After again missing earnings targets for the last financial year, Japan Airlines is looking to make deeper cuts and will further reduce its workforce.
The carrier has been in financial difficulty for some time and some analysts and shareholders have criticised it for not taking adequate cost-cutting action. JAL says now that it is to further accelerate a job-cuts programme and will be reducing its workforce by another 4,300 people by March 2009, or a year earlier than planned.
Earlier this year Asia's largest airline group unveiled a new four-year restructuring plan under which it said it would step up job cuts and reduce expenditure in many other areas in a bid to return to profitability. The restructuring plan called for a ¥50 billion ($405 million) reduction in group personnel costs annually, starting this fiscal year, mainly through stepped-up job cuts that have been taking place through employee retirement. JAL said at the time that between April this year and the end of March 2010 it hoped to reduce the group workforce to 48,800 from 53,100.
Plans to accelerate this 4,300-employee reduction by one year come after the carrier failed to meet a target for a return to profitability in the financial year ended March 2007. JAL incurred a ¥16.2 billion loss for the period. It now desperately needs to restructure its operations ahead of the opening of a new runway at Tokyo's busy Haneda airport at the end of the decade, which will enable new competitors to start challenging it.
The accelerated job cuts will come in part through a voluntary early retirement scheme, 250 of whom accepted. Cabin crew were to have been offered early retirement in the next fiscal year, but JAL says it is considering offering it this financial year and hopes that about 600 will accept. JAL also plans to offer ground staff just below the level of vice-president early retirement and hopes around 450 will accept. The carrier earlier this year offered voluntary early retirement to vice-president level employees.
JAL also plans to make changes to its pension scheme that are expected to enable it to cut its pension-related costs this year alone by ¥20 billion.
Source: Airline Business
