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Japan Airlines to Cut 5,000 Jobs, Slash Capital Investment

January 18, 1994

TOKYO (AP) _ Faced with severe competition from abroad, Japan Airlines Co. said today it will cut 5,000 jobs - nearly one-quarter of its work force - and sharply trim capital investment over the next four years.

″We are taking steps that will meet customers’ needs for a cheaper price,″ said Kousei Yamada, a JAL spokesman.

Yamada said the surging yen was making competition tougher than before, particularly with foreign airline companies.

A higher yen makes Japanese products more expensive abroad, while making imports cheaper in Japan. Foreign airlines can offer cheaper tickets and services than Japan’s because of the yen’s appreciation against the dollar.

JAL, formerly the nation’s flag carrier, is expected to tally a $270 million pre-tax loss for current fiscal year ending March 31, the company said.

The Japanese carrier has been struggling economically since fiscal 1991 due to the global economic slowdown, the rising yen, and high operation costs. It sustained a $484 million loss in fiscal 1992.

Last year, the company said it would transfer maintenance of its jumbo jets to China starting in 1996 to cut costs, with saving of about $1.9 million a year per Boeing 747 jet.

A series of restructuring moves undertaken by JAL are aimed at bringing the carrier back to profitability by March 1995, the official said.

In the latest steps, the job reductions will be implemented through attrition, curbs on new hiring and transfers to related firms, Yamada said. The planned job cuts represent about 23 percent of JAL’s work force.

During the 1994-97 period, JAL will slash its capital investment by 48 percent to $3.96 billion from originally planned $7.57 billion, the company said.

Yamada said planned introduction of some 747-400s and other aircraft will be later than initially planned, while the carrier is considering introducing smaller types of aircraft.

Yamada said the management will also discuss with union officials later a freeze on basic pay increases for next fiscal year. Last year, company unions agreed to such a freeze.

JAL, which turned private in November 1987, now has about 3,000 pilots, 7,000 flight attendants and 12,000 ground workers.

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