Japan Airlines (JAL) and All Nippon Airways are both accelerating plans to restructure in response to falling yields. As the two carriers prepared to announce first-half results at the end of October, neither was expecting to hit previous forecasts.
"Japan's recession is JAL's fundamental problem," says Isao Kaneko, the airline's new president. "Although we have just about maintained passenger levels, the actual yield has dropped several points, which will reduce our anticipated operating profit."
Kaneko is taking the opportunity of the financial results to unveil several revisions to JAL's business plan. He will accelerate by one year the deadline to cut overall costs by 10%. This will include a reduction of 1,500 ground staff a year earlier than planned by March 2001. More job losses are due.
JAL has disclosed no estimate on additional layoffs, but one Tokyo paper predicts that 350 to 500 more jobs will go. JAL's layoff plans may seem unruly by Japanese corporate standards, but Kaneko appears determined to act. JAL will also defer three new aircraft to March 2000, as part of a wider plan to cut $750 million from JAL's total interest-bearing debt of $9.5 billion.
One bright spot for both carriers has been new slots at Tokyo's Narita airport. JAL has moved a number of flights from Kansai to Narita, where passenger demand is higher. All Nippon is adding daily San Francisco flights and increasing Tokyo flights to London, Washington and Bangkok.
All Nippon Airways says: "We need to gear up the business in the second half. Otherwise we will miss our earnings forecast."
Source: Airline Business
