Japan Airlines, once the world's largest international carrier, is set to emerge from bankruptcy administration this week as a smaller company more reliant on Asian routes and global partners.
JAL has scaled back its global network, chopping 49 routes, including Sao Paulo, Amsterdam and Milan, and grounding the last remnants
of what was the world's largest Boeing 747 fleet as it cuts 103 planes.
The Tokyo-based airline has also shed about a third of its staff since entering court administration in January 2010 after three losses in four years.
"JAL has to be far more open-minded about its future than being a standalone airline," said Mike Newman, head of sales at Macquarie Capital Securities (Japan). "It all comes down to sustainability of earnings."
The carrier has offset fleet cuts by boosting co-operation with partners in the Oneworld grouping, including a venture with American Airlines that is due to start on April 1 and increased codesharing with Hong Kong-based Cathay Pacific Airways.
JAL's reduced role has also seen it shun the new 747-8 and the Airbus A380 superjumbo in favour of smaller planes including 35 on-order 787 Dreamliners.
"I don't think it will be growing back to where it was," said Peter Kenworthy, a project director of aviation at Mott MacDonald Group. "It will probably be looking to increase capacity through its alliances."
JAL spokeswoman Sze Hunn Yap last week said the airline expected to finish its restructuring this month as planned.
JAL's exit from court administration coincides with a travel plunge after the March 11 earthquake and tsunami, which left more than 27,000 dead and missing. The quake also crippled a nuclear power plant north of Tokyo, causing power shortages and concerns about radiation leaks.
After the quake, Tokyo's Narita Airport, Japan's main international gateway, had a 60 per cent drop in foreigners arriving from overseas to March 22, an Immigration Bureau spokesman said last week.
All Nippon Airways, Japan's largest listed carrier, had a 25 per cent drop in domestic passengers to March 21 and a 15 per cent fall in international travellers, it said last week. Yap said JAL was still compiling figures.
Enterprise Turnaround Initiative, the state-backed fund that has led JAL's 872 billion ($14.2 billion) turnaround, will continue to oversee the carrier.
- BLOOMBERG
