Japan Airlines, a former state-owned flag carrier that was once a source of national pride, has become one of the highest profile victims of the country’s long economic malaise.
JAL’s rise and fall mirrors the nation’s economic “miracle” after World War II as well as its years of stagnation after the bubble burst in 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.
Flying to 217 airports in 35 countries and regions, the biggest carrier of the world’s second-largest economy is saddled with huge debt.
With that estimated at about 2 trillion yen ($22 billion), the JAL bankruptcy is the biggest failure outside the financial sector since World War II, according to Tokyo Shoko Research, an advisory company. Despite the airline’s current woes, its landing slots remain coveted, with US carriers American Airlines and Delta locked in a bidding war for a slice of JAL as they look to increase their share of the Asian market.
Sporting its trademark crane logo, JAL rapidly widened its operations at home and overseas during the 1960s and 1970s, at one stage becoming the world’s largest carrier in terms of flights.
Disaster struck in 1985 when a JAL jumbo crashed into a mountain in Japan, killing 520 of the 524 people aboard in the worst single-airplane accident in aviation history.
As it battled to overcome the tragedy, the carrier was fully privatized in 1987 and expanded its fleet in the early 1990s, a move that soon turned out to be a financial burden as the economic “bubble” burst.
The carrier has 279 aircraft, including 113 leased planes. It transported about 53 million passengers last year, 41 million of them on domestic routes.
As the global aviation industry was battered by the fallout 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 JAL’s smaller rival All Nippon Airways moved into high gear.
Despite the privatization, JAL has often come under political pressure to maintain flights to more than half of domestic airports even though many are unprofitable, analysts say.
Nomura Securities analyst Makoto Murayama added that JAL also miscalculated international demand. “ANA predicted the decline in demand for international flights would not recover after the 9/11 attacks in the United States — which proved to be right,” he said. “JAL thought demand would recover.”
More recently, the global economic crisis as well as the swine flu outbreak dealt another serious blow. JAL lost about $1.5 billion in the six months to September 2009.
JAL, which has about 47,500 employees, has been saddled by huge pension payouts to retirees, who have now agreed to reduced payments. Agence France-Presse
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