Japan Airlines files for bankruptcy protection

Japan Airlines filed for one of the country's largest bankruptcies, entering a restructuring that will shrink Asia's top carrier and its presence around the world.

A fleet of 279 aircraft, carrying nearly 12 million passengers a year on more than 400 routes, there's no doubt Japan Airlines is a high profile victim of recession.

The bankruptcy of the national flag carrier is a major blow for Japanese pride. JAL collapsed with $16.5bn of debt because the Japanese government is no longer willing to keep bailing it out.

About 15,000 workers will likely lose their jobs under JAL's administered restructuring, while the firm's creditors will suffer losses of more than $3bn.


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Bankrupt JAL scrambles to reassure passengers

Japan Airlines sought to reassure the travelling public Wednesday that it will keep flying despite declaring bankruptcy as its share price dropped to a new record low of just two US cents.

The debt-laden carrier apologised in full-page newspaper advertisements for causing "tremendous worries to customers" and promised that "JAL will keep flying" and that passengers' air miles will remain valid.

"Please be reassured and use us as before," the company pleaded.

The once iconic airline, a symbol of Japan's rise to prosperity, filed for bankruptcy protection Tuesday with 26 billion dollars in debt in the country's biggest post-war corporate failure outside the financial sector.
It is set to undergo a painful overhaul under a new corporate chief, with more than 15,600 jobs to be cut, reducing the workforce by a third, and many loss-making routes expected to be slashed.

JAL, which carries more than 50 million passengers a year, is set to receive almost 10 billion dollars in public funds and emergency loans under a three-year turnaround plan.

The Tokyo Stock Exchange will delist JAL shares by February 20, a move expected to wipe out shareholders' investments.

JAL shares were trading at a record low of two yen (two US cents), down three yen or 60 percent from Tuesday's close. The price could theoretically fall to a rock-bottom one yen.

"There are still people who are trading JAL, including those who are enjoying a one-month game, with the downside risk limited to one yen," said Hideyuki Higashi, a strategist at SMBC Friend Securities.

The company has made no announcement regarding its tie-up talks with American and Delta Air Lines, which are in a bidding war for a slice of the carrier, eyeing its lucrative Asian landing slots.

JAL is understood to prefer switching its alliance from the American Airlines-led oneworld grouping to SkyTeam with Delta.

But it is expected to take some time for JAL and Delta to clear anti-trust hurdles and get approval from US authorities for joint operations.

The government has tapped Kazuo Inamori, a 77-year-old entrepreneur, business guru and ordained Buddhist monk, to run the stricken airline during its overhaul, replacing Haruka Nishimatsu, who resigned as president Tuesday.

Yasuhiro Matsumoto, a credit analyst at Shinsei Securities, voiced optimism JAL will successfully implement the restructuring plan but said the company still lacks a solid long-term vision.

He said the turn-around plan involves "getting rid of money-losing businesses to return to profit and is not based on unfounded optimism that travel demand will grow in the future."

However, he said, the government still "has no growth strategy. It doesn't have a strategy on how JAL should design its international network."

The bankruptcy, shocking to many Japanese, dominated newspaper front pages.
The Nikkei business daily said debt-ridden JAL's failure should serve as a warning to other companies and the government in a country where the public debt now stands at about 180 per cent of gross domestic product.

"If you shun the pain that is ahead of you, greater pain will come someday," the Nikkei warned. "The fall of JAL, which shone in the past, sends this message to the state and companies."

Source : BBC AFP
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Microsoft cuts 800 jobs, completes layoff plan

Microsoft Corp said on Wednesday it is cutting a further 800 jobs across its operations, on top of 5,000 jobs already eliminated under a plan to reduce costs that was announced in January.
A spokesman for the world's largest software firm said the latest job cuts are spread across the company's global operations, but about 200 are in and around its headquarters in Redmond, Washington.
Microsoft originally had planned to cut 5,000 jobs, or about 5 percent out of 96,000, before June 2010. The Microsoft spokesman said that plan has been expanded with the new layoffs and is now complete, well ahead of schedule.
As of October 23, Microsoft had 91,005 employees worldwide, according to its website.


Source : Reuters
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]

Nine US banks seized in largest one-day haul

US authorities seized nine failed banks yesterday, the most in a single day since the financial crisis began and the latest stark sign that substantial parts of the nation’s banking industry are being crippled by bad loans.
The move brought the total number of failed banks in 2009 to 115 — their highest annual level since 1992 — with analysts expecting more to come. Among the lenders seized yesterday was Los Angeles-based California National Bank, in what was the fourth-largest US bank failure this year.

The largest institution to fail in the current financial crisis was Washington Mutual, which boasted US$307 billion (1,044 billion) in assets when it was shuttered in September 2008.

US Bancorp yesterday acquired the nine banks that had been held by FBOP Corp, picking up US$18.4 billion in assets and US$15.4 billion of deposits.

Visibly worried employees lined up to file into Cal National’s head offices in the heart of a deserted downtown Los Angeles on a chilly Friday evening, where they had their employers’ fate explained to them, regulators said.

“We’re getting ready to turn everything over to US Bank,” said Roberta Valdez, a spokeswoman for the Federal Deposit Insurance Corp, which helped supervise the transfer of FBOP’s assets. “They will continue to operate as normal in the interim,” she added, referring to lenders acquired from FBOP.

US Bancorp — which has been buying up distressed assets this year — is picking up the lenders once owned by FBOP, a private Illinois group with over US$18 billion in assets that owned banks in Texas, Illinois, Arizona and California.

Cal National is FBOP’s largest bank by branches. Others that will now go under the US Bancorp umbrella included BankUSA, Citizens National Bank, Madisonville State Bank, North Houston Bank, Pacific National Bank, Park National Bank, San Diego National Bank, and the Community Bank of Lemont.
“This transaction is consistent with the growth strategy that we have outlined many times in the past, which includes enhancing our existing franchise through low-risk, in-market acquisitions,” said Rick Hartnack, vice chairman of consumer banking for US Bancorp.

“This transaction adds scale to our current California, Illinois and Arizona footprints.”
In the “near future”, all nine lenders’ branches will be re-branded US Bank, which is the California-focused unit of US Bancorp’s that operates a network of more than 770 branches across Illinois, Arizona and California.

US Bancorp did not specify what would happen to the new employees it inherits.
Cal National operates 68 branches across Southern California with more than US$7 billion in assets. As of June 30, the lender maintained five times as much foreclosed property on its books and twice as many non-current loans as it had a year earlier, according to the Los Angeles Times, which first reported news of its evening takeover yesterday.

Cal National lost about US$500 million on heavy investments in Fannie Mae and Freddie Mac preferred shares, the newspaper added, referring to securities rendered nearly worthless by the government takeover of the mortgage firms last year.

According to FDIC data, Cal National was the fourth biggest bank failure this year in terms of assets, just edging out Corus Bank, seized Sept 11 with a flat US$7 billion of assets.
A bank official who answered the main number at Cal National’s headquarters said they could not talk at the time.

Banks are still cleaning up their balance sheets from the recent credit boom that fuelled banks’ appetite to extend loans, many with poor underwriting and triggers that caused borrowers’ payments to spike to unaffordable levels.

More lenders are expected to go under this year as the industry tries to get a handle on commercial real estate loans that will continue to worsen, as more strip malls go vacant and residential developments stall.
Banks held about US$1.7 trillion in commercial real estate loans at the end of September, according to Federal Reserve data, or about 15 per cent of their total assets. But to the extent these loans weaken, small banks are likely to be hit the hardest because larger banks were better diversified.

Banks that analysts say could risk big losses include Salt Lake City’s Zions Bancorp, Columbus, Georgia’s Synovus Financial Corp and Dallas-based Comerica Inc.

Before FBOP, US Bancorp bought Downey Savings of Newport Beach and PFF Bank & Trust of Pomona when those thrifts failed last November, the newspaper said. Just this month, US Bancorp bought 20 Nevada branches from BB&T Corp, which had acquired them as part of its deal to buy Colonial BancGroup Inc, it added


Source : TMI
[tags : recession bankrupt collapse retrenchment financial news collapse stagnation economic slowdown financial collapse world recession global recession layoff job cut]