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

January 18, 1994

TOKYO (AP) _ Facing stiff foreign competition, 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 JAL spokesman Kousei Yamada said, adding that the strength of the Japanese yen against the dollar was hurting the carrier’s competitiveness.

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

JAL, formerly Japan’s flag carrier, said it expected to report a $270 million pre-tax loss for the fiscal year ending March 31.

The airline has been struggling in recent years due to the worldwide economic slowdown, the rising yen, and high operating costs. It lost $484 million in fiscal 1992.

Last year, the company said it would transfer maintenance of its jumbo jets to China starting in 1996, a move expected to save nearly $2 million a year per Boeing 747 jet.

The job cuts announced today, representing about 23 percent of JAL’s work force, will be implemented through attrition, curbs on new hiring and transfers to related firms, Yamada said.

JAL, which was privatized in November 1987, currently employs about 3,000 pilots, 7,000 flight attendants and 12,000 ground workers.

The airline also said it will trim capital investment for 1994-1997 by about 48 percent to $3.96 billion from a planned $7.57 billion.

Some 747-400s and other aircraft will be introduced later than initially planned, and the carrier is considering introducing smaller planes, Yamada said.

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