Saturday, January 16, 2010

JAL to cut 1/4 costs

Nikkei (via Bloomberg) reports that Japan Airlines plans to reduce its operating costs by 1/4 in the next three years. JAL will reduce fuel costs by revising future contracts and switching to smaller aircraft (dumping the 744).

Let's see, by laying off 1/3 of staff, 1/3 pension cut for retirees and 1/2 cut for staff, and all those route suspensions, JAL can only probably reduce the operation costs by 25%. But one concern is the future fuel price. The jet fuel price has increased quite a bit over the last year (just look at the fuel surcharge :P). And fuel costs is still one of the biggest costs of an airlines. I hope the new JAL management and ETIC have figured out a way to deal with this problem in the future. Hopefully they won't rely on solving this by raising the fuel surcharge LOL


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