New Japan Airlines chief to lead rescue

City A.M. Reporter
KAZUO Inamori, the founder of electronics maker Kyocera, yesterday agreed to become the new chief executive of Japan Airlines (JAL), as the carrier’s shares plunged ahead of its expected bankruptcy.

JAL is likely to file for bankruptcy as early as next week as part of a broader restructuring aimed at reducing debts, slashing about 13,000 jobs and cutting up to two dozen unprofitable routes, sources said.

With $16bn (£9.8bn) in debts, JAL’s bankruptcy would be the sixth largest in Japan’s history.

Inamori, the 77-year-old honorary chairman of Kyocera and an ordained Buddhist priest, will replace Haruka Nishimatsu, who has indicated he would resign as part of the restructuring overseen by a government-backed fund.

Founded in 1959 as a ceramics company, Kyocera has grown into one of Japan’s most profitable technology firms. Its products include semiconductor components, mobile phones and solar cells.

Lack of experience would not be a critical drawback, analysts said.

“I think he’s the right person for JAL at this point since JAL?needs a respected person for its business restructuring,” said Yasuhiro Matsumoto, senior credit analyst at Shinsei Securities.

“The government has agreed to offer financial support for JAL, so we should not worry about how long it would take for him to become familiar with JAL,” he said.

In massive volume, JAL shares tumbled by their daily limit of 30 yen yesterday to 7 yen, or less than 10 cents, leaving Asia’s largest carrier by revenue, with a market value of $208m, about the same as Tunisair and Austrian Air.

The Enterprise Turnaround Initiative Corp of Japan (ETIC), the state-backed fund, plans to put about 300bn yen in fresh capital into JAL, provided it files for bankruptcy and its banks forgive about 350bn yen in debts.