3 items on a wing and a prayer

All from today's WSJ.

Airlines Face $11 Billion in Losses

IATA sees premium passenger traffic falling 20% in 2009, compared with a 5% drop in traffic from the back of the cabin. The low demand for high-priced seats is expected to push yields, or revenue per passenger, down 12%.

Now, the airline industry needs to make structural changes to regain its footing, Mr. Bisignani said.

Airlines have helped themselves by adding new passenger fees, Mr. Bisignani said. IATA reported that revenue not related to tickets or cargo currently accounts for more than 10% of global airline revenue.

Photo attribution

Here's three structural ideas from Guambat: make it easier for passengers to get into the airport, on the plane and back off again; let them bring their baggage along; and give them enough space so they arrive looking and feeling unlike a crushed car.



JAL Plans Job Cuts, Confirms Alliance Talks

The restructuring plan is key for JAL to get fresh loans from banks, as it will have to persuade lenders that it can get back on its feet. Analysts estimate JAL may need as much as 150 billion yen, or $1.65 billion, in new funds in the second half of the fiscal year through March, on top of the 100 billion-yen loan partially backed by the government that it received in June.

A Year Later, AIG Rescue Is a Work In Progress

You wouldn't know it from the outside, with new CEO Robert Benmosche exuding confidence from his Croatian villa and AIG shares up nearly 70% during the past four weeks. But inside the offices of AIG and its government minders, there is a push to rescue one of AIG's most important units.

It is the largest airplane-finance company in the world, known as International Lease Finance Corp., and like much of this country, it can't pay its coming debts. But neither AIG nor the government has given up on ILFC, as both hope to extract some value from the company once considered AIG's crown jewel.

But taxpayers should tune in because a likely scenario is that they will end up paying for much of this smaller rescue, too. The Federal Reserve and the Treasury could agree to refinance tens of billions of ILFC debt at below-market rates, a move that would greatly increase their own risk and attract more AIG headlines. AIG has drawn on some $82 billion in loans and investments since its rescue last year, and has access to an additional $48 billion.

AIG also is expected to to plug other holes caused by ILFC's problems. One of its main insurance subsidiaries, National Union Fire Insurance Co., has a $4.5 billion equity stake in ILFC that is expected to be worthless. People involved in the situation expect AIG to protect the insurer by drawing down government funds to make up the difference. An additional $3 billion held by AIG itself likely will be flushed.

"AIG is working to pursue a business strategy that best positions ILFC for the long term, provides ongoing benefit to ILFC's customers and various stakeholders, and achieves enhanced value for its portfolio," said spokeswoman Christina Pretto.