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TOKYO : Japan Airlines (JAL) said on Tuesday it would slash 6,800 jobs and pursue a tie-up with a foreign carrier in a bid to return to profit in the face of severe turbulence unleashed by the global recession.
The job cuts, which will shrink JAL's workforce by 14 per cent, are part of an emergency restructuring plan being prepared by Asia's largest carrier, which is seeking financial aid from the government.
"The personnel reduction cannot wait," president Haruka Nishimatsu told reporters after briefing a government-appointed panel on the planned revamp.
"The world is changing, and we have to adjust our size. It's easy to expand, but it's extremely difficult to downsize," he said.
JAL, which lost more than one billion dollars in the April-June quarter, has already slashed thousands of jobs in recent years.
Nishimatsu said JAL aimed to seal a tie-up with an overseas carrier by mid-October, without naming any potential partners.
According to local media, Delta Air Lines and American Airlines' parent company, as well as Korean Air, are considering taking a stake in JAL. European carrier Air France-KLM is also seen as a possible partner.
Delta is part of the SkyTeam global airline alliance, while JAL and American Airlines belong to the rival Oneworld grouping.
Nishimatsu told the government panel the three pillars of JAL's recovery plan were a drastic cut to its route network, a review of personnel costs and a capital tie-up, a transport ministry official said.
The Nikkei business daily reported over the weekend that JAL aimed to raise around 250 billion yen (2.7 billion dollars) by March next year by taking out loans and selling new shares and other assets.
The Japanese airline already announced last month a drastic reduction in flight services as it braces for a second straight year in the red, hit by the global economic downturn and swine flu fears.
Industry experts said the downsizing could give JAL some breathing space but they would not cure all its ills.
"Of course, cuts to unprofitable routes and personnel are necessary, but they won't solve JAL's recurring problems," said Makoto Murayama, a transport analyst at Nomura Securities.
He said it was imperative for the company to reduce the burden of its generous pensions payments to its retired workers.
JAL has forecast a net loss of 63 billion yen in the year to March 2010, after a 63.2-billion-yen deficit last year.
It has had a troubled record since its 1987 privatisation and a complex merger with domestic carrier Japan Air Systems, which was finally completed in 2004 after several years of negotiations and integration difficulties.
But "JAL is still an attractive partner for its competitors," said Osuke Itazaki, a transport analyst at Credit Suisse. "The chances of a revival are still high if it can succeed in its streamlining efforts."
Prospects of JAL securing more state aid from the government have been clouded by a change of power in Japan, with a new centre-left government seen as less business-friendly than the outgoing conservatives.
"I don't think there will be a drastic change in the scheme under the new administration, but it is still too early to predict," said Itazaki.
Some lawmakers of the newly victorious Democratic Party signalled concern about the prospect of additional government support for JAL. - AFP/ms
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