JAL flying through stormy skies
(From The Japan Times October 5 issue)

「日本航空」グループ2社が合併

    The former Japan Airlines Co. and Japan Air System Co. were integrated under a single holding company in 2002 to improve their competitive edge. Then, in April 2004, Japan Airlines International Co. and Japan Airlines Domestic Co. came under the wings of the holding company, Japan Airlines Corp.

    But the integration did not lead to the expected benefits. Restructuring efforts have been slow. A spate of safety problems has caused many customers to switch to rival airlines. Soaring fuel prices have also hit the company.

    JAL fell into the red in fiscal 2005 on a consolidated basis, registering a net loss of ¥47.2 billion for the year ended March 31, 2006, compared with a net profit of ¥30 billion the year before. Falling passenger numbers caused a ¥30 billion revenue loss in domestic operations. Although overall sales rose 3.2 percent to ¥2.2 trillion, that was due mainly to a series of fare hikes and increased fuel surcharges. By contrast, JAL archrival All Nippon Airways Co. fared well in the same fiscal year. Its pretax profit rose 2.3 percent to 6¥6.7 billion and sales increased by 5.8 percent to ¥1.37 trillion.

    In the first quarter of fiscal 2006, JAL had a net loss of ¥26.7 billion, down from a net loss of ¥38.3 billion a year before. In the meantime, ANA's net profit more than tripled from a year earlier to ¥7.68 billion. JAL's operating loss amounted to ¥31.9 billion, slightly less than ¥32 billion a year earlier, indicating that the company is still suffering from the decrease in passenger volume and higher jet-fuel prices. ANA's operating profit jumped 66.1 percent to ¥19.5 billion.

    The difference in business performance between JAL and ANA can be attributed to the speed of each company's restructuring efforts. ANA started purchasing fuel-efficient aircraft in fiscal 2003. It also cut employee salaries the next fiscal year. The efforts saved ¥30 billion over two years. JAL's cost-reduction efforts didn't go into full gear until fiscal 2006.

    In March 2006, JAL announced a middle-range business plan covering the period of fiscal 2006 to fiscal 2010. For the current fiscal year, it is striving to realize a net profit of ¥3 billion, an operating profit of ¥17 billion and sales of ¥2.3 trillion. The plan also calls for completing the reconstruction of the airline's business operation infrastructure by the end of fiscal 2008 and eventually raising the rate of consolidated profit to 5 percent or more.

    Under the plan, JAL will strengthen its international passenger flight services as the main pillar of its business operations. To improve earnings from each flight, it will review air routes, number of flights and flight schedules as well as introduce smaller, fuel-efficient aircraft. JAL will phase out 29 Boeing 747 jumbo jets by the end of 2009 and plans to purchase 86 new aircraft over a period of five years. The new aircraft will cost about ¥750 billion.

    To cover part of this cost, JAL raised ¥150 billion through issuance of new shares in July — short of the ¥200 billion it had hoped for. To fill the gap, JAL plans to take out loans from the Japan Bank for International Cooperation, a government-affiliated financial institution.

    At a time when JAL needs money to improve its competitiveness and expand its business, its finances have weakened. JAL's liability with interest stood at nearly ¥2 trillion, almost equal to its annual sales, as of the end of March 2006. In addition to the need to raise funds to pay for the purchase of new planes, JAL will need ¥100 billion for bond redemption, due next year.

    The issuance of new shares was accompanied by an episode that betrayed JAL management's lack of prudence. Its sudden announcement June 30 of a plan to issue up to 750 million new shares — including the public placement of 700 million shares equal to 35.3 percent of the company's outstanding shares as of the end of May — prompted complaints from shareholders because the move diluted the value of their shares. JAL is looking forward to an increase in the number of departures and landings at Narita and Haneda airports in fiscal 2009. But the next two to three years before that happens will be crucial for the airline. It should explore every means to strengthen itself, including pay cuts and disposals of assets. Changing its corporate culture, traditionally characterized by lack of unity among employees and insufficient communication, will be indispensable to achieving this goal.

The Japan Times Weekly: Oct. 14, 2006
(C) All rights reserved

    合併したのは「日本航空インターナショナル」（旧JAL）と「日本航空ジャパン」（旧JAS）で、持株会社傘下の別会社として経営を統合していた。

    これまでのところ、経営統合は成果をあげていない。改革が遅れる一方、運行トラブルが続出、多くの乗客は競合エアラインに乗り換えた。

    日本航空は05年度に、472億円の連結純損を計上した。ライバルの全日空は、同年度に667億円（2.3%増）の経常利益を計上している。

    日本航空と全日空の間には、経営改善努力に大きな差がある。全日空は、03年に燃費のよい航空機の購入を始め、翌年には給与引き下げをして2年間で300億円の経費節減に成功している。日本航空が本格的経費節減を始めたのは06年だ。

    計画では、経営の柱として国際線事業を強化し、路線、便数、発着時間を見直し、ジャンボ機に替えて燃費のよい高性能中型機を導入する。

    計画実行のため、日本航空は7月に新株発行により、1500億円の資金を調達したが、2000億円の必要資金には足りない。そこで国際協力銀行から不足分を借り入れる。

    日本航空は、競争力強化のための資金を必要とする一方で、06年3月現在2兆円の有利子負債を抱えている。また、航空機購入資金に加え、社債償還のため、来年度に1000億円の資金を必要とする。

    日本航空は09年度に成田、羽田両空港の発着便増便をねらっているが、今後給与引き下げや資産処分をして体質改善を図らねばならない。社内の不和、コミュニケーション不足などの問題を解決することが目標達成には不可欠だ。