Japan Air to Boost Flight Cuts, Retire Planes Faster (Update2)
By Chris Cooper
April 28 (Bloomberg) -- Japan Airlines Corp., undergoing a government-backed turnaround in bankruptcy, 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 fiscal year, compared with an earlier plan to slash 31 routes over three years, according to a statement posted on the airline’s Web site today. The statement was later removed. Sze Hunn Yap, a spokeswoman, declined to comment.
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, who oversees $450 million in assets at 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.”
JAL will hold a press conference with President Masaru Onishi at 5 p.m. today, Yap said. The airline may increase job cuts to return to profit, Onishi told reporters in Los Angeles earlier this month.
Sao Paulo, Amsterdam
Japan Air will stop flying to Sao Paulo, Amsterdam and Milan from Tokyo starting Sept. 30, according to the statement. The carrier will end services to Kona, Hawaii, from Oct. 30.
The airline 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.
JAL 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 for a fourth year in five in the 12 months ended March 31. It had a net loss of 46.8 billion yen ($502 million) in the three months ended Dec. 31, compared with a loss of 39 billion yen a year earlier.
--Editors: Neil Denslow, Chana Schoenberger.
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