JAL to cut flights after record loss

Japan Airlines said Friday it will discontinue or reduce flights on 16 unprofitable international and domestic routes, reporting the same day an operating loss of 86.1 billion yen on a consolidated basis in the April-June quarter.

Flights will be discontinued on two international routes, between Chubu Airport near Nagoya and Paris, and Chubu and Seoul (Incheon).

To be cut back are flights on eight international routes, including Narita-Guangzhou and Kansai-Shanghai, and on six domestic routes, including Haneda-Naha and Fukuoka-Sendai.

The international flights will be discontinued or cut back on Oct. 25, while four domestic ones will be reduced on Nov. 1 and two in December.

The 86.1 billion yen operating loss was the largest first quarter setback for the airline.

Negative factors such as the recession and the swine flu are making recovery for the financially troubled airline even more difficult.

JAL had already discontinued or reduced the number of flights on 10 international and domestic routes this spring.

Together, the cutbacks mark a major flight reduction for the former national flag carrier.

In terms of available seat kilometers--or total number of seats multiplied by total kilometers traveled--JAL will after the cutbacks offer about 15 percent less for international flights and about 3 percent less for domestic flights, compared with the same period last year.

With lenders urging JAL to discontinue or cut back flights on unprofitable routes in exchange for additional loans, further streamlining is expected toward next spring.

JAL plans to withdraw entirely from some airports it currently services.

It announced Friday that on a consolidated basis, its sales in the April-June quarter shrank 31.7 percent from a year before to 334.8 billion yen.

The company also reported a net loss of 99 billion yen, compared with 3.4 billion yen for the same period last year.

Though the airline did not revise its forecast of a 63-billion-yen annual net loss for the current business year, it is likely to be forced to make a downward revision unless demand for air travel recovers.

The expected net loss of 63 billion yen is based on an assumption that the company's corporate pension program will cut benefits to achieve an extraordinary profit of 88 billion yen for the company.

As many retired JAL employees are opposed to the proposed pension cut, the airline's deficits will balloon further if the pension reduction does not materialize.

It could adversely affect the plan to receive additional loans at the end of this year.

The other international routes on which JAL will reduce flights are Narita-Incheon, Narita-Delhi, Haneda-Hong Kong, Kansai-Incheon, Kansai-Guangzhou and Chubu-Guangzhou.

The other domestic flights to be cut back are Nagoya-Nagasaki, Osaka (Itami)-Yamagata, Itami-Niigata and Itami-Izumo.(IHT/Asahi: August 8,2009)