TOKYO – Japan Airlines filed for bankruptcy Tuesday in one of the nation's largest corporate failures, entering a restructuring from which it seeks to emerge leaner, smarter and free of crippling debt.
Asia's biggest carrier by revenue, called JAL for short, applied for protection from creditors under the Corporate Rehabilitation Law — Japan's version of Chapter 11 — with the Tokyo District Court.
A state-backed turnaround agency said it had decided to assist with the reorganization and pledged to offer the money-losing airline "sufficient funding" during the process. The transport ministry also said in a statement the government would offer "necessary support" without giving details.
"JAL constitutes an important part of the aviation network that provides the foundation of Japan's development," the government said. "Therefore, the government of Japan will provide necessary support for JAL until the completion of its rehabilitation."
JAL President Haruka Nishimatsu resigned, with new management to be announced in "early February," the company said. It said its flight operations would not be interrupted.
"We are confident that the swift revitalization of JAL Group will be achieved, after which JAL Group will be reborn as a leading airline group that could again lead the global airline industry."
The day's events culminate a process that began in October when JAL — saddled with debts of 2.32 trillion yen ($25.6 billion) — first turned to the Enterprise Turnaround Initiative Corp. for help. Under the prepackaged reorganization, it will embark on a massive overhaul to shed the fat and inefficiency that hobbled Asia's biggest airline.
JAL said it would cut its work force to an "appropriate scale." News reports have said its turnaround would involve about 15,600 job cuts, or a third of JAL's payroll, by March 2013.
There was no word on the outcome of a fierce tug-of-war between Delta Air Lines and American Airlines for a slice of JAL's business. Despite its woes, the airline's access to Asia is a mouthwatering prize for foreign airlines.