Japan’s new transport minister has said JAL, it’s national carrier must not be allowed to fail, suggesting the state would support the loss-making airline as it seeks fresh funding for a major cost-cutting plan. JAl has revealed it will cut 14 percent of its workers, or 6,800 employees, over the next three years as part of a restructuring plan.
The comments from Seiji Maehara come as both Delta and American Airlines hold competing talks to invest in Japan Airlines, eyeing growth opportunities across Asia.
Maehara said he hoped the company would restructure and turn it’s fortunes around without assistance from the state but the company lost $1 billion last quarter and has been trying to plan for survival around a government backed loan.
In the limited time available the new transport minister is reviewing the rescue plan. Currently this involves cutting thousands of jobs and suspending dozens of domestic and international routes.
JAL is looking to withdraw from several international airports, including those in Mexico and China, and to suspend routes from Tokyo and Osaka to nine overseas destinations, including Rome, São Paolo in Brazil and Dalian in China. It will cut 29 domestic routes and 21 routes by March 2011.
The 6,800 redundancies will be implemented through to March 2012 as the company strives to cut operating costs by 30% over the next three years.
JAL has been hard hit by the global recession, which has cut passenger numbers and cargo traffic as well as facing tough competition on domestic routes from All Nippon Airways. They are also in talks with Air France-KLM and Korean Air over additional investments worth several hundred million dollars.