Is Japan Airlines just hours away from bankruptcy?
Shares in Japan Airlines have fallen further today as the reality of the company's financial situation continues to hit home with investors. Having fallen to a record low equivalent to 26p a share it is believed the company is just hours away from an official bankruptcy ruling which will transfer ownership of the company to a state owned turnaround venture. But is this the end of Japan Airlines?
Despite the fact that the company is rumoured to have around $16 billion in borrowings and facing an ever more difficult trading environment it is believed the company will continue to trade. The government has promised support for the company if it agrees to a significant reduction in the size of the operation which could result in over 15,000 job losses. It is also believed the company will be asked to jettison unprofitable routes and focus upon those which are profitable and have the potential for growth in the future.
The airline is expected to announce record losses of $265 billion for the year ended March 2010 which is certain to send shockwaves around the airline industry. Whether we see a domino effect across the sector remains to be seen but the fragile nature of many airline company finances will no doubt be brought to the fore again.
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