JAL Could Be First Huge Airline Chapter 11 in Years
A bankruptcy might make it easier for the airline to cut employees and routes and perhaps restructure debt -- actions that could allow the carrier to move back toward profitability as the economy improves.
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% The news will send a shudder through an industry already concerned about how an alleged terrorist attempt on a Northwest flight from Amsterdam to Detroit will affect customer traffic. The International Air Transport Association, which represents 230 carriers, projects that the industry will lose $5.6 billion in 2010.
The airline industry has routinely used bankruptcy as a way to cut debt obligations and renegotiate labor contracts. In JAL's case -- -- one of the ten largest airlines in the world by most measures -- a bankruptcy would make it the first major airline bankruptcy in years.
And heading into 2010, next year could be one of significant restructuring in the airline industry particularly if debt-burdened carriers like JAL face stagnant revenue as passengers continue to stay on the ground.
Douglas A. McIntyre is an editor at 24/7 Wall St.