JAL to cut 6,800 jobs, pursue tie-up

JAL to cut 6,800 jobs, pursue tie-up

Tokyo: Japan Airlines (JAL) said on Tuesday it would slash 6,800 jobs and pursue a tie-up with a foreign carrier in an effort 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%, 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 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 $1 billion 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 are both interested in taking stakes in the Japanese group.

Delta is part of the SkyTeam global airline alliance, while JAL and American Airlines belong to the rival Oneworld grouping.

The Nikkei business daily reported over the weekend that JAL aimed to raise around 250 billion yen ($2.7 billion) by March next year by taking out loans and selling new shares and other assets.

The Japanese airline 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 would give JAL some breathing space but 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 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 privatization and a complex merger with domestic carrier Japan Air Systems which was finally completed in.