Is Japan Airlines on the verge of bankruptcy?
Shares in Japan Airlines fell by 45% today as speculation intensifies regarding a potential bankruptcy petition from the company. This comes despite the fact that American Airlines has increased its offer of investment from $1 billion to $1.3 billion and other potential investors are waiting on the sidelines. It was also announced that company's employees have agreed to a reduction in pension payouts with the company's pension scheme around £2.2 billion in deficit. So why have the shares collapsed?
The Japanese authorities have yet to announce whether they will refinance Japan Airlines or whether the company will be able to bring in outside investment such as that offered by American Airlines. This is causing confusion in the stock market and many investors are now running scared amid concerns about the short-term future of the group. Each day that this predicament continues will weaken the company's finances and the company's trading position.
This is just the latest in a long line of negative news stories regarding the worldwide airline industry which has been hit by rising fuel prices, increased taxes and a reduction in premium travel numbers. There are some who believe the industry needs to experience significant pain in order to rebase for the future.
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