JAL To Offset Dreamliner Grounding By Tightening Belt Further

TOKYO (Nikkei)--Japan Airlines Co. (9201) will cut an additional 4 billion yen in costs in the current year through March 31 as it seeks to absorb flight cancellations stemming from the grounding of the Boeing 787.

Between Jan. 16 and the end of March, a total of 94 JAL international flights will have been canceled due to the safety concerns surrounding the Dreamliner, pushing airfare revenue down around 1.1 billion yen and leaving operating profit some 700 million yen lower.

The cost reductions will extend to areas such as procurement of crew uniforms and airport ground-handling services. Additionally, the airline will seek to not only lower real estate rental fees but also replace negotiated transactions with bidding-based contracts. It will also seek volume-based discounts for bulk purchases.

As a result, JAL's full-year group operating profit is expected to come in at the previously forecast 186 billion yen, representing a 9% drop on the year.

This fiscal year, the company has adopted a system to enhance profitability control at group firms. The total savings from such streamlining efforts will likely reach 29 billion yen in fiscal 2012.

(The Nikkei, Feb. 21 morning edition)

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