Manila remains a profitable destination for JAL

But cuts 21 other International Routes

September 26, 2009

Tokyo - Asia's biggest airline announced this week that it intends to keep its operations in the Philippines amidst recent announcement of cutting 21 of its unprofitable international routes as part of the company's massive re-structuring program after reporting $ 1 billion in losses for the period of April-June this year.

Japan Airlines operation to the Philippines has been downgraded since July 1, 2009 with its afternoon flight serviced by Boeing 767's due to economic downturn says the JAL Group in a statement. But in August both services were downgraded from Boeing 747 to 767 service or a capacity reduction of about 30%.

The airline said that in accordance with the FY2009 management plan, drastic adjustments are being made to the network and fleet size so as to more closely match capacity to demand, and allow the Group to improve profitability. However servicesis expected to be upgraded back slowly when traffic to and from Manila improves particularly during the peak months of December and January.

A downsizing strategy will be implemented in most of JAL's route network affecting 15 flights on 14 international routes, where jumbo 747-400s will be switched to medium-sized 777s and 767s, and medium sized 767s will be switched to even smaller 737s.

As part of its corporate reconstruction plan presented on Sept. 15, JAL will cancel all of its loss-making routes both at home and abroad within the next 3 years totaling 50 unprofitable routes that is 29 flights to cities in Japan and 21 to overseas destinations.The company also plans to completely withdraw from seven domestic and nine overseas airports.

The international routes to be abolished includes flights from Narita to Rome, Amsterdam, Brisbane and Sao Paulo, as well as those from Kansai to Singapore and Hangzhou.

JAL secured a 100 billion yen ($1.1 billion) loan from the Japanese Development Bank in June to keep flying until the end of the year but needs more money from the State to fund a restructuring plan. It seek as much as 250 billion yen ($2.5 billion) more through a mixture of equity and debt financing. It already cuts 6,800 jobs from its payroll to stay afloat.