Tokyo: After a two-month delay, struggling Japan Airlines announced on Tuesday details of a rehabilitation plan that will see the group cut more than 16,000 positions by the end of fiscal 2010.
In January the flagship carrier went under with $26 billion of debt in one of Japan’s biggest-ever corporate failures, but has continued flying while it goes through a painful state-led restructuring process.
Since filing for bankruptcy protection in January, JAL was delisted from Tokyo’s stock exchange in February and is now going through a court-led restructuring with the help of a government-backed turnaround fund.
“JAL has caused tremendous nuisance to its shareholders and creditors,” said chairman Kazuo Inamori. “I believe the rehabilitation plans submitted today marks the start of JAL’s revival,” he told a press conference.
The Enterprise Turnaround Initiative Corp. (ETIC) said in a statement that it would inject ¥350 billion ($4.14 billion) into the JAL group, subject to approval of the rehabilitation plan with the court.
The carrier will reduce the number of old aircraft by retiring them early and will downsize its fleet by introducing mid-sized and small planes.
JAL said it would achieve personnel cuts by encouraging early retirement and selling subsidiaries, reducing the group personnel number to 32,600 at the end of fiscal 2010 from 48,714 at the end of fiscal 2009.
“We must strive to implement schemes in the plan steadily and post figures that would even exceed targets,” said Inamori.
JAL hopes to post a ¥64.1 billion operating profit in fiscal 2011, which it forecast to rise to ¥117.5 billion in the year to March 2013.
“The number of passengers is increasing and cargo business is robust,” said ETIC trustee Hideo Seto when asked how the fast return to profit could be achieved amid the current business environment.
Seto added that the re-listing of JAL shares would be an option “around March 2012.”
The government asked charismatic entrepreneur Inamori, founder of high-tech company Kyocera and an ordained Buddhist monk, to turn around the former state-run company.
The ailing carrier delayed submitting its restructuring programme to the court by two months until the end of August to give it more time to refine cost-reduction measures.
The company has been negotiating with its creditors for fresh financial support under the programme, having faced pressure to speed up its plan to return to health.
Since filing for bankruptcy, JAL has been reducing flights and pulling out of unpopular routes, while being eclipsed by All Nippon Airways as the top Japanese carrier in terms of passenger volume and cargo.