JAL To Speed Up Restructuring By Cutting Unprofitable Routes

TOKYO (Nikkei)–Japan Airlines Corp. will accelerate restructuring efforts by eliminating unprofitable routes and lowering pension obligations, President Haruka Nishimatsu said at a news conference Thursday.

The airline has decided to slash three routes that currently connect Kansai International Airport with the Chinese cities of Dalian and Hangzhou, as well as flights between Chubu International Airport and Paris.

“We can only keep routes that earn a profit,” said Nishimatsu.

With pressure from the Land and Transport Ministry and local governments to maintain existing domestic routes, JAL will first try to improve profitability in this segment by utilizing smaller planes. If the airline is still unable to generate profits from these routes, it will consider cutbacks or the elimination of flights, according to Nishimatsu.

On JAL’s planned use of emergency loans from the Development Bank of Japan, which are guaranteed by the government, Nishimatsu acknowledged that the airline itself was not thrilled with having to rely on public assistance.

“This is truly just a temporary measure,” he said.

In response to higher oil prices, JAL plans to resurrect fuel surcharges on international routes beginning in October.

“At current (crude oil price) levels, we cannot do without” the surcharges, Nishimatsu said.

JAL dropped surcharges on all routes in July, but will bring back the fees to soften the brunt of rising fuel costs.

(The Nikkei July 24 morning edition)

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