JAL to lower personnel expenses in latest round of restructuring

Japan Airlines Corp. in October is to merge three airport services subsidiaries and consolidate its packaged tour operations as tepid demand forces the hobbled carrier to further trim expenses.

Jalsky Tokyo Co. and JAL Sky Service Co., which oversee airport counter operations, and Jalwave Co., which provides pilots with airport information and other assistance, are to be merged. The merger is intended to allow the new unit to better shuffle personnel according to the fluctuations of the travel business.

In addition, the sales operations of Jalpak Co., which markets overseas trips, and of Jal Tours Co., which focuses on domestic travel, will be spun off. The two vacation planners' combined 150 or so sales agents as well as about 900 workers who oversee sales at regional JAL branches will be sent to four firms within the Jal Sales Co. group.

JAL hopes to tap new clients by having salesclerks sell all of the group's vacation products. With salaries also to be brought in line with those of the subsidiaries, the airline foresees long-term savings on personnel expenses.

In February, JAL forecast a 34 billion yen net loss for the year ended March 31. But there is a distinct possibility that the loss will be even greater. The airline is also negotiating for a roughly 200 billion yen low-interest loan from the Development Bank of Japan.

Since JAL will inevitably face pressure from financial institutions and others to overhaul its business structure, it had already decided to merge four maintenance subsidiaries as well as slash 50 billion yen in annual costs.