JAL Likely to Speed Up Work Force Cuts By a Year
Japan Airlines aims to speed up work force cuts to improve profitability and will trim 4,300 jobs by April 2009, a year earlier than planned, sources familiar with the matter said.
The move comes as the troubled airline, which is Asia's biggest airline by revenue, seeks to improve its standing with financial institutions to gain fresh capital.
The sources also said JAL may increase the overall number of job cuts planned by April 2010 and would ask for cuts in retirement payments in talks with trade unions.
Banking sources have said JAL had asked its main lenders to swap part of its $14 billion debt for equity to prop up its capital and secure funds to restructure.
But a report by the Asahi newspaper this month said the plan had been put on hold in the face of reluctance from its banks and because the airline thought it might be able to get better terms if it waited.
JAL has been battered by high oil prices, which have hurt it more than rivals as its fleet is older and less fuel-efficient.
Its personnel costs are also relatively higher and on domestic flights it has lost much ground to All Nippon Airways after a series of safety mishaps.
It lost 63.5 billion yen over the two years to March 2007 but expects to swing to a profit this business year and under a three-year business plan unveiled in February, JAL vowed to reduce its debt through the sale of non-core assets.
Sources told Reuters in May that JAL had asked the Development Bank of Japan, Mizuho Corporate Bank, Bank of Tokyo-Mitsubishi UFJ to swap part of its 1.7 trillion yen debt for equity.
The plan initially sparked a sharp recovery in JAL's credit spread but the spread in its five-year credit default has widened by nearly 50 basis points to around 250 basis points since late May on the report that it had been postponed.
Shares in JAL were little moved, down 1 yen at 232 yen at the finish of Friday morning trade.
Another report by the Yomiuri newspaper also said JAL was considering issuing more than 100 billion yen in new shares to trading houses including Sojitz Holdings and Mitsui & Co.