JAL finally gave up the ghost after months of negotiation with creditors and large banks. The Japanese government gave the airline access to a modest credit facility. That was not nearly enough.  The bankruptcy filing will take the equity value of the carrier to zero. JAL will get a waiver for 730 billion yen in debt.

The worst part of the bankruptcy is its human toll. The reorganization plan calls for the JAL workforce to be cut by almost 16,000 people from the current level of 47,000.

American carriers are not out of the financial woods yet. Shares in American Airlines (NYSE:AMR) traded at $41 three years ago and now are worth only a little over $8. The stocks of other US airlines have had similar sell-offs.

The enemies of the airline industry are still active. The IATA expects the industry to lose $5.6 billion this year. Oil prices are high enough now to keep jet fuel prices fairly rich. Passenger traffic, cratered by the recession, is not returning quickly. Airlines are still burdened, in may cases, with substantial debt.

What happens if a US carrier heads down the route that JAL has? Would the US government give it a massive bail-out the way it did for GM or Chrysler? Or, would it let one or more carriers fail and, as a result, cut tens of thousands or jobs.

The “Great American Industrial and Financial Bailout” may not be over.

Douglas A. McIntyre

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