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Japan Airlines to cut 170 jobs in December

by on December 29, 2010

Japan Airlines to cut 170 jobs in December

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Japan Airlines to cut 170 jobs in December

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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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All Nippon Plans First 787 Overseas Flights in March

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Japan Airlines plans more route cuts

April 29, 2010

Japan Airlines plans more route cuts

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Japan Airlines to slash 16,500 jobs

April 8, 2010

Japan Airlines to slash 16,500 jobs

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Japan Airlines aims to cut 16,500 jobs by next March

April 7, 2010

Japan Airlines aims to cut 16,500 jobs by next March

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`Pink Slip Party’ Host Has $2.2 Million Payday as Tokyo Bankers Find Jobs

March 17, 2010

By Takahiko Hyuga March 17 (Bloomberg) — Soichiro “Swimmy” Minami parlayed a get-together for laid-off bankers into a $2.2 million paycheck in less than a year. In April 2009, Minami threw what he called Japan’s first “pink slip party” at the Heartland bar in Tokyo’s Roppongi district. About 300 finance professionals, made jobless by the worst recession since World War II, mingled with recruiters and sipped $5.50 beers they paid for themselves. The cost to Minami: Zero. Last week, the former Morgan Stanley banker raised 200 million yen ($2.2 million) for his career consulting company, BizReach Inc. , from a Nomura Holdings Inc. affiliate. Minami plans to use the money to triple the number of subscribers to his job-search Web site as banks and brokers rebuild after shedding 330,000 jobs worldwide during the financial crisis. “When we started last year, most clients were just beginning to eat into their severance packages after getting downsized,” Minami, 33, said in an interview. “Now, overseas banks have resumed hiring, and bankers who are still employed are using us as a kind of check-up service for future career opportunities.” When Minami organized his first pink slip party, the Topix index was just starting to recover from a 26-year low and overseas financial firms were firing bankers in Japan. Similar events were springing up in New York and London. ‘Patchy Pattern’ Goldman Sachs Group Inc., JPMorgan Chase & Co., Bank of America Corp., Credit Suisse Group AG, Citigroup Inc. , BNP Paribas SA, Morgan Stanley and Deutsche Bank AG cut their combined workforce in the world’s second-largest economy 12 percent to 7,846 in the year to March 31, 2009, according to data compiled by Bloomberg. Rebounding stock markets and a surge in share and bond sales last year sparked renewed demand for everything from equity analysts to bankers who advise on mergers. The Topix has gained 34 percent from a March 12, 2009, low. “U.S. and European investment banks have resumed hiring M&A and coverage bankers, especially for junior positions,” said Rikako Onishi , chief executive officer of Kotora Co., a Tokyo-based headhunting firm. “It’s still a patchy pattern. It may be just a correction after eliminating too many jobs.” BizReach operates a paid-membership job vacancy site for bankers in the market for positions paying at least $111,000 a year. The average Japanese worker earned 4,296,000 yen, or $47,594, in 2008, according to the National Tax Agency. No More Parties Minami, who founded BizReach in 2007 after leaving the Rakuten Eagles baseball team he helped start in 2004, said he’ll use the funds he raised from Jafco Co. to boost advertising and hire more sales staff. He plans to increase the number of paying members to the job-search service to 50,000 by year-end from 16,000 now. The pace of new monthly registrations doubled to 2,500 in January from December, and BizReach expects to sign up about 3,500 people this month, said Minami. Bankers flush with end-of-year bonus cash are joined by professionals including flight attendants in scouting for finance-industry jobs, Minami said. Japan Airlines Corp. is offering 9,000 employees early retirement as part of its bankruptcy restructuring. Jafco, which set up a 150 billion yen fund in 2007, was drawn to BizReach’s model of focusing on high-paying financial jobs, said Atsushi Fujii, deputy manager of Jafco’s investment management group. The private equity firm is part owned by Nomura. “Targeting high-class jobs is a new and epoch-making strategy,” Fujii said in an interview. Pink slip parties, meanwhile, are out. BizReach hosted a second gathering in July, drawing some 160 people, and Minami said he’s not planning any more. The reason: lack of demand. To contact the reporter on this story: Takahiko Hyuga in Tokyo at thyuga@bloomberg.net

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Japan Airlines may stay tied up with American Airlines

February 9, 2010

Japan Airlines may stay tied up with American Airlines

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Video: Toyota Recalls, JAL Bankruptcy Damage Japan’s Reputation: Video

February 8, 2010

Feb. 9 (Bloomberg) — Bloomberg’s Mike Firn reports on the state of corporate management in Japan. Toyota Motor Corp.’s recalls and Japan Airlines Corp.’s bankruptcy have damaged the country’s reputation for reliability. (Source: Bloomberg)

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Japan Airlines to decide alliance partner ASAP

February 1, 2010

Japan Airlines to decide alliance partner ASAP

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Airlines May Take Three Years to Recover From Losses in Global Recession

January 31, 2010

By Chan Sue Ling and Liza Lin Jan. 31 (Bloomberg) — The global airline industry will take at least three years to recover after the worst recession in six decades hurt travel demand, said Giovanni Bisignani , chief executive of the International Air Transport Association . The airline industry globally lost $50 billion in the past 10 years, with $11 billion in 2009 alone. Revenues declined by $80 billion last year, Bisignani said. “These numbers are really shocking,” Bisignani said in an interview in Singapore today. “We’ve had a terrible 10 years. It would take at least three years to recover the level of growth we have lost.” Airlines worldwide suffered the worst drop in passenger demand since World War II last year, IATA said on Jan. 27. The global travel slump has pushed carriers including Singapore Airlines Ltd. and British Airways Plc into losses and forced Japan Airlines Corp. to file for bankruptcy. Traffic, a measure of passengers flown multiplied by the distance travelled, dropped 3.5 percent last year, with declines exceeding 5 percent in Europe, North America and the Asia- Pacific region, said IATA, which represents 230 carriers. The economic slump and credit crisis have cost carriers 2 ½ years of growth in passenger markets and 3 ½ years in freight, so that 2010 will be “another spartan year” of cost controls and capacity caps, Bisignani had said earlier. British Airways, Europe’s third-biggest carrier, expects a “bigger loss” in the 12 months ending March 31 than it had in fiscal 2009, Chairman Martin Broughton said on Jan. 25. Singapore Air, the world’s second-largest carrier by market value, may have its first annual loss as a publicly traded company, the carrier said in July. Bankruptcy Japan Air this month became Asia’s first major flag carrier to seek bankruptcy protection after four government bailouts failed to revive the region’s most indebted carrier. More airlines will go bankrupt, Bisignani said today. About 34 carriers have gone out of business since 2008, according to IATA. Passenger yield, or the average price a traveler pays to fly one kilometer, will remain “flat” this year and increase only next year, Bisignani said. Globally, airlines will probably post losses totaling $5.6 billion this year, the trade group had estimated. That’s about half of last year’s estimated $11 billion deficit. While the industry’s worst loss to date was almost $13 billion in 2001 following the Sept. 11 terror attacks, an $80 billion revenue decline last year was “vastly bigger” than anything previously experienced, according to IATA Chief Economist Brian Pearce . To contact the reporters on this story: Chan Sue Ling in Singapore slchan@bloomberg.net ; Liza Lin in Singapore at llin15@bloomberg.net

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JAL Bankruptcy May Prompt Japan Inc. to Shore Up Underfunded Pension Plans

January 20, 2010

By Jason Clenfield and Tomoko Yamazaki Jan. 21 (Bloomberg) — Japan Airlines Corp.’s $25.5 billion bankruptcy may be the impetus for companies including Hitachi Ltd. and Toyota Motor Corp. , Japan’s biggest private employers, to shore up their deficit-ridden pension plans. Japan’s top 278 companies were a combined 21.5 trillion yen ($235.7 billion) behind on their pension funding in fiscal 2009, a 50 percent increase from the previous year, according to the Daiwa Institute of Research in Tokyo. Hitachi’s unfunded liabilities totaled 1.1 trillion yen — triple the deficit that helped push Japan’s former national carrier into bankruptcy. The pension plans suffer from two decades of slumping markets, an aging population and a dependence on packages that are immune to investment performance. Japan Inc. stuck with defined-benefit plans even as the country’s stock market slid and interest rates hovered near zero. “It’s going to be very difficult to improve their underfunded status,” said Yoichi Okamoto, a pension consultant at Towers Watson & Co. in Tokyo. “Companies will be earning money from their operations and losing it to their pension plans.” JAL, which the government supported with four bailouts in nine years, filed for bankruptcy Jan. 19 with 2.3 trillion yen in debt that left it unable to pay full pensions. Current workers agreed to a 50 percent cut in retirement benefits, and retirees accepted a 30 percent reduction. 16 Percent Deficit Benefit cuts may spread through Japan Inc., analysts said. Companies are behind on their promised funding obligations by an average of 16 percent, according to data from Stamford, Connecticut-based research firm Greenwich Associates . Japanese companies will divert more of future earnings to plug the funding gap while also asking retirees to shoulder some of the burden, said Yuuki Sakurai , chief executive officer of Fukoku Capital Management Inc. in Tokyo. “Balance sheets are going to get worse and worse,” said Sakurai, who oversees $7.6 billion. “A lot of companies are going to do what Japan Airlines has done: tell employees they have to cut promised benefits.” Yet those pension plans are healthier now than they were in 2003, when companies were behind by an average of 38 percent. The last time pension funds were fully funded was in 2007 at the peak of Japan’s most recent economic recovery. ‘Severe Difficulties’ “Japan has gone through a couple of meaningful dips in funding ratios,” said Dev Clifford , a consultant at Greenwich who focuses on Japan. “So there’s precedent for having dug one’s way out of this.” The hurdles are high, said Jacob Kirkegaard , a research fellow at the Peterson Institute for International Economics in Washington. Almost 23 percent of Japan’s 126 million people will be older than 65 this year, compared with 13 percent in the U.S., according to data compiled by Bloomberg. People under 15 comprise 12.5 percent of the population, compared with 19.4 percent in the U.S., Bloomberg data show. Japan’s benchmark Nikkei 225 Stock Average is trading 72 percent below its 1990 peak, and yield on Japan’s 10-year government bond is 1.3 percent, compared with 3.7 percent in the U.S. “That translates into severe difficulties in getting return on investment,” said Kirkegaard, co-author of the 2009 book, “U.S. Pension Reform: Lessons from Other Countries.” “If you continue to have fairly generous corporate pension plans — as was clearly the case with JAL — you are going to have these problems.” Accounting Changes Companies will be under pressure to change because of accounting rules being adopted in the wake of fraud cases like Enron Corp. International standards likely to take effect within two years will require current pension losses to be posted on a company’s balance sheet instead of being spread out over a longer period. Under current rules, about 8.6 trillion yen in pension shortfalls are not included on Japan’s balance sheets, according to Daiwa. Unfunded pension liabilities for Japan’s top three automakers — Toyota, Honda Motor Co. and Nissan Motor Co. — exceeded 1.5 trillion yen last year, according to the companies. Toyota, the nation’s second-biggest employer, had a pension shortfall of 654 billion yen as of March and will fill the gap with “future cash contributions,” according to its annual report . Nissan’s unfunded pension liability was 430 billion yen on March 31, according to its annual report. Cap ‘Too Low’ Defined-benefit programs like those favored by Japan Inc. contributed to last year’s bankruptcies at General Motors Co. and Chrysler Group LLC. These plans give workers predetermined benefits that don’t change when investments fall, leaving companies responsible for making up the difference. Defined-benefit plans make up 60 percent of Japan’s corporate retirement funds, Clifford said. About 4 percent of assets are invested in defined contribution or 401(k) programs, which only became legal in 2001 and have a cap of 25,500 yen per month. That’s too low, Clifford said. “That’s a big part of why defined benefit plans have stayed in place,” he said. “There hasn’t been a viable defined-contribution plan.” In the U.S., more than half of companies use defined- contribution or 401(k) plans, according to Greenwich. Japanese companies also are trying to get better returns by scrapping a bias toward domestic investments. Overseas investments accounted for 25 percent of assets at Japan’s corporate pension funds in fiscal 2009, Pension Fund Association data shows. Honda, which says it has 457 billion yen in unfunded pension liabilities, last year lifted a requirement that its fund managers buy Japanese assets. “There is a greater focus among Japanese pension funds on the efficiency of their plans and the investment selections that they make,” said Justin Balogh , president and representative director at State Street Global Markets (Japan) in Tokyo. “The tolerance for sustaining underperforming managers has shortened.” — With assistance from Yoshinori Eki in Tokyo. Editors: Michael Tighe , Bret Okeson . To contact the reporters on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net ; Tomoko Yamazaki in Tokyo at tyamazaki@bloomberg.net ;

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Japan Air to Cut Third of Staff, 53 Planes in $10 Billion Turnaround Plan

January 19, 2010

By Chris Cooper and Kiyotaka Matsuda Jan. 20 (Bloomberg) — Japan Airlines Corp. plans to cut 31 routes, 53 planes and almost a third of its workforce after winning state funds to help restructure following the nation’s fourth-largest bankruptcy. Asia’s biggest carrier will ax 14 international routes and 17 domestic ones by the end of March 2013 under a 900 billion yen ($10 billion) plan announced yesterday by Enterprise Turnaround Initiative Corp. of Japan, the state-affiliated fund leading the reorganization. Employment will drop by about 15,700 to 36,201 over the same period. The cuts may help JAL make an operating profit in the year ending March 2012, compared with an expected operating loss of 265.1 billion yen this fiscal year, according to the plan. The airline, founded in 1951 , and two units applied for protection from creditors yesterday, with 2.32 trillion yen in liabilities. “There will be big hurdles for Japan Airlines before it’s really revived,” said Yoshihiro Okumura , a general manager at Chiba-gin Asset Management Co. in Tokyo. “It will probably take time for the airline to get back to where it was.” Delta Air Lines Inc. and American Airlines , which have made rival offers to invest in JAL, both said that talks would continue. JAL is likely to switch to Delta’s SkyTeam alliance from American’s Oneworld as part of the turnaround, according to people familiar with the situation. JAL Delisting JAL , with a market value of more than $6 billion as recently as March, will be delisted following the bankruptcy, wiping out shareholders. The stock closed at 5 yen in Tokyo trading yesterday, after slumping 93 percent this year. The carrier will likely get 730 billion yen in debt forgiveness, including 350 billion yen from financial institutions, Enterprise Turnaround said without elaboration. Unsecured creditors will be asked to waive about 83 percent of claims, based on figures in the plan. JAL owed 429 billion yen at the end of March to its four biggest lenders, Mitsubishi UFJ Financial Group Inc. , Sumitomo Mitsui Financial Group, Mizuho Financial Group Inc. and state- owned Development Bank of Japan. JAL plans to phase out its 37 Boeing Co. 747-400s and 16 MD-90s during the restructuring. JAL had a fleet of 279 planes as of March. It has another 71 aircraft on order at Boeing, including 35 widebody 787s, according to Boeing’s marketing chief Randy Tinseth . Empty Seats JAL, Asia’s first major flag carrier to seek bankruptcy, suffered a 16th straight drop in overall passenger numbers in November as the global recession sapped travel. The carrier also filled less than 65 percent of seats on domestic routes in each of the last six fiscal years on competition from All Nippon Airways Co., Asia’s second-biggest carrier, and bullet trains. “It will become necessary to carefully evaluate whether two mega-carriers should continue to operate” in Japan, Transport Minister Seiji Maehara told reporters yesterday in Tokyo. JAL, privatized by the government in 1987, served 59 domestic airports as of April and flew to about 20 other countries and territories. The airline may lose passengers to All Nippon on customer concern that service standards will drop. Edward Plaisted, chief executive officer of Skytrax , which ranks airlines on quality, said JAL’s service suffered a “slight decline” in the past six weeks. Skytrax rates JAL as four stars out of a possible five, the same ranking as All Nippon. U.S. Experience U.S. air travelers grew familiar with flying on airlines in bankruptcy during the past two decades as all of the major U.S. carriers except AMR Corp.’s American Airlines and Southwest Airlines Co. sought court protection. In September 2005, half of U.S. airline capacity was on airlines operating in bankruptcy. UAL Corp.’s United Airlines was under court protection for more than three years before its exit on Feb. 1, 2006. Delta Air Lines Inc. won support from bankruptcy creditors to rebuff US Airways Group Inc.’s hostile takeover bid in January 2007, emerged in April of that year and agreed to buy once-bankrupt Northwest Airlines Corp. less than 12 months later. Passengers in the U.S. have “gotten used to airlines going bankrupt and operating,” Michael Derchin , an analyst at FTN Equity Capital Markets Corp. in New York, said in an interview last week. Lehman Brothers Japan Inc. and three affiliates went bankrupt in September 2008 with 4.7 trillion yen of debt in Japan’s biggest group bankruptcy since World War II, according to Teikoku Databank Ltd. Kyoei Life Insurance Co., which failed in 2000, ranked second with 4.5 trillion yen of liabilities. Chiyoda Mutual Life Insurance Co. also sought bankruptcy in 2000, with 2.9 trillion yen of debt. To contact the reporter 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 files for bankruptcy

January 19, 2010

Japan Airlines files for bankruptcy

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European Stocks Decline as Alstom, HSBC, Casino Retreat; Cadbury Advances

January 19, 2010

By Adam Haigh Jan. 19 (Bloomberg) — European stocks declined before a report that may show investor confidence in the region’s biggest economy dropped for a fourth month in January amid signs the recovery is slowing. Asian shares also fell, while U.S. index futures were little changed. Alstom SA, the world’s second-largest train maker, and Casino Guichard-Perrachon SA slid at least 1.5 percent after reporting fourth-quarter sales that missed analysts’ estimates. HSBC Holdings Plc paced a retreat among banks after Exane BNP Paribas recommended selling the shares. Cadbury Plc jumped 3.3 percent as Kraft Foods Inc. announced its recommended final offer for the U.K. chocolate maker. Europe’s Dow Jones Stoxx 600 Index slipped 0.5 percent to 256.97 as of 9:10 a.m. in London. The regional benchmark gauge has climbed 63 percent since March 9, boosted by record-low interest rates in the U.S. and Europe and about $12 trillion committed by governments worldwide to revive the economy. The rally has slowed in 2010 as the measure posted its first weekly decline in a month. “There’s been a nervousness this year in terms of investors trying to understand when and how central banks will exit the stimulus process,” said Gregor Smith , a fund manager at Daiwa Asset Management in London who helps oversee about $1 billion. “A few people have just decided this is as good as it gets for the rally and are taking some profits.” German Confidence Germany’s ZEW Center for European Economic Research may say its index of investor and analyst expectations fell to 50 from 50.4 in December, according to the median of 37 forecasts in a Bloomberg News survey. ZEW releases the report, which aims to predict developments six months ahead, at 11 a.m. in Mannheim. Standard & Poor’s 500 Index futures expiring in March added 0.1 percent ahead of trading in the U.S., where markets were closed yesterday. Citigroup Inc. and International Business Machines Corp. are among companies scheduled to report results today. Analysts estimate fourth-quarter profits in the S&P 500 grew 67 percent on average, data compiled by Bloomberg show. The MSCI Asia Pacific Index lost 0.4 percent today. Japan Airlines Corp., Asia’s biggest carrier, said it’s filing for bankruptcy, according to the government’s chief spokesman. Alstom sank 3.4 percent to 52.25 euros. Sales in the fourth quarter rose to 4.69 billion euros ($6.75 billion) from 4.56 billion euros a year earlier. That trailed the average estimate of 4.81 billion euros in a Bloomberg survey of seven analysts . Casino, HSBC Casino slid 1.5 percent to 61.09 euros after saying revenue from continued operations in the three months ended Dec. 31 rose to 7.32 billion euros from 7.17 billion euros a year earlier. That missed the 7.36 billion-euro estimate from eight analysts surveyed by Bloomberg. Banks were the worst performers among 19 industry groups in the Stoxx 600 today, followed by industrial-goods companies. HSBC, Europe’s largest bank, slid 1.2 percent to 690.5 pence after Exane downgraded the shares to “underperform” from “ neutral .” Barclays Plc, the U.K.’s second-biggest bank, lost 2.2 percent to 310.9 pence as Credit Suisse Group AG cut its price estimate on the shares by 13 percent, saying its forecasts imply a “sizeable capital deficit,” according to a report to clients today. The bank has an “outperform” recommendation on the stock and said “this is a relative call rather than a particularly upbeat view on Barclays’ shares.” Cadbury climbed 3.3 percent to 834 pence. Kraft offered 840 pence a share for the U.K. company in a revised bid. Shareholders of Cadbury will also be entitled to a special dividend of 10 pence. Daimler AG lost 1.2 percent to 36.68 euros after Nomura Holdings Inc. cut its recommendation on the German maker of luxury cars and trucks to “neutral” from “buy.” To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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Japan Airlines, Delta reach tie-up deal

January 17, 2010

Japan Airlines, Delta reach tie-up deal

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Japan Airlines Slumps by Daily Limit for Second Day on Bankruptcy Concerns

January 12, 2010

By Chris Cooper and Kiyotaka Matsuda Jan. 13 (Bloomberg) — Japan Airlines Corp. , Asia’s biggest carrier, plunged by the daily trading limit for a second day on concerns it will file for what may be the nation’s sixth-largest bankruptcy. The carrier fell 81 percent to 7 yen at 9:28 a.m. on the Tokyo Stock Exchange. The shares dropped 45 percent yesterday. Prime Minister Yukio Hatoyama said yesterday shareholders should take responsibility “in general” for the Tokyo-based carrier, which has been bailed out at least three times in nine years. Hatoyama’s four-month-old government is set to back a court restructuring of the company, according to three people familiar with the situation. “Individual investors are adding to selling pressure on concern shareholder responsibility is moving toward a delisting,” said Yoku Ihara, a special adviser on equity research at Retela Crea Securities Co. A bankruptcy may allow JAL to shed debts, staff and unprofitable operations after posting a 131.2 billion yen ($1.4 billion) first-half loss. It may also wipe out investors, including small shareholders owning about 60 percent of the stock . The government has “largely reached agreement” with Japan Air’s lenders on the way ahead, Transport Minister Seiji Maehara told reporters in Tokyo yesterday, without elaborating. The carrier separately said it won approval from retirees to cut pensions, helping reduce costs. JAL, which has at least 1.5 trillion yen of liabilities, has struggled because of competition from All Nippon Airways Co. , Skymark Airlines Inc. and bullet trains. Worldwide international air travel also likely fell about 4.1 percent last year, according to the International Air Transport Association, as the global recession sapped demand. For Related News and Information: JAL capital structure: 9205 JT CAST Top Japan news: TOP JAPAN Asia-Pacific airline traffic data: STNI APAIRTRAFFIC Pre-bankruptcy news: NI PREBCY

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Japan Airlines prepares to file for bankruptcy

January 10, 2010

Airline will reject offers of equity investment from US rivals American and Delta Airlines and undergo state-sponsored restructuring Japan Airlines is expected to be declared bankrupt, possibly as early as this week, despite offers of aid

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

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 awaits staff approval on pension cuts

January 5, 2010

Japan Airlines awaits staff approval on pension cuts

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Lifeline to Japan Airlines expanded to $2.2b

January 4, 2010

Lifeline to Japan Airlines expanded to $2.2b

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Video: Harbison Sees `Pretty Ugly’ 2010 Asian Airline Results: Video

December 30, 2009

Dec. 31 (Bloomberg) — Peter Harbison, executive chairman at the Sydney-based Centre for Asia Pacific Aviation, talks with Bloomberg’s Haslinda Amin about the outlook for Japan Airlines Corp. and the Asian airline industry. Japan Airlines plunged to a record in Tokyo trading yesterday on speculation the company may seek bankruptcy, even as the nation’s transport minister said other options remain for the unprofitable carrier. (Source: Bloomberg)

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Aiful Credit-Default Swaps to Be Paid Out After Lender Delays Repayments

December 30, 2009

By Abigail Moses and Yusuke Miyazawa Dec. 30 (Bloomberg) — Credit-default swaps insuring about $1.3 billion of Aiful Corp.’s debt will be paid out after Japan’s third biggest consumer lender delayed loan repayments, the International Swaps & Derivatives Association said. Aiful triggered a so-called restructuring event when it agreed to extend the maturity of loans to avoid bankruptcy, ISDA’s Japan Determinations Committee ruled today. The Kyoto- based company said last week it would delay payments on 280 billion yen ($3 billion) of debt until Sept. 30 next year. The committee’s ruling ends a dispute that threatened to undermine confidence in Japan’s default swaps market. It previously rejected three requests to determine a credit event occurred, citing a lack of publicly available information on which to make a judgment, even though Tokyo-based Aozora Bank Ltd. said it hadn’t been paid by Aiful. “This is significant in Japan’s credit-default swaps history,” said Junichi Shimizu , an analyst at Deutsche Bank AG in Tokyo. “It will be a precedent.” Aiful faced possible failure after Goldman Sachs Group Inc. this month demanded that its 3.7 billion yen in loans be repaid. The company offered to settle the borrowing at a discount to win the New York-based lender’s support for its restructuring proposal, two people familiar with the matter said on Dec. 11. First Auction It’s the first time swaps on a Japanese company will be settled at auction and may set a model for future events. Japan Airlines Corp . plunged to a record in Tokyo trading today on speculation the company may seek bankruptcy protection. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to meet its debt commitments. A total 2,780 contracts were outstanding on Aiful debt as of Dec. 25, making it the second-most insured Japanese borrower after the government, according to Depository Trust & Clearing Corp. in New York, which runs a central registry that captures most trading. Run by founder and Chief Executive Officer Yoshitaka Fukuda , Aiful hasn’t sold bonds in public markets since March 2007 and reported a record first-half loss of 282.3 billion yen in November. It struggled with debt after a crackdown by authorities on excessive interest rates made Japan’s consumer lenders liable to pay billions of dollars of refunds. Aiful said Dec. 24 it will have repaid 76 billion yen by June 10, 2014. It also said 2,095 employees will retire by Feb. 28, helping reduce annual staff costs by 13 billion yen, and that it took a one-time charge of 5.8 billion yen for the cuts. To contact the reporter on this story: Abigail Moses in London at Amoses5@bloomberg.net ; Yusuke Miyazawa in Tokyo at ymiyazawa3@bloomberg.net

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Japan’s Credit-Default Swaps Committee Asked to Rule on Contract Triggers

December 13, 2009

By Shannon D. Harrington Dec. 14 (Bloomberg) — The committee that governs credit- default swaps in Japan was asked to rule whether a private debt restructuring process that roiled contracts tied to consumer lender Aiful Corp. would trigger payouts. The 15-member determinations committee , composed of dealers and investors including JPMorgan Chase & Co., Goldman Sachs Group Inc. and UBS AG, rejected three attempts in October by holders of swaps on Aiful to get paid even as one bank said the Kyoto-based company ceased making loan payments as part of a so- called alternative dispute resolution process. The committee, which rejected those requests because of a lack of publicly available information surrounding Aiful’s debt talks, was asked Dec. 11 by an unnamed market participant whether a borrower under similar circumstances would trigger payouts on credit swaps if public information were available. The question was posed a day after the International Swaps and Derivatives Association, an industry group that sets standards in the market and acts as secretary to the determinations committee, said it would form a legal panel to study the matter. ISDA organized a meeting last week in which about 150 traders, lawyers and investors discussed whether the ADR process counts as a so-called credit event allowing buyers of swaps to get paid. Bond Hedge Credit-default swaps, which are used to speculate on creditworthiness or to hedge against losses on corporate bonds and loans, let buyers demand payment from sellers if the underlying company fails to make scheduled interest or principal payments, according to standard definitions published by New York-based ISDA. Banks, hedge funds, insurance companies and other investors use them to insure against default and to speculate on the creditworthiness of companies and countries. Because creditors use the contracts to protect against losses on loans, investors have said that a protracted dispute over Aiful threatens to undermine confidence in Japan’s nascent credit swaps market. “We need a common standard amid the confusion,” said Hisayoshi Nogawa , a strategist at BNP Paribas Securities Japan Ltd. in Tokyo, said last week. “ISDA’s definition is aimed at legal liquidation, not out-of-court ones like the ADR. So they should show how to interpret the definition in relation to it.” Japan’s outstanding swap contracts jumped to $887.3 billion as of June 30 from $554.2 billion a year earlier, according to Bank of Japan data . Globally, there were about $26.6 trillion in contracts outstanding as of Dec. 4, according to the Depository Trust & Clearing Corp., which runs a registry that captures most trading. If traders determine that Aiful triggered payouts on credit swaps protecting debt holders, it would lead to Japan’s first auction to settle the derivatives. The Japanese Association of Turnaround Professionals, which is mediating ADR talks with Aiful and Japan Airlines Corp ., also said last month that it was forming a group of bankers, lawyers and government officials to review whether the ADR process should trigger credit swap payouts. To contact the reporter on this story: Shannon D. Harrington in New York at sharrington6@bloomberg.net

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Japan Airlines proposes 30 percent cut in retiree pension payments

November 23, 2009

Japan Airlines proposes 30 percent cut in retiree pension payments

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AMR Says Japan Air Talks at Advanced Stage as Delta Holds Out Incentives

November 19, 2009

By Kiyotaka Matsuda Nov. 19 (Bloomberg) — American Airlines said preparations for an investment in Japan Airlines Corp. are at an advanced stage after Delta Air Lines Inc. announced a package of incentives to lure the Asian carrier into a new alliance. Japan Air, as the airline is known, would face a regulatory risk in leaving American’s Oneworld group and joining Delta’s SkyTeam, Theo Panagiotoulias , American’s Pacific director, told reporters today in Tokyo. Delta and AMR Corp. ’s American, the world’s two biggest airlines, are vying for access to JAL’s routes in its home country and in China, Asia’s largest air-travel market. Atlanta- based Delta unveiled its $1 billion proposal yesterday, while American hasn’t detailed its plan to keep JAL in Oneworld. People familiar with the matter have said American and private-equity firm TPG Inc. may offer as much as 130 billion yen ($1.47 billion) to JAL, which is seeking a government rescue and new investors after losses in three of the last four years. JAL probably will stay in Oneworld, Dow Jones reported, citing Vice President Shuta Saito. The Tokyo-based carrier will make a decision after agreeing on how to restructure itself with Japanese government aid, Dow Jones reported. Sze Hunn Yap , a spokeswoman at Japan Air, declined to confirm or deny Saito’s comment. Charley Wilson , a spokesman for American, declined to comment in order to “respect the JAL restructuring process.” Oneworld’s Response American’s Oneworld partners are preparing their own proposals, which would be offered along with the plan from American and TPG, to help persuade JAL to stay. There is no schedule for making details public, Oneworld Managing Director John McCulloch said today in an interview from Vancouver. “A lot of this is moving around, almost by the day,” he said. Other Oneworld airlines aren’t considering equity investments, and instead would help through strengthened alliances, McCulloch said. Delta fell 18 cents, or 2.3 percent, to $7.58 at 1:30 p.m. in New York Stock Exchange composite trading, while AMR dropped 22 cents, or 3.8 percent, to $5.55. AMR and TPG are both based in Fort Worth, Texas. To contact the reporter on this story: Kiyotaka Matsuda in Tokyo at kmatsuda@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 to eliminate 13,000 jobs by 2015

October 26, 2009

Japan Airlines to eliminate 13,000 jobs by 2015

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American Airlines Pilots recommends Japan Airlines reconsiders

October 20, 2009

American Airlines Pilots recommends Japan Airlines reconsiders

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Japan Air Said to Release Midterm Plan a Month Early as Carrier Seeks Aid

October 18, 2009

By Chris Cooper and Kiyotaka Matsuda Oct. 19 (Bloomberg) — Japan Airlines Corp. , seeking its fourth state bailout since 2001, will release a midterm business plan by the end of October, a month earlier than planned, a person familiar with the situation said. Asia’s largest airline, also known as JAL, may also may pay “tens of billions” of yen to settle pension obligations with retirees, said the person, who declined to be identified because the information isn’t public. The plan will cover a five-year period and aims to raise operating profit at the carrier to 50 billion yen ($550 million), the person said. A government-appointed panel restructuring JAL is seeking forgiveness of loans and debt-for-equity swaps, as well as new financing with creditor banks, the person said. The airline, forecasting a fourth year of losses in five, fell to a record low in Tokyo trading last week. JAL has dropped more than 40 percent since Prime Minister Yukio Hatoyama’s government took power last month and installed a five-member panel to form a restructuring plan. An advisory group set up by the previous government was abandoned. Last week, the airline was downgraded two levels by Standard & Poor’s on concern it may issue new shares to pare debts. Moody’s Investors Service also downgraded the main flying unit of the carrier the same day and said the state-appointed restructuring panel may propose “drastic measures” to restore JAL to profit. JAL has predicted an operating loss of 59 billion yen this fiscal year as a global recession damps demand for air travel. 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 Jobless Rate Unexpectedly Falls From Record, Consumer Spending Rises

October 1, 2009

By Aki Ito and Toru Fujioka Oct. 2 (Bloomberg) — Japan’s unemployment rate unexpectedly retreated in August from a postwar record. The jobless rate fell to 5.5 percent from a record 5.7 percent in July, the statistics bureau said today in Tokyo. The median forecast of economists surveyed by Bloomberg was for an increase to 5.8 percent. Any drop probably doesn’t indicate unemployment has peaked, economists said before the report, as companies including Aiful Corp. and Japan Airlines Corp. cut jobs even as the economy recovers from its worst postwar recession. Tumbling wages are also likely to discourage consumers from spending, tempering any hope for economic growth to accelerate. “It’s still too early” to say the worst is over for Japan’s workers, said Masamichi Adachi , senior economist at JPMorgan Chase & Co. in Tokyo. “Companies still have too many employees and too much capacity.” Household spending unexpectedly rose 2.6 percent in August after dropping 2 percent in July, a separate report showed today. Analysts anticipated a 0.2 percent decline. Wages fell for a 15th month, the Labor Ministry said this week. Aiful, Japan’s second-largest consumer lender by assets, said last week that it will cut as many as 2,000 positions, or 44 percent of its workforce, and forecast a full-year loss of 311 billion yen ($3.5 billion) as it struggles to get financing. Japan Airlines Japan Airlines, Asia’s most indebted carrier, said last month that it will cut 6,800 jobs as it plans the biggest reduction of routes in its history. The job-to-applicant ratio , a leading indicator of employment trends, stayed at an unprecedented low of 0.42, meaning there are only 42 positions for every 100 candidates, the Labor Ministry said today. Businesses are reluctant to hire and invest as earnings slump. The Bank of Japan’s quarterly Tankan survey showed yesterday that large companies plan to cut spending at a faster pace than they anticipated three months ago and forecast profits will drop 22 percent in the year ending March 2010. While labor demand at large manufacturers improved from the previous Tankan, companies still reported that they have too many employees. “Even when things start to get better, employers will delay hiring for some time,” said Azusa Kato , an economist at BNP Paribas in Tokyo. “Companies are still burdened with excess workers.” Strict Labor Laws Masamichi Adachi , senior economist at JPMorgan Chase & Co. in Tokyo, said the current jobless rate reflects Japanese businesses’ cultural reluctance to fire workers and the country’s strict labor laws. That’s making it tough for graduates to get work. “I used to be against using personal connections for job leads, but it’s been impossible to find anything through the normal channels,” said Yoko Kasai, 23, who finished four years of college in Japan and a year abroad in the U.K. “I didn’t think it was going to be this hard for my friends and I to land a job we want.” To contact the reporter on this story: Aki Ito in Tokyo at aito16@bloomberg.net

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Most Asian Stock Markets Fall on Drop in Commodity Prices; Japan Advances

September 23, 2009

By Shani Raja Sept. 24 (Bloomberg) — Most Asian stock markets fell, led by commodity companies, after raw-material prices declined. Japan stocks rose as brokerages upgraded Toshiba Corp. and Fast Retailing Co. BHP Billiton Ltd., the world’s largest mining company, and Jiangxi Copper Co., China’s biggest producer of the metal, lost more than 1 percent. Toshiba , Japan’s biggest chipmaker, climbed 3.8 percent after Credit Suisse Group AG more than doubled its price estimate. Fast Retailing , the operator of the nation’s biggest casual clothing chain, jumped 3.8 percent after Goldman Sachs Group Inc. recommended buying the stock. The MSCI Asia Pacific Index gained 0.1 percent to 118.85 as of 12:20 p.m. in Tokyo, where markets resumed trading after a three-day holiday. The MSCI gauge rose 0.3 percent in that time. The measure has surged 42 percent in the past six months as government stimulus measures around the world dragged economies out of recession. “The consensus view now is that the worst is over,” said Tim Schroeders , who helps manage about $1 billion at Pengana Capital Ltd. in Melbourne. “The markets have priced in a fair degree of good news, but discerning how strong the recovery’s going to be is still problematic.” China’s Shanghai Composite Index fell 1.2 percent amid concern new share sales will divert funds from existing equities. Hong Kong’s Hang Seng Index slumped 2.5 percent as Metallurgical Corporation of China Ltd. sank 13 percent on its first day of trading. All markets declined except Japan and Indonesia. Aiful, Japan Airlines Japan’s Nikkei 225 Stock Average climbed 1.7 percent, even as a government report showed exports fell for an 11th month in August. Aiful Corp., the country’s second-largest consumer lender by assets, tumbled 11 percent after forecasting a full- year loss. Japan Airlines Corp. fell 11 percent ahead of a transport ministry meeting to discuss restructuring. Futures on the Standard & Poor’s 500 Index lost 0.1 percent. The gauge lost 1 percent yesterday as the Federal Reserve signaled it will use fewer tools to bolster growth. The Fed, following a two-day policy meeting, changed the wording in the final paragraph of its statement to say it will continue to employ a “wide range of tools” to bolster the economy. In its August statement, it said it would use “all available” tools. The MSCI Asia Pacific Index has gained 68 percent from a five-year low on March 9 on speculation improved global growth will boost corporate earnings. The advance has driven the average price of the gauge’s members to 1.6 times book value, up from 1 at the low in March. Strike Vote BHP dropped 1.5 percent to A$37.76 as a gauge of six metals fell 1.6 percent in London yesterday, the most this week. The stock also fell after Andres Ramirez, president of a union representing miners at one of BHP’s copper mines in Chile, said workers will vote on a strike next week after rejecting the company’s latest pay offer. Jiangxi Copper retreated 2.9 percent to HK$17.76 in Hong Kong, while China Shenhua Energy Co., the nation’s largest coal producer, lost 2.6 percent to HK$33.95. Woodside Petroleum Ltd., Australia’s No. 2 oil and gas producer, sank 1.8 percent to A$52.17 after crude oil lost 0.6 percent in after-hours trading, adding to yesterday’s 3.9 percent slump in New York. Inpex Corp., Japan’s largest oil explorer, dropped 0.7 percent to 809,000 yen. “Resource-related shares will be inevitably affected by the drop in commodity prices,” said Mitsushige Akino , who oversees the equivalent of $656 million at Ichiyoshi Investment Management Co. in Tokyo. Brokerage Upgrades Toshiba climbed 3.8 percent to 496 yen. Credit Suisse raised the stock to “outperform” from “neutral” and increased its price estimate more than twofold to 640 yen. Fast Retailing rallied 3.8 percent to 10,980 yen after it was boosted to “buy” from “neutral” by Sho Kawano , a Tokyo- based analyst at Goldman Sachs Group Inc. “The global economy’s recovery is accelerating and we’ll see many companies raise their full-year earnings forecasts,” said Yoshinori Nagano , a strategist at Tokyo-based Daiwa Asset Management Co., which oversees the equivalent of $94 billion. Aiful sank 11 percent to 119 yen on its loss forecast and plans to cut as much as 44 percent of its workforce. The company said last week it plans to seek a reprieve on debt repayments. Japan Air, Asia’s most indebted carrier, fell 11 percent to 152 yen. President Haruka Nishimatsu will meet today with Transport Minister Seiji Maehara to discuss the airline , which is under government supervision following state bailouts. The carrier’s lenders may ask the government to split the company up, Nikkei reported earlier this week. Bird’s Nest In Hong Kong, Metallurgical Corporation, which helped build the “Bird’s Nest” Olympic stadium in Beijing, sank 13 percent to HK$5.54 on its first day of trading. The company’s shares surged 28 percent when it debuted in Shanghai on Sept. 21. Samsung SDI Co., the world’s second-largest maker of plasma displays, fell 4.6 percent to 167,500 in Seoul. Samsung Securities Co. lowered the stock to “hold” from “ buy,” saying the share price now reflected the value of its electric- car battery business. David Jones Ltd. lost 4.1 percent to A$5.43. The company, Australia’s second-biggest department store, reported net income of A$65.4 million ($57 million) in the six months ended July 25 and maintained its earnings growth forecast for the current year. “The market had very high expectations and expected that they would upgrade guidance, which they didn’t,” said Angus Gluskie , who manages about $300 million at White Funds Management Pty. in Sydney. To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net .

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Japan’s Jobless Rate Climbs to Record 5.7% in Blow to Aso on Election Eve

August 27, 2009

By Toru Fujioka and Mayumi Otsuma Aug. 28 (Bloomberg) — Japan’s unemployment rate rose to a record 5.7 percent in July and deflation worsened, dealing a blow to Prime Minister Taro Aso on the eve of an election that polls indicate his ruling Liberal Democratic Party will lose. The jobless rate surpassed the previous worst of 5.5 percent last seen in April 2003, the statistics bureau said today in Tokyo. Economists surveyed by Bloomberg predicted an increase to 5.5 percent from 5.4 percent in June. Consumer prices dropped an unprecedented 2.2 percent from a year earlier. Yukio Hatoyama ’s Democratic Party of Japan may end the LDP’s 54-year grip on power as jobs vanish in the wake of the country’s worst postwar recession. Household spending slid 2 percent last month, indicating Aso’s cash handouts as part of a 25 trillion yen ($267 billion) stimulus plan are failing to spur demand among consumers whose wages are falling. “The economy is the key factor for the election,” said Masamichi Adachi , senior economist at JPMorgan Chase & Co. in Tokyo. “Voters naturally direct their frustrations about the slumping economy at the incumbent government.” The yen traded at 93.77 per dollar at 10:28 a.m. in Tokyo from 93.60 before the reports were published. The Nikkei 225 Stock Average gained 0.6 percent. The yield on Japan’s 10-year bond rose two basis points to 1.32 percent. The DPJ is projected to win more than 320 of 480 seats in the Aug. 30 lower-house election, according to an Asahi newspaper survey published yesterday. Finance Minister Kaoru Yosano said this week the opposition party is “engulfing Tokyo like a massive wave.” Exports Tumble Companies from Toyota Motor Corp. to Japan Airlines Co. are scaling back and cutting jobs as sales weaken at home and abroad. Exports fell 36.5 percent in July, a tenth monthly drop, as demand from all of the nation’s major markets deteriorated. The unemployment rate is the highest since the government began collecting the data in 1953, a year after the U.S. military occupation ended. The LDP has governed Japan for all but 10 months since 1955. More than $2 trillion in stimulus plans worldwide helped the world’s second-largest economy grow at an annual 3.7 percent pace last quarter, the first expansion in more than a year. Economists expect growth will weaken in coming quarters once the government cash injections are exhausted. The jobs-to-applicants ratio , a leading indicator of employment trends, fell to a record 0.42 in July, meaning there are only 42 positions for every 100 candidates, the Labor Ministry said today. The unemployment rate will reach 5.9 percent next year, according to economists Bloomberg surveyed. The number of unemployed rose by 200,000 from June, the biggest increase since March, today’s report showed. Distant Recovery “We are very far from a solid recovery,” said Yuichi Kodama , chief economist at Meiji Yasuda Life Insurance Co. in Tokyo. “There’s a high risk for a more serious labor adjustment going forward” as companies offload workers they no longer need, he said. Toyota, Japan’s biggest automaker, said this week that it will shut down a domestic assembly line as sales plunge. Japan Airlines, Asia’s largest carrier by sales, may cut 5,000 jobs in three years, Kyodo News reported. Isetan Mitsukoshi Holdings Ltd. , Japan’s largest department store chain, plans to eliminate 1,000 jobs by March, Nikkei English News said. The jobless rate would be around 12 percent if all of Japan’s excess workers were considered unemployed, according to Takahide Kiuchi , chief economist at Nomura Securities Co. in Tokyo. Hisako Abe, 53, signed up for a computer-training course in an effort to find regular work. ‘Want a Promise’ “I want to be a full-time employee, or at least have a part-time job that’s stable,” Abe, who was laid off in April, said at an unemployment office in Tokyo. “I want a promise that they won’t fire me right away.” Deflation is also threatening the recovery. Last month’s drop in prices excluding fresh food, which matched economists’ estimates, was the steepest since the survey began in 1971. “Nothing can stop prices from falling now, given that demand has deteriorated so much,” said Masaaki Kanno , a former central bank official and now chief economist at JPMorgan Chase & Co. in Tokyo. Consumers, whose spending accounts for more than half of the economy, may delay purchases if they expect goods to get cheaper. That would erode profits and force companies to keep cutting wages , which tumbled an unprecedented 7 percent in June. Bank of Japan board member Atsushi Mizuno said last week that policy makers should “be prepared to fight a long-term battle” with deflation. The central bank, which has cut the key interest rate to 0.1 percent, has few tools to prop up inflation and economic growth in the short term, he said. To contact the reporter on this story: Toru Fujioka in Tokyo at tfujioka1@bloomberg.net ;

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Japan Airlines registers $1b loss in Q2

August 8, 2009

Japan Airlines registers $1b loss in Q2

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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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