Japan Airlines files for bankruptcy as debt mounts to $25 billion

Japan Airlines, the largest airline in Asia, today filed for bankruptcy with 2.3 trillion yen ($25.4 billion) in debt as of end-September 2009, under a state-backed restructuring and revival plan.

 Japan Airlines Corporation, Japan Airlines International Co Ltd and JAL Capital Co Ltd (collectively called `JAL') jointly with the Development Bank of Japan, Japan Bank for International Cooperation, Mizuho Corporate Bank Ltd, The Bank of Tokyo-Mitsubishi UFJ Ltd and Sumitomo Mitsui Banking Corporation filed the bankruptcy petition with the Enterprise Turnaround Initiative Corporation of Japan (ETIC), which in turn gave assurance of support, JAL said in a release.

 JAL also filed petitions for commencement of corporate reorganisation proceedings with the Tokyo district court, which, in turn, appointed ETIC and Eiji Katayama as reorganisation trustees.

The court has authorised the trustees to continue JAL's payment of certain commercial transaction claims, including payments for fuel and other supplies and services, as well as leases and other related obligations. Also, JAL will be able to obtain DIP financing from DBJ and ETIC, the amount of which will be sufficient to continue its business.

Under the bankruptcy protection plan, customers' airline tickets and frequent flyer miles will be fully protected allowing uninterrupted operation of the airline group. JAL group's business will also continue as usual.

In its statement JAL said it expects a quick turnaround, and re-emergence as a leading global airline group, on the back of support from ETIC and assistance from banks and the Japanese government.