chris-cooper

All Nippon Plans First 787 Overseas Flights in March

by on June 4, 2010

By Chris Cooper and Kiyotaka Matsuda June 4 (Bloomberg) — All Nippon Airways Co. , the first customer of Boeing Co. ’s 787 Dreamliner, plans to start flying the aircraft overseas in March, increasing international operations while rival Japan Airlines Corp. slashes routes. ANA, as All Nippon is also known, expects to receive its first 787 in November and will use it first on local routes, Executive Vice President Katsumi Nakamura said in an interview in Tokyo yesterday. The Japanese carrier is considering flights to Los Angeles, San Francisco, London, Paris, Frankfurt and Munich as well as China with the Dreamliner, he said. The new aircraft and the opening of a fourth runway in Tokyo’s Haneda airport will enable ANA to boost overseas flights as JAL restructures under government-backed bankruptcy protection. Boeing is more than two years behind schedule on producing the plane and is still struggling with faulty parts from suppliers. “ANA will be able to be more dominant in the international market as JAL is still in trouble,” said Jay Ryu , a Hong Kong- based analyst at Mirae Asset Securities Co. “China is an untapped market so it’s got to improve. One option is to expand into China so can they carry Chinese people to the U.S.” Tokyo-based ANA is the biggest airline customer for the 787, with 55 of the planes on order. The aircraft will be 20 percent more fuel efficient compared with similar-sized planes, according to the aircraft’s maker. ANA is forecasting a return to profit this fiscal year as it boosts international flights 15 percent. The 787s will replace Boeing 767 aircraft in the company’s fleet. Strengthening Brackets “It’s indispensible; without the 787 we wouldn’t be able to go ahead with our plans,” said Nakamura, who flew on a test flight last month. “Boeing seems very confident in being able to deliver the plane this year.” All Nippon gained 0.7 percent to close at 278 yen in Tokyo today, extending its gain for the year to 10 percent. The Nikkei 225 Stock Average has declined 6.1 percent this year. Boeing said last month it’s strengthening brackets attaching sections of the fuselage after discovering a former supplier’s design flaw. The planemaker has said it will deliver the plane to ANA in the fourth quarter of this year. ANA became the first airline to fly the 787 last month in a test flight. The carrier plans to start training pilots to fly the plane from September, Nakamura said. “It was exciting,” said Masayuki Ishii, one of two ANA pilots who flew the plane. “It was easy to handle.” ANA boosted its 787 order to 55 planes from an initial agreement for 50 in 2004, worth about $6 billion at list prices, it said in 2008. Japan Airlines has also ordered 35 of the aircraft. To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net ; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

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Japan Airlines’ Largest Banks Said to Agree to Bankruptcy Plan for Carrier

by on January 9, 2010

By Finbarr Flynn and Chris Cooper Jan. 9 (Bloomberg) — Japan Airlines Corp. ’s largest banks are set to agree to a bankruptcy of Asia’s largest carrier, said four sources familiar with the matter. Mitsubishi UFJ Financial Group Inc. , Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc. are prepared to go along with a proposed court-led reconstruction, said three people who declined to be identified because the matter is private. The state-owned Development Bank of Japan already agreed to the bankruptcy, a person said earlier. Japan Air is seeking new investors and loan write-offs as it restructures after posting three losses in four years. The government will hold talks on JAL’s future as soon as Jan. 12, Transport Minister Seiji Maehara told reporters yesterday in Tokyo after meeting with Prime Minister Yukio Hatoyama . Mizuho spokeswoman Masako Shiono , Mitsubishi UFJ spokesman Takashi Takeuchi and JAL spokeswoman Sze Hunn Yap declined to comment. Sumitomo Mitsui spokeswoman Chika Togawa wasn’t immediately available for comment and calls to the media relations office of the Ministry of Finance, which oversees Development Bank, went unanswered outside regular office hours To contact the reporters on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net ; Chris Cooper in Tokyo at ccooper1@bloomberg.net

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Japan Airlines Rises After Workers Agree to Cuts in Future Pension Payment

January 4, 2010

By Chris Cooper Jan. 5 (Bloomberg) — Japan Airlines Corp. , seeking to cut costs to avoid collapse, rose in Tokyo trading after workers accepted reductions of about 50 percent in future pension payments. The carrier won support from 68 percent of employees, spokesman Satoru Tanaka said late yesterday. Around a third of the carrier’s roughly 9,000 existing retirees have also agreed to a cut in payouts of about 30 percent, he said. JAL has sought to reduce its pension obligations, shed staff and eliminate routes after posting three losses in four years on slumping international travel. The carrier’s shares surged a record 31 percent yesterday after a state bank increased a credit line, easing bankruptcy concerns. “Things are turning around for JAL,” said Yasuhiro Matsumoto , an analyst in Tokyo at Shinsei Securities Co. “The pension issue is the main hurdle in avoiding bankruptcy.” The airline rose as much as 4.6 percent to 92 yen and traded at 90 yen as of the 11:00 a.m. break. The carrier needs the support of two-thirds of existing retirees to cut pensions under Japanese labor laws. JAL is seeking financing from a state-affiliated fund for a turnaround plan. Delta Air Lines Inc. and American Airlines have also made competing offerings to buy a stake in the carrier to access its networks in Japan and China. State-run Development Bank of Japan doubled a credit line for the carrier to 200 billion yen ($2.2 billion). The airline had used more than half of the original 100 billion yen facility as of last week, according to Transport Minister Seiji Maehara . To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net

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American, Oneworld Offer $1.1 Billion Japan Air Investment, Topping Delta

December 2, 2009

By Chris Cooper and Mary Schlangenstein

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Delta, SkyTeam Ready $1 Billion Japan Airlines Offer Rivaling American Bid

November 18, 2009

By Chris Cooper and Takahiko Hyuga Nov. 18 (Bloomberg) — Delta Air Lines Inc. and its SkyTeam alliance partners offered as much as $1 billion in incentives to lure Japan Airlines Corp. away from the Oneworld group led by American Airlines. SkyTeam airlines may invest $500 million in Japan Air, and Delta would supply $200 million in financing and $300 million to cover lost sales, Delta President Edward Bastian said today. American ’s bid may consist of $1 billion from private-equity firm TPG Inc. and $300 million from the airline. Delta’s proposal escalated the jockeying with AMR Corp. ’s American for a stake in money-losing Japan Air, also known as JAL. The U.S. carriers, the world’s biggest, are vying for access to JAL’s routes in its home country and in China, Asia’s largest air-travel market. “Delta has the bigger network, which may appeal to JAL, but American may offer more long-term potential because of its more global reach,” said Ryota Himeno , an analyst at Mitsubishi UFJ Securities Co. in Tokyo. He rates JAL as “market perform.” Bastian unveiled Delta’s offer in Tokyo, where JAL is based, and said the carrier may boost annual sales by $400 million by joining SkyTeam because Delta flies three times as many passengers to Japan as American. Delta wouldn’t cede any landing slots at Tokyo’s Narita Airport, Bastian said. The airline is the largest overseas carrier at the facility. ‘Survive and Prosper’ “Our goal for JAL is for it to survive and prosper,” he said. “JAL needs to survive for the long-term needs of the Japanese people.” Delta, based in Atlanta, has promised JAL to “bear the whole cost of the transition no matter how much it is,” Bastian said. He didn’t give details on how a SkyTeam investment would be funded. A JAL spokeswoman, Sze Hunn Yap , declined to comment. American and TPG, both based in Fort Worth, Texas, said in a statement their offer would provide “significant value” and be part of a “comprehensive recovery plan” for the Japanese carrier after three annual losses in the past four years. Delta’s offer to make up for lost revenue from shifting alliances “at best merely gets JAL back to status quo, while introducing costly disruptions and distractions,” American said today in its own statement. TPG is awaiting approval from JAL and the Japanese government to become a partner in the bid. JAL now gets as much as $500 million in annual revenue from its Oneworld partners, and approval from U.S. regulators to coordinate pricing on trans-Pacific routes potentially could add $100 million a year more, American has said. Government Bailout Japan Air is seeking loans of 125 billion yen ($1.4 billion) from the Japanese government to maintain operations and has applied to negotiate out-of-court agreements with creditors to temporarily freeze debt payments. Transport Minister Seiji Maehara said in a parliamentary session that a court-led bankruptcy for the carrier couldn’t be ruled out. The U.S. carriers’ offers “won’t be enough to solve JAL’s problems,” said Himeno, the analyst. AMR fell 12 cents, or 2 percent, to $5.87 at 10:08 a.m. in New York Stock Exchange composite trading , while Delta dropped 6 cents to $7.84. JAL fell 3.9 percent to 98 yen in Tokyo. Oneworld, SkyTeam and Star Alliance , the three main global airline groups, help carriers cut operating costs and allow them to expand sales networks without the difficulties or expense of a merger. JAL began a marketing alliance with American in 1999, and joined Oneworld in 2007. SkyTeam, Oneworld China Southern Airlines Co., the second-biggest member of SkyTeam by passenger numbers, is “involved in the incentives package,” said an official at the carrier, who declined to be identified because of a company policy. Korean Air Lines Co. declined to comment. Air France-KLM Group spokeswoman Brigitte Barrand said the airline had no immediate response. TPG is ready to inject 100 billion yen into Japan Air, said Kozo Iino , a spokesman. American said in its statement that it is prepared to make a “significant” investment in JAL, without elaboration. The carrier’s offer may be as much as $300 million, a person familiar with the matter has said. Staying in Oneworld would “make more sense,” and it would be “easy” to seek antitrust immunity to deepen ties with American, JAL President Haruka Nishimatsu said last week. Oneworld carriers, including British Airways Plc, Qantas Airways Ltd. and Cathay Pacific Airways Ltd., are crafting incentives to help keep JAL in the alliance, John McCulloch , the group’s managing partner, said Nov. 13, without providing details. To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net ; Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

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Japan Air’s Fourth State Bailout to Be Decided in 2010 After Panel Review

November 9, 2009

By Chris Cooper and Kiyotaka Matsuda Nov. 10 (Bloomberg) — Japan Airlines Corp. ’s application for financing from a state-affiliated fund won’t be decided upon before next year, the lender’s president said, prolonging the carrier’s bid to avoid collapse. “Due diligence won’t be quick,” Hiroshige Nishizawa , president of Enterprise Turnaround Initiative Corp. of Japan, said in an interview in Tokyo yesterday. “We’re not going to be able to make a decision on whether to provide aid by the end of this year.” The group will also draw up a new plan for the carrier, instead of relying on one completed by a government-appointed taskforce last month, Nishizawa said. JAL is seeking state support as it heads for its fourth loss in five years on plunging international travel. The due-diligence team will be decided upon “soon,” said Nishizawa, a former head of Tokyo Tomin Bank Ltd. Enterprise Turnaround was set up last month by the government and private companies with 1.6 trillion yen ($18 billion) to help restructure companies and buy assets. JAL fell 2.8 percent to 106 yen in Tokyo trading yesterday. The stock has slumped 50 percent this year, the biggest decliner in the Nikkei 225 Stock Average. The government created a taskforce to develop a plan for JAL after the transport minister said President Haruka Nishimatsu’s proposal to cut 6,800 jobs and slash routes didn’t go far enough. The carrier , predicting a loss of 63 billion yen this fiscal year, is due to announce first-half earnings on Nov. 13. To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net ; Kiyotaka Matsuda in Tokyo at kmatsuda@bloomberg.net

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AMR Said to Seek Deeper Ties With Japan Airlines to Keep Oneworld Together

October 28, 2009

By Chris Cooper and Mary Jane Credeur Oct. 28 (Bloomberg) — American Airlines , the world’s second-largest carrier, has proposed a deepening of ties with Japan Airlines Corp. as it seeks to keep the Asian company in the Oneworld alliance, a person with knowledge of the plan said. Fort Worth, Texas-based American Airlines has urged Japan Air , or JAL, to seek antitrust immunity to collaborate on schedules and pricing as soon as a U.S.-Japan “open skies” aviation treaty is concluded, according to the person, who asked not to be identified because the discussions aren’t public. American is seeking similar immunity with British Airways Plc and Spain’s Iberia Lineas Aereas de Espana SA to compete on trans-Atlantic flights with Delta Air Lines Inc. , which already has such an arrangement with Air France-KLM . Collaboration on timetables, pricing and routes would give Japan Air and American most of the benefits of a merger without the associated costs. “JAL is a very important part of Oneworld so they’ll think of a way of keeping them in the alliance,” said Hunter Keay , an analyst at Stifel, Nicolaus & Co. in Baltimore with a “hold” recommendation” on AMR stock. “The company also requires a lot of money, but most of that has to come from the Japanese government. I don’t think airlines have the resources.” Japan Air spokeswoman Sze Hunn Yap and Richard Hedges at American, a unit of AMR Corp., declined to say whether the carriers are discussing an application for antitrust immunity. Tokyo Talks The Japanese and U.S. governments began four days of talks in Tokyo this week to discuss liberalizing aviation agreements between the countries as the capital’s Haneda and Narita airports are set to increase their capacity in 2010. Haneda, Asia’s busiest airport, will offer 60,000 overseas flights a year and start 24-hour operations after opening a fourth runway next October. Narita, Japan’s busiest international gateway, will boost capacity by 10 percent to 220,000 slots annually from March. Japan Air joined Oneworld in 2007 and has had tie-ups with American Airlines for more than 10 years, with the two airlines codesharing on flights between Tokyo and Dallas. JAL’s domestic rival All Nippon Airways Co. is in the Star Alliance along with UAL Corp. ’s United Airlines and Deutsche Lufthansa AG . Antitrust immunity lets carriers coordinate more closely than traditional marketing alliances that limit airlines to selling seats on each other’s flights through codesharing and dividing some of the revenue. The new alliance could be approved as early as June, assuming completion of the treaty in December and an application for regularity approval in January, the person said. Stake Sale Japan Airlines, which has requested a fourth state bailout since 2001, is also considering the sale of a stake to American or Delta , a member of the SkyTeam group. Atlanta-based Delta, the world’s largest carrier, is the No. 1 overseas airline at Narita and doesn’t have a Japanese codeshare partner. JAL , due to announce quarterly results next month, posted a 99 billion-yen ($1.1 billion) loss in the first quarter, the most in six years, as business and leisure travel plummeted during the country’s worst postwar recession. Asia’s biggest carrier received a 100 billion-yen loan from state-owned Development Bank of Japan and other local lenders in June. The carrier last week asked banks to write off or convert 250 billion yen into equity, according to a person familiar with the matter who declined to be identified because the talks are private. JAL’s new restructuring plan is due to be submitted to the government by the end of this month, Transport Minister Seiji Maehara said last week. To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net ; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

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Japan Airlines Posts Biggest Loss in Six Years as Overseas Travel Plummets

August 6, 2009

By Chris Cooper Aug. 7 (Bloomberg) — Japan Airlines Corp. , Asia’s largest airline by sales, said its first-quarter loss surged almost 30- fold as companies slashed business trips amid a global recession and an outbreak of swine flu cut travel demand. Japan Air had a loss of 99 billion yen ($1 billion) in the three months ended June 30, compared with a loss of 3.4 billion yen in the same period last business year, the Tokyo-based company said in a statement today. Sales dropped 32 percent to 335 billion yen. The airline, set for a second year of losses, is cutting costs after suffering its biggest drop in overseas passengers since 2003. Rival Singapore Airlines Ltd. last week said it may have its first annual loss in 24 years and Cathay Pacific Airways Ltd. is considering ripping out some premium-class seats as they cope with the deepest recession since World War II. “Japan Air needs more cost cuts,” said Mitsushige Akino , who oversees $615 million in assets in Tokyo at Ichiyoshi Investment Management Co. “It should get rid of money-losing routes.” The airline industry globally may lose $9 billion this year as a swine flu outbreak compounds the effects of the global recession, according to the International Air Transport Association. Japan Air fell 1.2 percent to 166 yen as of the 11 a.m. close of morning trade in Tokyo, before earnings were announced. Overseas Passengers Japan Air is losing international passengers as the economy shrinks. The airline has cut the frequency of eight overseas routes, including Tokyo flights to and from Taipei, Seoul and New Delhi and is ending its Osaka-London service due to shrinking demand. All Nippon Airways Co. , Japan’s second-largest carrier, forecasts a return to a profit this fiscal year helped by 73 billion yen in cost reductions. ANA, as All Nippon is also known, last month said it will post a profit of 3 billion yen for the year ending March 31, compared with a loss of 4.26 billion yen last year. Japan Air reached an agreement with its largest labor union to cut workers’ pay by 5 percent from October last year. The carrier forecast in May its fuel costs will fall by 111 billion yen , or 27 percent, in the year ending March 31 from 413 billion yen last business year. Jet Fuel The price of jet kerosene has tumbled since reaching a record $181.85 a barrel in July 2008. It traded at $82.05 a barrel in Singapore yesterday. President Haruka Nishimatsu has said the company will have a one-time savings of 88 billion yen this year by cutting pensions. The reduction has yet to be approved by the carrier’s retirees. More than 3,000 retirees out of approximately 9,000 intend to vote against the move, according to an unofficial tally on a Web site run by The Committee to Consider the Revision of JAL’s Pension Scheme. That’s enough to block the cuts as the Tokyo- based carrier needs a two-thirds majority to push them through. To contact the reporters on this story: Chris Cooper in Tokyo at ccooper1@bloomberg.net

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