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Saturday, June 20, 2009

Japanese Transport Minster: JAL cost-cutting might be painful but crucial

The Japanese Transport Minister Kazuyoshi Kaneko released a statement on MLIT website regarding Japan Airlines median term corporate plan released yesterday. According to Kaneko, JAL should accelerate the cost-cutting plan to improve its financial health. MLIT will also seek supports from the financial institutions because this is "indispensable" to the success of JAL's restructure.

“We consider it crucial for the company to draft a drastic cost-cutting plan, which might be painful,” Kaneko said in a statement published on the ministry’s Web site yesterday. “Our ministry will closely instruct and supervise Japan Airlines during its process of drawing up such plans.”

Kaneko said the airline should assume “there is no sacred area” that can escape cost-cut efforts and “regularly report” its plans to the ministry.

One more point Bloomberg 's report didn't cover is MLIT wants to ensure the success of JAL's restructuring because they want to maintain a positive competition environment in Japanese airlines industry, and JAL's international network is important to the success of Japan's economy.

Sounds like there still a lot of work painful cost-cutting coming in a very near future. And the Japanese Government will heavily involved in this reform. Let's hope JAL doesn't become another GM. Let's see if I can notice any differences in service quality in my upcoming trips. For outlines of JAL's restructuring plan, you can refer to my post here.

Source: Bloomberg and MLIT Press Release (Japanese only)

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