Japan Airlines Corp filed for bankruptcy protection on Tuesday, owing more than $25 billion, and vowed to slash 15,700 jobs and unprofitable routes as it tries to survive volatile fuel costs and fickle flyers.
JAL, Asia's largest airline by revenues, will remain in the skies thanks to nearly 1 trillion yen ($11 billion) in state-backed support and must go through a sweeping restructuring under a new board and management.
Shareholders will be wiped out and creditors will forgive 730 billion yen in debt, including a 350 billion yen debt waiver from banks, as part of the deal with the fund, the Enterprise Turnaround Initiative Corp of Japan (ETIC).
Kazuo Inamori, the 77-year-old founder of electronics maker Kyocera Corp, was tapped last week to become JAL's new chief executive officer to oversee its restructuring. JAL's restructuring plan calls for increasing fuel-efficiency in its fleet, replacing all B747-400 jets.