Japan Bails Out JAL; Would the U.S. Do the Same?
%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% JAL is not the only global carrier that is in trouble. The International Air Transport Association, which represents over 230 airlines, predicts that industry losses will be $5.6 billion this year. Rising oil prices could make that number worse. Fears of more terrorism, like the unsuccessful bombing of a Northwest Airlines flight from Amsterdam to Detroit on Christmas Day, could keep fliers off plans. The significant increase in security screening will almost certainly create much longer check-in lines at airports, which could deter still more travelers.
Several American-based carriers carry substantial debt loads on their balance sheets. U.S. airlines have cut costs in the last two years and Delta bought NWA, in part to save money through consolidation.
A sharp downturn in travel would make the airline industry look a bit like the auto industry did two years ago. That could push one or more American carriers toward bankruptcy, which would cause losses among creditors and cause lay-offs, perhaps in the tens of thousands. And, that would put another drag on the government's effort to improve unemployment.
The federal government has bailed out one industry. It may be faced with the prospect of having to do the same for another.