New Management Team Vows to Rescue Japan Airlines
Kazuo Inamori described himself as an amateur in the aviation industry on Monday, in his first news conference as Japan Airline's chairman. The founder of electronics maker Kyocera spent decades in the technology industry and served as chairman of one of Japan's top telecommunications companies. He retired more than a decade ago to become a Buddhist monk - but the Japanese government brought him out of retirement to bring JAL out of bankruptcy.
Inamori addressed the size of the challenge. He says JAL is a company that represents Japan. Its misfortunes directly affect the country's overall economy. And, Inamori says, they must bring the company back, to bring Japan's economy back. Inamori takes over as chairman with new president Masaru Onishi by his side. Their first order of business will be deciding on an alliance with a U.S. airline. Both American Airlines and Delta have offered significant financial support in an attempt to woo the company into an alliance.
Onishi did not give a timetable, but says JAL will decide on a partner soon. Onishi says they are absolutely "neutral" at the moment and that both plans have good points and bad points. With JAL's new system in place, he says, they plan to reexamine this issue. Onishi and Inamori must also tackle nearly $25 billion in debt. The company plans to slash unprofitable routes, along with a third of its workforce. Inamori did not confirm that number Monday, but said he must consider job cuts.
Inamori says it pains him to think he has to cut jobs. If that is what it takes to bring JAL back, he must convince employees that it is a necessary step for the company's future success. The former state-owned carrier once symbolized the strength of the country's post-war economic boom. For decades, it was considered one of the top airlines in the world, and other carriers in Asia tried to copy its style and success.
But its fortunes declined in the last decade, because of the fall in business after the September 2001 terrorist attacks, a surge in fuel prices, and the worldwide economic slowdown. The Japanese government bailed out the airline three times in the past 10 years, but it could not save the company from bankruptcy this time around.
A state-backed group overseeing the company's restructuring plan has agreed to give JAL $3 billion in capital. In exchange, the company's lenders were asked to forgive about $3 billion in loans. The restructuring plan is expected to take three years.
