Japan Airlines Corp., undergoing a government-backed turnaround in bankruptcy, said Wednesday it will increase route cuts and retire planes earlier than planned in a bid to return to profit.
The carrier will cut 15 overseas and 30 domestic flights this business year, compared with an earlier plan to slash 31 routes over three years, President Masaru Onishi said at a news conference in Tokyo. Chairman Kazuo Inamori was also present. The airline will stop flying to Sao Paulo, Amsterdam, Rome and Milan from Tokyo starting Sept. 30, the company said.
The 30 domestic flight routes to be terminated from Oct. 30 include those to and from Aichi Prefecture-run Nagoya airport, Hiroshima-Nishi airport in Hiroshima, Okadama airport in Sapporo and Okushiri airport on the island of Okushiri off Hokkaido, JAL said.
As JAL works out the details of its rehabilitation measures,including the route cuts, the government-backed turnaround body said the airline's submission of its turnaround plan to the Tokyo District Court may be delayed from the initial target of late June.
Hideo Seto, trustee of the Enterprise Turnaround Initiative Corp. of Japan, which is overseeing the airline's turnaround, told the news conference there is a "likelihood that (the submission) will be slightly delayed" to enable JAL to come up with a "firm" and "effective" turnaround plan.
Asia's largest carrier by sales said it will carry out "drastic cuts" in costs in one year rather than three years to speed its turnaround after filing for Japan's fourth-largest bankruptcy in January. Political opposition may still limit how deeply JAL can pare flights, said Mitsushige Akino of Ichiyoshi Investment Management Co.
"JAL is likely to face local opposition to cutting routes," he said. "They should really stop flying internationally if they want to stop big swings in their earnings."
Earlier this month, Onishi told reporters in Los Angeles that the airline may increase job cuts to return to profit.
JAL was headed for a fifth annual decline in international passenger numbers, according to figures released April 12. Overseas traveler numbers fell 8.6 percent in the 11 months to February, following a 12 percent drop in the previous fiscal year.
It will retire its Boeing Co. 747s and Airbus SAS A300 planes by March 31, according to the statement. It had planned to retire the 37 Boeing 747s over three years under the turnaround plan released in January.
The carrier, which was delisted from the Tokyo Stock Exchange in February, predicted it would lose money in the 12 months that ended March 31. It had a net loss of ¥46.8 billion in the three months ended Dec. 31, compared with a loss of ¥39 billion a year earlier.
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