JAL Group Announces FY2007-2010 Medium Term Revival Plan
Japan Airlines | Feb. 06, 2007
On February 6, the JAL Group announced the medium-term corporate business plan for the four years FY2007 to March 2011, emphasizing the pursuit of safety and the customers' standpoint, rebuilding the group's business foundation, and realizing continuous stable profits.
While securing high levels of safety that are the foundation of the company, JAL will carry out business restructuring through aircraft downsizing and shifting to high profit routes. JAL will strengthen product competitiveness through for example, the introduction of First Class on domestic flights, and Premium Economy Class on international flights. Thereby the airline will make maximum opportunity of the business changes that will result from the internationalization and expansion of Tokyo's Haneda Airport from and after FY2009, and increase of airport slot capacity at Narita. JAL will also implement large scale cost reductions through personnel reductions and other measures and concentrate resources to the core air transport business segment in order to achieve sustainable growth.
The JAL Group will consolidate efforts to maintain flight safety on a daily basis, and provide safety and comfort to customers in order to regain the trust of all stakeholders.
The Medium Term Corporate Plan focuses on the following 5 points:
1. Further Improvement of Safety Standards
While continuing to realize the recommendations of the Safety Advisory Group, an external panel of advisors, we will strengthen the safety management system and the measures taken for Human Factor monitoring in order to maintain and improve high quality flight operations and aircraft.
2. Improving Profitability via Cost Reductions
JAL plans a bold review of the work process to increase workforce productivity by 10% and reduce the 53,100 employees on a consolidated basis at the end of FY2006 to 48,800 employees by the end of FY2009, a reduction of 4,300 persons (including reduction of 3,500 employees through increase of productivity by 10%).
While maintaining the 10% reduction of basic salaries introduced in April 2006, the Group will implement a special early retirement program revise retirement benefit-related systems, implement a bold review of allowances and bonuses and take other large scale personnel cost reduction measures.
JAL aims to shrink Group personnel costs from and after FY2007 by 50 billion yen compared with FY2006. (excluding temporary cost reduction effects due to changes in the pension system in FY2006).
3. Downsizing via Aircraft Renewal and Strengthening Aircraft Competitiveness
We will proactively introduce highly economical medium and small size aircraft types, and retire old aircraft and by doing so improve revenue and increase aircraft competitiveness.
The ratio of large aircraft in the fleet will decrease from 29% in FY2006 to 21% in FY2010. When only looking at aircraft used for international operations, the reduction will be from 58% in FY2006 to 39% in FY2010.
4. Shift to High Profit Routes and Strengthen Overall Product Competitiveness
JAL will respond to the internationalization and expansion of Tokyo's Haneda Airport and the increase in slots at Narita, and concentrate resources on high-growth high-profit routes. The Group will expand operations of JALways, JAL Express, J-AIR and other subsidiaries, to build a more efficient Group operating system.
JAL will accurately monitor customers' needs and wants, and improve products and services of quality from the customers' standpoint, and strengthen the sales force to increase competitiveness.
- Revenue improvement as a result of shift to high profit routes (FY2007): International Passenger 7.0 billion yen, Domestic Passenger 6.0 billion yen.
- Revenue improvement as a result of product competitiveness improvement measures (annual): International Premium Economy Class 4.0 billion yen, Domestic First Class 4.0 billion yen.
- Scale of operations by JALways, JAL Express, J-AIR, JALways and JAL Express international flight operations: From FY2006 24% to FY2010 37%; JAL Express and J-AIR domestic flight operations: From FY2006 15% to FY2010 26%.
5. Concentrate Resources to Air Transport Segment
JAL will concentrate associated business resources on air transport business, and will increase the quality and value of affiliated businesses through partnerships with other companies.
Operating Income / Ordinary Income Targets (Unit: billion yen)
|
FY07 |
FY08 |
FY09 |
FY10 |
Operating revenue |
2200 |
2230 |
2247 |
2298 |
Operating income |
35 |
45 |
60 |
88 |
Ordinary income |
21 |
16 |
23 |
58 |
Net income |
7 |
6 |
11 |
37 |
Forecast based on the assumption: Exchange rate:
Fuel per barrel (