Business News

Japan Airlines executives announce route cuts at a news conference at the Ministry of Land, Infrastructure, Transport and Tourism in Tokyo Thursday. (Mainichi)

Japan Airlines (JAL) has announced that it will be cancelling a total of 16 routes in and outside Japan between December and June next year.

"In consideration of making a profit, we've decided to suspend routes that would remain unprofitable even if we used smaller aircraft," said Manabu Sato JAL deputy general manager of corporate affairs at a news conference Thursday. "We must stop the bleeding quickly."

The troubled airline will pull out of Kobe Airport, halting flights on eight domestic routes, and is in discussions with prefectural authorities in Nagano and Shizuoka to withdraw service to Matsumoto and Shizuoka airports. Internationally, JAL will cancel routes to Hangzhou, Tsingtao, and Xiamen in China, and to Mexico.

The route cuts, which will also claim the jobs of 200 employees, will result in estimated savings of 7.1 billion yen. Ten aircraft will also be made surplus by the move. The decision has already received consent from the Enterprise Turnaround Initiative Corp. (ETIC), which is overseeing restructuring at the airline.

By accelerating the route shut-downs, JAL aims to show the restructuring body that it is taking proactive steps to improve its balance sheet, in the hope that the body will approve a support plan.

JAL had considered shutting down a total of 50 routes in the three years starting fiscal 2009. Meanwhile, the JAL rehabilitation taskforce under the control of Land, Infrastructure, Transport and Tourism Minister Seiji Maehara has drawn up a draft plan for the cancellation of 45 routes. While these plans have been scrapped with the airline's application for support to the ETIC, JAL intends to include a sweeping evaluation of all its routes in its upcoming restructuring plan.

Local opposition to domestic route cuts is most likely, and the airline faces difficult consultations with local bodies.