David Fullbrook/SINGAPORE
The Japan Airlines (JAL) group is targeting an annual operating profit of at least ¥80 billion ($665 million) plus annual debt reduction over the next three years as it adds routes and frequencies while transferring some work to subsidiaries to cut costs.
JAL will invest around ¥430 billion over the period, while reducing its high level of interest-bearing debt - one of its great handicaps - by ¥100 billion to ¥1.4 trillion, its says in its medium-term corporate plan covering the 2001-2003 fiscal years. JAL hopes to eliminate this type of debt completely by 2010 through improved cashflow.
Key to JAL's aspirations - other than an upturn in the sluggish Japanese economy - is additional airport capacity. Tokyo Narita is scheduled to open a second runway next year; Haneda, the city's second airport, is making additional slots available; and new regional airports are due to open over a six-year period.
JAL plans to grow both available seat kilometres and available tonne kilometres by just 2% annually during the three years, adding more flights on routes to Hawaii, the UK, Italy and Switzerland. Most new Asian routes will be to China and South Korea.
Group subsidiaries with lower operating costs than premium brand JAL will expand capacity via increased frequencies, new routes and the assumption of routes from the flag-carrier. More of JAL's international routes will be transferred to JALways, which by 1 April will serve around 15% of JAL's international destinations.
The JAL Cargo Sales unit may also be transformed into an independent cargo airline subsidiary.
Fleet numbers will increase by two to 173 by 2004 including 12 freighters, compared with the current 10. Costs should fall with the disposal of remaining McDonnell Douglas DC-10s, Boeing MD-11s and Boeing 737-200s.
One other major plank in JAL's strategy could be to join a global alliance, although no decision has yet been taken. The carrier has codeshares with every founding member of oneworld, with similar links to carriers from the other alliance groupings. It says more codeshares are on the cards.
Source: Flight International
