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Fuel Bills Push Japanese Airlines to Cut Routes

Reuters
Tuesday, 5 Aug 2008 | 11:47 PM ET

All Nippon Airways, Japan's second-largest airline, said on Wednesday it may cut services and its bigger rival Japan Airlines was reported to be following suit, due to soaring costs for aviation fuel.

Passenger planes of All Nippon Airways sit at the tarmac in Tokyo.
Katsumi Kasahara
Passenger planes of All Nippon Airways sit at the tarmac in Tokyo.

ANA said it may trim services on about 10 domestic and international routes, while the Nikkei business daily said Japan Airlines planned to cut flights on 21 routes, including services to London.

Skyrocketing jet fuel prices have hit the airline industry, with carriers worldwide shedding thousands of jobs and scrapping routes as losses mount, threatening some of them with insolvency. The cost of jet fuel has jumped about 69 percent over the last year to about $144 a barrel.

Japan Airlines is due to report results on Thursday, and a spokesman declined to comment on the media report, saying any announcement on flight cuts would be made then.

An ANA spokesman said the airline was considering halting international routes such as those to Guam and Taipei, and would make an official announcement soon. Guam and Taiwan are popular holiday destinations for Japanese.

The cuts by Japan Airlines were projected to save the airline 12 billion-13 billion yen ($111 million-$120 million) a year, the Nikkei said.

In the United States, AMR, parent of American Airlines, and Delta Air Lines have both said they would trim capacity and slash headcount.

Shares of ANA rose 1.5 percent to 405 yen while Japan Airlines added 0.5 percent to 223 yen, both lagging a 1.8 percent gain for the benchmark Nikkei average.

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