Japan Airlines Corp. said Wednesday its negative net worth — liabilities in excess of assets — has expanded to about ¥1 trillion.
The figure, including capital deficits at two subsidiaries, has grown because of costs involved in a review of the airline’s flights and routes as well as a re-examination of assets, according to JAL and Enterprise Turnaround Initiative Corp. of Japan, the state-backed administrator overseeing the carrier’s rehabilitation.
Hideo Seto, trustee of ETIC, said at a joint news conference with JAL executives that they are set to formally ask the carrier’s creditor banks from Thursday for an additional debt waiver.
Given the end of August deadline for the submission of JAL’s turnaround plan to the Tokyo District Court, Seto said they will do their best to gain the creditors’ acceptance by early that month.
Sources said the banks are likely to object to a larger waiver, dragging out their negotiations with JAL.
But JAL officials urged the financial institutions to trust in the turnaround efforts.
“We will draw up a firm turnaround plan and have it executed by our employees with a new mind-set and sense of values,” JAL President Masaru Onishi said.
JAL will meanwhile scrub training for 130 would-be pilots and freeze its pilot training program for the next five to seven years, sources said.
The airline plans to ask the 130 trainees to work as ground staff or solicit early retirement under special benefits, the sources said.
JAL has also decided to close its pilot training facility in California by the end of this fiscal year in March, they said.
The airline has already suspended most pilot training since April because it is expected to have a surplus when it cuts domestic and international routes.
Under the in-house pilot training program, JAL recruits university graduates and sends them to the U.S. training facility to obtain a commercial pilot’s license.
They return to Japan for further training to become copilots.
It costs several hundred million yen for the airline to train a pilot.
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