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Japan Airlines bankruptcy filing expected Tuesday

Japan Airlines bankruptcy filing expected Tuesday

TOKYO – Japan Airlines is set to file for bankruptcy Tuesday, ending months-long speculation about its fate and writing Japanese corporate history as one of its biggest-ever failures.

The country’s flagship carrier, called JAL for short, will likely convene a special board meeting in the afternoon before filing for protection from creditors under the Corporate Rehabilitation Law — Japan’s version of Chapter 11, according to Kyodo News agency. The filing will be followed by a restructuring plan crafted by a government-backed corporate turnaround body.

President Haruka Nishimatsu is expected to resign. Leadership of the company will be handed over to Kazuo Inamori, a buddhist monk and founder of electronic components behemoth Kyocera Corp. and Japan’s No. 2 mobile carrier KDDI Corp.

The government will also offer assurances that it backs the company’s rehabilitation and intends to keep JAL flying.

“The government wants to continue to support JAL to ensure its continued stable and safe operations,” said transport minister Seiji Maehara hours before the expected filing.

The day’s events culminate a process that began in October when JAL — saddled with debts of 1.5 trillion yen ($16.5 billion) — first turned to the Enterprise Turnaround Initiative Corp. for help. Under a prepackaged restructuring strategy, it will embark on a massive overhaul to shed the fat and inefficiency that hobbled Asia’s biggest airline.

“As an airline product, it’s always had a high reputation,” said Peter Harbison, executive chairman of the Centre for Asia Pacific Aviation, a Sydney-based aviation market research firm. “But from a cost base, it’s generally been something of an industry joke.”

The plan calls for about 15,600 job cuts, or a third of JAL’s work force, by March 2013 and will require the airline to halve the number of its subsidiaries which span everything from hotels to credit cards, according to Kyodo. The Enterprise Turnaround Initiative Corp. will invest about 300 billion yen ($3.3 billion) in the carrier, and JAL’s main lenders have been asked to waive about 350 billion yen in liabilities.

What may take longer to emerge is the winner of a fierce tug-of-war between Delta Air Lines and American Airlines for a slice of JAL’s business. Despite its woes, the airline’s access to Asia is a mouthwatering prize for foreign airlines.

Investors Tuesday braced for a seemingly inevitable removal of the airline’s shares from the Tokyo Stock Exchange.

The issue, which has lost more than 90 percent of its value over the last week, tumbled another 20 percent Tuesday to 4 yen. The company is now essentially worthless, with a market capitalization of about 10.9 billion yen ($120 million) — less than the price of one Boeing 787 jet.

It’s a humbling outcome for Japan’s once-proud flagship carrier which was founded in 1951 and spent its early years owned by the state. Along with Japan’s economy, it expanded quickly in the decades after World War II and was privatized in 1987.

But it soon became the victim of its own ambitions.

When Japan’s property and stock bubble of the 1980s burst, risky investments in foreign resorts and hotels undermined its bottom line. JAL also shouldered growing pension and payroll costs, as well as a big network of unprofitable domestic routes it was politically obligated to maintain.

More recently, JAL’s passenger traffic has slowed amid the global economic downturn, swine flu fears, competition from Japanese rival All Nippon Airways Co. and a spate of safety lapses that tarnished its image. It lost 131.2 billion yen ($1.4 billion) in the six months through September.

Its four government bailouts since 2001 only exacerbated JAL’s problems, officials now say. Maehara last week blamed previous administrations, controlled by the opposition Liberal Democrats, for propping up an ailing JAL for years without reforming the company.

Passengers seemed to agree as much.

“I guess they did not work in earnest and so fell into this situation,” said Isao Sasaki, 72, who waited in line Tuesday at a JAL check-in counter at Tokyo’s Haneda Airport. “Weren’t they spoiled as they always had protection from the government?”

Delta Air Lines — the world’s biggest airline operator — and rival American Airlines are courting JAL with massive financial offers as the U.S. carriers seek to expand their Asian networks.

Delta and its SkyTeam partners have offered $1 billion, including $500 million in cash to lure JAL away from American’s oneworld alliance. American Airlines and its partners say they are ready to inject $1.4 billion cash into the Japanese airline, up from a previous $1.1 billion offer.

As of March, JAL’s fleet consisted of 279 aircraft, mainly from Boeing Co. It served 220 airports in 35 countries and territories, including 59 domestic airports.

It carried 11.7 million international passengers last fiscal year and 41.2 million travelers domestically. International traffic was down 12.4 percent from the previous year, while the domestic passenger count fell 1.8 percent.

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Russia Seeks to Cleanse Its Palate of U.S. Chicken

Russia Seeks to Cleanse Its Palate of U.S. Chicken

MOSCOW — At the mere mention of American chicken at a central Moscow market, the poultry vendors pounce.

“We don’t eat American chicken,” snarled one.

“Americans raise their chickens on chemicals,” another called from across stacks of Russian birds. “They’re all fat. There’s no taste.”

Of all the disputes great and petty that have marred relations between Russia and the United States over the years, chicken has provoked more than its share of angst and animosity. The United States under the first Bush administration flooded Russia with American chicken as food aid in the early 1990s, products that Russians came to call “Bush legs.”

These stocks — mostly thighs and other parts, not many drumsticks — helped feed hungry Russians reeling from an economic collapse. They also came to symbolize the humiliation of a once-great nation reduced to dependence on food handouts.

The Russian government has spent over a decade seeking to do away with this lingering vestige of post-Soviet misery. In the latest attempt, the government imposed an open-ended ban on American chicken imports that started Tuesday, ostensibly because United States companies had failed to adhere to new food safety regulations.

Representatives from both countries began talks on Tuesday in Moscow in an attempt to resolve the dispute, though neither side seemed prepared to make concessions.

The move might cause poultry prices here to spike, but there was nevertheless a tinge of national pride last week when Prime Minister Vladimir V. Putin told Russian poultry producers that Russia was no longer dependent on Bush legs.

“Unfortunately, among many of our partners — and above all I mean companies from the United States — we still do not see a readiness to observe our standards,” he said. “If some of our foreign suppliers do not want or are not in a position to fulfill our safety requirements, then we will use other sources.”

This has no doubt unnerved American producers, who gained a foothold in the Russian market in the early 1990s, in part, their Russian critics say, by swamping Russian producers with cheap chicken. Since then, Russian officials have angered American producers and officials with a raft of restrictions and quotas meant to help domestic producers.

The Kremlin has also used chicken as a diplomatic weapon with the United States, which, aside from poultry, has relatively little trade with Russia. Moscow imposed a similar ban in 2002, after the United States raised steel tariffs, and it banned several American chicken companies shortly after Russia’s war with Georgia in 2008, after accusing the United States of helping to instigate the violence.

The continuing chicken dispute has hindered Russia’s entry into the World Trade Organization.

But domestically, the restrictions, coupled with heavy government support of the poultry industry, appear to have worked.

“There has been a rapid rise in production consisting of 15 to 16 percent per year,” said Andrei N. Teriokhin, head of the Association of Russian Poultry Market Operators. Domestic production now accounts for 75 percent of demand.

“In the next four to five years,” Mr. Teriokhin said, “Russia will be able to support itself.”

At Dorogomilovsky Market in Moscow, the chickens arranged lovingly at the poultry counter all come from farms just outside the capital, the vendors said.

“This bird was running around yesterday,” said a burly vendor named Mikhail, pointing out a chicken that was clearly freshly plucked. “They showed us on television where those Bush legs come from,” he said. “They are all American military surplus.”

Propaganda campaigns aside, United States companies were still able to sell about 600,000 tons of chicken last year worth roughly $800 million, according to American and Russian officials, by far the largest share of Russian poultry imports.

But the new regulations, which came into effect on Jan. 1, could endanger this lucrative trade.

At issue is the chlorine bath that American companies use to disinfect chickens after slaughter. Russian health officials declared that method unsafe, and they outlawed the procedure in 2008. The European Union has long enforced a similar ban on the procedure.

The Russian government gave companies, both Russian and foreign, until this year to adopt new procedures. About 90 percent of Russian companies complied, officials said.

The Americans, however, protested. The requirements would force American poultry producers to completely overhaul their sanitation systems, officials and producers have said.

Moreover, American producers have said that the Russian government has provided no scientific evidence that chorine disinfection is unsafe. The USA Poultry and Egg Export Council wrote a letter to the Russian government last November, citing several scientific studies that found the opposite to be true.

But the science of the matter, it seems, is not the most important point. Rather, as Gennady Onishchenko, Russia’s chief sanitary officer, noted in an interview in the official newspaper Rossiiskaya Gazeta last month, the issue is one of principle.

“A problem has arisen with one country: the United States, which is again continuing to insist that we show them that it is harmful,” Mr. Onishchenko said. “We tell them, ‘Excuse me, we pay the money, so we set the conditions for what kind of meat we want and what kind we don’t.’ ”

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Nearly 150 dead in clashes in Nigerian city

Nearly 150 dead in clashes in Nigerian city

JOS, Nigeria (Reuters) – More than 150 Nigerians have been killed and dozens injured in three days of clashes between Muslim and Christian gangs in the central city of Jos, where police imposed a 24-hour curfew, residents said.

The governor of Plateau state on Tuesday sent extra security forces to the state capital to prevent a repetition of clashes in November 2008, when hundreds of residents were killed in the country’s worst sectarian fighting in years.

“On Sunday evening we buried 19 corpses, and 52 yesterday. As of right now, there are 80 at the mosque yet to be buried,” said Muhammad Tanko Shittu, a worker organising mass burials at the city’s main mosque, adding 90 people had been injured.

But official police figures were significantly lower with 20 people dead, 40 injured and 168 arrested since Sunday.

“Any other figures being bandied by people could be done with mischief aimed at aggravating the situation,” said Yemi Ajayi, spokesman for the national police in the capital Abuja.

This week’s violence erupted after an argument between Muslim and Christian neighbours over the rebuilding of homes destroyed in the 2008 clashes.

The fighting is unlikely to have a big impact on sub-Saharan Africa’s second biggest economy. Its oil industry is in the south and its banking sector mainly in the commercial hub Lagos.

Police said calm had been restored in most neighbourhoods in Jos, but residents said they could still hear sporadic gunfire and see smoke from burning houses and churches.

“UNDER CONTROL”

Vice-President Goodluck Jonathan ordered troops and top security chiefs to Jos to restore calm, in his first use of executive power since President Umaru Yar’Adua left Nigeria for treatment at an overseas hospital nearly two months ago.

“I assure you that the federal government is on top of the situation in Jos and the situation is under control,” said Ima Niboro, spokesman for the vice-president.

It was not known whether Yar’Adua, who is receiving medical treatment in a hospital in Saudi Arabia, had been briefed on the situation.

A Red Cross spokesman said around 2,000 residents had left their homes and taken shelter at a nearby college. Some were injured with machete and gunshot wounds, he said.

There were reports that the clashes had spread to at least seven communities outside Jos, but this could not be independently confirmed.

Dr Aboi Madaki, who works at the Jos University Teaching Hospital, said gunshots and machinegun fire could be heard as early as 4 a.m. (0300 GMT) and continued for hours afterwards.

“I saw soldiers moving into town and I can see smoke coming from many places,” he said.

Nigeria has roughly equal numbers of Christians and Muslims, although traditional animist beliefs underpin many people’s faiths.

More than 200 ethnic groups generally live peacefully side-by-side in the West African country, although 1 million people were killed in a civil war between 1967 and 1970 and there have been outbreaks of religious unrest since then.

U.S.-based Human Rights Watch released a report in July saying around 700 people were killed in the November 2008 clashes, more than three times as many as the official figure given by the government shortly after the violence.

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