JAL cuts 4300 jobs

[Kip Powick]

Japan Airlines to cut 4,300 jobs

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TOKYO – Japan Airlines Co. said Tuesday it will cut 4,300 employees, or about eight per cent of its workforce, over the next three years after it reported a net loss for the most recent quarter.

Japan's No. 1 carrier is still struggling to regain customer confidence after a spate of safety lapses in recent years have prompted passengers to opt instead for rival All Nippon Airways.

JAL, as the airline is known, reported a net loss of 10.8 billion yen, or US$89.9 million, in the October-December quarter, slightly less than the 11-billion-yen loss it recorded for the same period in 2005.

Quarterly sales rose 4.9 per cent to 584.1 billion yen ($4.9 billion), from 556.9 billion yen a year ago.

Cargo traffic from Japan to China was strong, but was weak to the U.S. in the latest quarter. Tourism to Guam and Hawaii was stagnant, and poor snowfall caused a drop in domestic ski travel, JAL said.

Later Tuesday, JAL said it would cut 4,300 employees from its payrolls by March 2010 from the current 53,100 as part of its four-year business plan aimed at boosting profitability. This comes on top of the ongoing elimination of 6,000 ground jobs for the period from through March 2008, announced several years ago. JAL has also been scrapping flights and trimming other costs to turn around its sagging business.

The company expects to cut 50 billion yen ($416.7 million) in annual labour costs beginning fiscal 2007 from the current fiscal year, and boost a group operating profit to 35 billion yen ($291.7 million) from 13 billion yen ($108.3 million) this fiscal year.

Soaring fuel costs continue to be a problem, JAL said, although oil prices have eased since October. The average price for jet fuel over the nine-month period from April 2006 was $81.9 per barrel, a price that's unprecedented, it said.

The airline is taking up fuel hedging and fuel consumption reductions, but the fuel bill during the nine months was up 12.8 per cent at 320.4 billion yen ($2.7 billion) from the same period a year earlier, it said.

JAL suffered a huge net loss of 47.2 billion yen ($393 million) in the fiscal year through March 2006 on soaring jet fuel prices and weak passenger demand.

The airline has been trying to win back customers after a series of embarrassing safety lapses since 2005, including an engine fire.

No one has been injured in the Japan Airlines incidents, but wheels have fallen off during a landing, a flight took off with a faulty latch and a flight was forced to return shortly after takeoff when a cockpit window cracked.

Seems the customers take the above type of incidents to heart.