners to serve other areas, e.g. US and Europe, through code-sharing agreement.
2. Transfer part of JAL's Asia network to Skymark, a Japanese low-cost carrier (not sure if this is on top of #1)
3. JAL to completely withdraw from international routes and transfer them to ANA. 

If #1 or #3 happens, I might have to close down this blog and stop flying JAL :( As long as JAL serves LAX and HKG on its own metals, I will still be a loyal customer/fan boy. But if I have to fly on AA or Delta from LAX to NRT, then connect on a JAL flight to HKG, I might have to reconsider whether I should switch to ANA. It will be really suck since ANA doesn't have a JAL Global Club equivalent for overseas members (The ANA SFC requires a bank account in Japan) and I will lose my JGC-like semi-lifetime benefits.

Fingers crossed and good luck to all JAL employees.

Source: Reuters via The New York Times and Kyodo News and Bloomberg