Posts Tagged ‘Japan Airlines’
The original interview can be found on the AO site at: http://airobserver.wordpress.com/2010/02/15/what-could-we-expect-for-airlines-in-2010-ao-interview-of-carter-stewart/
Posted on February 15, 2010. Filed under: AO Interviews |
First, I’d like to thank Carter for answering my questions, I’m glad we’ve managed to publish this Interview. This is part of my new desire to invit and interview more aviation profofessional. We discussed the globlal situation of airlines industry for 2010. Please, feel free to comment and add your point! Carter Stewart is founder and chief consultant at TWC Aviation, and a managing director at the London-based consortium Constellation Aviation Limited. He found his passion for the airline industry in his youth, and learned the trade with a variety of management posts at TWA, American Airlines, and Silverjet. He specializes in the commercial airline sector and has managed airline projects around the world including airline start-ups, developing strategic futures, and managing airline mergers and acquisitions. He lives in London, United Kingdom, with his wife and spends 75% of this time as a “wing warrior”.
AO: Let’s start with the global state of the aviation industry, what you do you foresee for airlines in 2010?
According to you, what will be the main trends and events? We have seen some positive moves on the U.S. front, as this past weekend we saw the news about the Department of Transport (DOT) clarifying its position on AA/BA, which can only be beneficial in levelling the playing field between alliances. I think that we have not seen the end of economic challenges around the world, specifically in U.S, Europe, and Gulf Region. As a result I think that airlines can expect to see continued pressure on both premium passenger numbers, and also on total traffic- and further airline failures in 2010 are likely. I also do not foresee successful launch of any new trans-Atlantic carriers in this environment, such as companies like Aer Fair or Scotland’s Nimbus look for start-up cash in a tight credit market. I also believe that we will see a widening gulf as more European carriers experiment with some degree of “un-bundling” of fares such as BA, and those who opt for the more legacy “single price” model like SWISS.
AO: I know that you’re particularly been following JAL’s situation. JAL is now cutting thousands of jobs, costs and routes as ANA is performing well. For a few months now, ANA has gone increasingly international, in other words, competing on JAL’s playground. Do you think Japan can support two major legacy airlines?
The short answer is a resounding yes. I maintain that there are a number of common misconceptions about the Japanese economy, and about the fundamentals behind the JAL bankruptcy that needlessly cloud this issue. The Japanese Home Island economy does has some challenges ahead of it. Japan is still the second largest developed economy in the world, with their nearest neighbours, China, coming in a very close third place. So, here you have two of the largest economies of the world, which are closely commercially linked and geographically close. That single fact alone offers Japanese and Korean carriers some enviable opportunities. JAL may be at a small competitive disadvantage as it restructures, but it is important to remember that Japanese laws surrounding international aviation regulation are not at all liberal, and you only have to look as far as the new Japanese-U.S. bilateral to see how restrictive and conditional the Japanese regulatory environment is. As a result, the international Japanese market is not as vulnerable to the forces of foreign competition as some other word markets, and Japanese carriers will still have retain advantage in the very lucrative trans-Pacific market.
AO: The BA-Iberia merger will take place soon. Do you see any other bridge-building possibilities among European carriers in 2010?
Well, I think there is ample room for those European carriers who are not already owned by Lufthansa. On a more serious note, obviously, the U.S. part of the equation of AA/BA/IB and ATI was long overdue, now need to keep a close eye on what the EU decides to do with this matter. Clearly, Iberia has not been spooked by BA’s pension deficit, and is moving forward. As for other potential possibilities, it is relatively common knowledge that Aer Lingus has been looking at a potential of “re-joining” an alliance to shore up its future fortunes, but there are obvious ownership roadblocks to that. Also, it remains to be seen how well the LCC markets will adapt in an environment where closer cooperation may work to their advantage.
AO: You know that my blog is more focused on the LCC market. What’s your point of view on Ryanair’s recent announcement of fare increase and what could it mean for the airline?
My personal take is that Ryanair can have no choice but to begin charging an increased fare, as they have exhausted all other obvious forms of gaining ancillary revenue. Clearly what they do well is actively manage fixed costs such as labour, which so often are the most difficult part of some carriers bottom line. Their fleet is young, but not as young as it once was, and this will slowly increase operating costs as well. Overall, Ryanair faces a number of challenges as a business, not the least of which is pushing the limits of consumer tolerance for “un-bundling” and customer service. It will also be interesting to see what the Ryanair culture and product will be like once O’Leary steps aside, and the process of separating the brand from the man will be an interesting one.
AO: We recently observed a budding cooperation between two main Asian low cost airlines, do you think such an alliance could take place in Europe?
I do believe that there is a room for cooperation between LCC carriers, but the EU regulatory environment is not as easy or conducive to that cooperation as say the Asian market. There are many potential legal and regulatory hurdles that LCCs may encounter in the event that they seek closer cooperation. I think it more likely that we could see a carrier seeking to acquire another, but the idea of a traditional alliance would be potentially difficult. In my view, traditional alliances are generally about five interconnected goals: code-sharing, schedule coordination, some form of revenue share, ground handling savings, and enhancing passenger experiences (i.e. frequent flier programmes, lounges, etc). Given their tight margins, I don’t see any of the EU LCCs being willing to subject themselves to the pressures of a potential alliance in this current environment.
- Updated 05/01/10 at 1400 Local
- Cabinet Minsters Meet with DBJ to secure further funding for JAL- along w/ three of Japan’s biggest banks
- JAL Stock sees its record volume and lowpoint
- How does Japanese Law set out Kaisaha Kousei?
- Who are DBJ, ETIC, and the DICJ really?
- Capital Adequacy found without giving up foreign ownership?
- So what do we think will happen- with the DBJ and new bank money- Reorg is looking unlikely now!
What a week we have had while most of Japan has been on holiday!
Minsters Meet with DBP to secure further funding for JAL
While the stock takes a bath, and rumours of the ETIC report leaking just prior to the final day and a half of trading on the 29-30th of Dec,the mood around JAL was not exactly a festive one. It was highly probable that a draft of the ETIC report was complete as most Japanese will not be at work for even the remainder of this week- so the idea of having it leaked prior to the break seems logical. ETIC, in their report allegedly state the Corporate Reorganisation Code (In Japanese this is known as Kaisha Kousei or 会社更生法, かいしゃこうせいほう) should be used to turn JAL around.
Against that backdrop Minister Meahara and his cabinet colleagues were in talks over the holiday with DBJ (Development Bank of Japan) officials. Were they seeking arrangments for additional funds in place for JAL that missed the supplemental budget?
On Sunday Japanese Minster for Transport Seiji Maehara told reporters that the Development Bank of Japan will double its credit line for Japan Airlines Corp. to 200 billion yen ($2.2 billion). In addition the Sumitomo Mitsui Banking Corporation, Mizuho Corporate Bank, and Bank of Tokyo-Mitsubishi UFJ are all commiting to similar amounts.
Japanese transport minister Seiji Maehara told reporters Sunday the state-owned Development Bank of Japan will double its credit line for Japan Airlines Corp. to 200 billion yen ($2.2 billion).
That should be enough to keep the airline afloat while the government works out details of a bailout for the cash-strapped carrier, government officials said.
“That should be enough to keep the airline afloat while the government works out details of a bailout for the cash-strapped carrier”, government officials said.
Japanese Law and Corporate Reorganisation
As far as the Japanese bankruptcy code, I should be clear that I was using the term DIP previously, and many of my Japanese colleagues have been kind enough to give me a lesson in the legal complexity of DIP and Restructuring.
There is one major difference that I have recently been educated on regarding Japanese Insolvency Laws that now show that my previous, and rather US-centric use of the term DIP were not entirely accurate.
The first and most important distinction is that the laws were updated in 2000, and at that time several updated concepts were introduced to Japanese law. One was the concept of Debtor in Possession (DIP) for a Civil Reconstruction, which is available to both Corporations and Individuals. It is generally a faster and more flexible process than a Corporate Reorganisation. Unfortunately for JAL, most experts agree that it is not suitable to their particular situation.
The most suitable form of JAL may only be the Corporate Reorganisation Code, where a court appointed administrator is granted a small stay on debt payment, and then embarks on the same general procedures of U.S. Chapter 11 proceedings with a few minor nuances. The process is strictly prescribed and a great deal of time can elapse prior to the company emerging from administration. Under the Japanese systems however, it is noted by several prominent experts that this procedure is “both highly reliable, and has an excellent chance of success.”
So in the past, while I have been quoted as saying, “ETIC or The Government” would become the DIP in this case, that was technically inaccurate. It would be more appropriate to say that under the prescriptive terms of the reorganisation process, the Government would be free to infuse cash as the airline set new terms with its creditors without the need to “possess” (or re-nationalise) the carrier in any direct or overt way.
The reality, of course, some would say that is exactly what it would be. The largest creditor by far would be the Guarantees of the Japanese government via the DJP and ETIC. So effectively, DIP it is not wrong- it is just a quirk of Japanese law that make it inaccurate.
Is there an alternative? I can see one possible longshot
As for the possibility of opening up capital partnership opportunities for other carriers, there looks like there is some behind the scenes movement to do so.
There is also the possibility that if enough capital can be located (which I do not see as the most probable outcome) that they could initiate a Civil Reconstruction. While this is a much faster process, it would leave the Hatoyama Government in the position to “wean off the carrier” more quickly from state funds. Frankly this whole idea of changes in foreign ownership laws during a time of Japan exerting its sovereignty again smells funny to me, but politicians have been known to do some fairly strange things when their backs are to the wall- which by the way I do not think Prime Minister Hatoyama is.
So who are all these players like the DBJ, ETIC and DICJ anyway?
Sometimes it is best to get it direct from the source:
The Development Bank of Japan Inc. was established on October 1, 2008. Under the terms of the Development Bank of Japan Inc. Law approved by the Japanese Diet on June 6, 2007 . It was to be a fully private institution, except it was recently allowed to an extention on those plans. It currently is a state-owned bank. At the end of fiscal year 2011, the government plans a review of DBJ’s organization which will include the future of government-held shares. The Japanese government will continue to hold its shares until then.
“Enterprise Turnaround Initiative Corporation (ETIC) is a 100% owned subsidiary of the Deposit Insurance Corporation of Japan (DICJ) a semi-governmental organisation. ETIC was founded in 2009 with the remit to provide support for revitalization of Japanese enterprises operations by assessing their assets, assisting formulation of their operation and finance restructuring plans, coordinating their creditors and other stakeholders, and rendering human and financial support to them, in an impartial and neutral manner.”
Ah, well, that clears that up. They are all three semi-independent governmental bodies.
What about all these alliance offers?
It remains unclear that if JAL does enter into a Corporate Restructuring which of either offer would be more useful or welcome to ETIC. It could be that more fundamental issues are addressed first, and then the question of alliances would come in at a later time.
It is being widely reported that both “are still in talks”, and even some news outlets are reporting that one has been selected- SkyTeam/Delta. Now, if this were true, let have a look at some of the reasons why that could be the case.
I don’t think that AMR has not made any friends in Japan, particularly in the early days of their overtures. In my opinion Delta and SkyTeam only fared marginally better, and stopped short of what I called in some of my previous blogs naked threats.
One of the more interesting quotes of this week came while attending a friends New Years Celebrations He asked me “If TPG are high-end airline investors, then why did they sell Midwest to Republic? They had ample time to do what Republic has done, and make it a success, did they not? What do we know of their true core skills and intentions?”
The man has a point.
So what do we think will come of all this in the end?
I don’t think we will see a firm decision made until after the 12th of January. On Monday JAL said that more than two-thirds of its current employees have agreed to accept the company’s proposal to cut pension benefits substantially as part of efforts to turn the struggling carrier around. Around 11,800 of the approximately 16,000 employees had responded positively to JAL’s proposal . At this time it is unclear if the company’s retirees will accept the proposed pension benefit cuts in a similar vote.
I have the highest respect for the men and women of JAL. As a person who has stood on the precipice with my colleagues and watched two of the three major carriers I have worked for take their last flight, I find my thoughts returning to how the employees must be feeling. All of this uncertainty at a time where they were culturally in Japan there is a celebration to end and even ”forget” about the past year. For thousands that was not possible this New Year. My thought go out to them, and what they must be feeling.
For my money, I see JAL at the fork in the road. The alleged ETIC recommendation to employ Corporate Reorginasation is the strongest possibility, and most likely. Prime Minister Hatoyama, and his cabinet, however appear at least ready to make a political move and step in to save JAL from the process. The fact that three of Japan’s biggest banks are also willing to put up the cash says that we should watch out for something other than the Corporate Reorganisation- or it could just be DIP money. Whichever way he, and his cabinet, choose to go will be a clear signal not just to JAL- but to Japan- about the futuer of his time in Government. Make no mistake, however, the Japanese are clearly in control here.
Carter Stewart, is a Pricipal at TWC Aviation Consulting- an aviation consulting firm headquartered in London.
At the time of this article, the author did not have any shareholdings or active contracts with any of the companies covered in the scope of the work.
Copyright TWC Aviation 2009 – TWC Aviation 2009
Photo Credits: C. Stewart, Copyright 2009 (unless otherwise attributed)
In Todays Issue:
- - The Bullet
- - Summary of the Key Findings
- - Carbon Emissions: A Damning Indictment
- - The “Open Skies”?
- - TWC’s Take on the Report
- - Who says politics can’t be funny
This morning, The U.K House Of Commons Transport Committee published its initial findings to the Government on their enquiry “The Future of Aviation”. The enquiry began in late February of this year with a broad scope to elicit information from the public, the industry, and other interested parties on the Future of UK Aviation.
Committee Chairman Louise Elleman MP, said in a statement, “Aviation is an important part of the UK economy, both in the south east of England, and in the regions.”
The Committee goes on to say that the Government’s long term basis of Aviation Policy- a 2003 white paper- “continues to provide a sound basis for aviation policy but warns the Government that it must update its assessment of the economic value of aviation for the UK economy regularly to ensure its figures are subject to independent external scrutiny.”
Carter Stewart, Managing Director of TWC Aviation, a London-based Aviation Consultancy agrees. “We believe that the overall net economic contribution of aviation to the U.K. has been under-valued by the Government by as much as £800M GPB annually”
The Key Findings of the Report: Overall Good News for the Industry
In summary the statement from The Committee makes the following additional recommendations:
The Committee supports the Labour Government’s London Heathrow expansion proposal; but calls into question the Stansted expansion and instead suggests London Gatwick may be more appropriate.
While The Committee “recognises the importance of Air Passenger Duty (APD)” it suggests that the Government needs to be “mindful of the vulnerability of the aviation industry in the current economic climate.”
Carbon Emissions: A Damning Indictment of the EU – Sane Words to the Industry
The report could not be complete without also addressing the issue of Carbon Emissions and noise pollution. The Commitee says in their report that aviation should not be “demonised or assigned symbolic value beyond its true impacts.” It went on to comment that they had concerns that “The EU Emissions Trading Scheme has an appaling track record and may prove insufficient to to drive investment into low carbon aviation”
Regarding Carbon Emissions, the report sets forth a “number of principles that should be applied in this area.” It also refers us to the publication of the UK Climate Change report that is due to be published on Tuesday, 08 December. They also called on industry to “sensibly reduce its greenhouse gas emissions over the coming decades.”
The “Open Skies?”
“Discussions to extend the Open Skies agreement are ongoing between the European Commission and the US Federal Aviation Administration. This might allow further access to EU and US markets. The asymmetric nature of the Open Skies agreement is disadvantageous to the UK economy and particularly to the UK regions, and should be renegotiated at the earliest possible opportunity.”, the report says.
The report also reiterates MPs previous calls for the ATOL levy to be increased and extended to include all international flights. Currently, ATOL is only applied on package holidays from the U.K.
It also asks The Government to clarify the “basis of its claim that an additional £10 bn could be raised if VAT and Fuel duty were applied to Aviation.”
The key conclusion is clear. ”We beleive that the aviation industry is a very important to the UK Economy. Therefore we find it unsatifatory that the Government leaves such a key industry to the vagaries of the market.”
Our Take of the Reports Findings
“Overall we believe that the report is a good news story for both the industry and consumers,”, Stewart says. “At this critical economic time for our country the aviation industry, and airline consumers, have been suffering at the hands of the taxman disproportionately to other industries.”
“In a recent speech to The UK Aviation Club in September, The Lord Adonis defended the recent APD increase by saying it was ‘a matter of published policy’ and as a result ‘it would not be changed.’ I am glad to see members of the Transport Committee are calling into question the potentially damaging effect this policy has on UK airlines and airports to compete with other European rivals.”
“One of the most telling items from our perspective is the language used around the US Open Skies agreement.”, says Carter Stewart. ”With talks between the US and Japan about to start today this is not the ideal moment for a key U.S. shortfall to come into such scrutiny. We agree that US liberalisation promises have failed to truly materialise for the UK, and promises about foreign ownership are key”
“With US carriers vying for ownership and control deals with JAL, I simply hope that the Japanese keep in mind the key points of reciprocity in their agreement and have clear understanding and timetables from the outset.”, Stewart says.
“It is also refreshing to see MPs pushing back on behalf of the industry and consumers by demanding clearer answers on proposed estimates on tax revenue from VAT on tickets and fuel levies”, Stewart says.
Todd Koonce, Manager of Technical Operations at TWC Aviation believes that the report does hit some of the right notes about aircraft technology. “It is obviously to everyone’s benefit to phase in more efficient aircraft as soon as is financially and operationally viable. The key issue for many carriers has been the delivery delays of these very aircraft, like the 787 and A380, from the manufacturers themselves.
“I also believe that for short-haul segments, the efficiencies of turbo-prop aircraft have been overlooked by the airlines. There is also a public perception that regional jets are somehow safer, and more comfortable, when there is an argument to be made that latest generation of turboprops could offer lower emissions and better operating margins.”
Proof Positive of Humour in Politics
For those of your interested in the initial white-paper, here is a little bit of the background and history.
H.M. Government has for some time used a white paper entitled “The Future of Air Transport”, published in 2003, as the basis of U.K. Government Aviation policy. Ironically, it was then Alistair Darling, then Minister of State for Transport (and now current Chancellor of the Exchequer) who introduced the reports findings to the House of Commons on 23 of July 2002. Even at that time, then Minster Darling was making a case that the U.K. needed to keep pace with capacity demands, and understood the importance of our air gateways which needed to compete with the increase in market share by Continental European airports.
What a difference a few years, and a change to Chancellor can make.
(A full text of his statement to the House in 2003 can be found here, at the 1530 time marker.
At the American Airlines Fall Management Conference, CEO Mr Gerard Arpey stated that JAL would not benefit by leaving the OneWorld alliance. A day later AA CFO Tom Horton followed-up by saying JAL would “have have difficulty clearing regulatory hurdles if they sought antitrust immunity for closer business ties with another alliance. ” In fact, AA has clearly alluded it would oppose any such move.
There is no argument that JAL is in serious financial trouble, and perhaps even less of an argument that Japan may yet be the next sovereign national default. That could even be part of the AMR strategy, as they begin to see their chances with a mutual AA/BA eclipsed slightly by BA/Iberia- and the delay U.S. governments official ruling on this important subject.
Even in that light, Mr. Arpey’s recent comments represent, at best, a fundamental misunderstanding of his Japanese partner’s cultural approach to business. At worst they demonstrate yet again a narrow U.S.-centric view of the global aviation industry. Even if JAL would make a comment, which they wouldn’t, statments of this calibre would generally only serve to further isolate AMR from this important strategic partner both culturally and financially.
I personally know the ladies and gentlemen of AMR to be clever, erudite, and savvy people. I respect them. In my opinion, however, I have seen them demonstrate a repeated weakness through the years. This weakness comes in two parts. First is to unabashedly apply US style business approaches in places where an alternate approach may be advisable, and the second is to rely on US O/D traffic on most int’l routes to an excess that isolate them from some local markets. Ironically, this appears to not a mistake shared by all of their US competitors.
I do not believe that AMR, DL and the rest of JAL’s recent suitors could have been unaware of Japan’s much stricter foreign ownership rules, which make U.S. ownership appear positively liberal. They also could not have been oblivious to the complexities of lobbying a new Diet that has barely taken office for a change in laws related to restrictions on simple equity stakes. Add into mix the potential suitors intense interest in Haneda, and then overlay the already contentious presence of Macquarie Bank in Haneda financing chain, and I think what you will find is a perfect storm. In my view, it is a storm that has already taken both JAL and the new Japanese Government to a more isolationist stance.
I would even go so far as to hypothesise that JAL simply and strategically used the OneWorld and SkyTeam interest to their own political advantage, never fully intending the follow through with a financing offer without first doing what the foreign carriers could not- lobbying their own government.
JAL knew that the guaranteed financing was in place prior to the landslide election victory by the Opposition Democrats. Now that that money had evaporated in a single August evening, a sense of careful self preservation became the focus. JAL had to demonstrate contrition for their failures through management shake-ups and uncomfortable cultural issues around lay-offs and pension issues, and painful semi-public audits.
Simultaneously, however, it also began to draw a picture the new Hatoyama government what life might be like with another major Japanese company, some say even the “flag-carrier”, being funded by non-Japanese- and with access covenants that may not have been in best interest of any Japanese carrier.
The manner in which the Opposition Democrats have responded to the JAL crisis only further proves that there are discrete and delicate cultural issues at play here that must not be ignored. The most telling demonstration of this is the first radical change in government in over fifty years was swept to power on a wave of promises to reform government handouts to corporations chose to break with their own platform of reforms within weeks of taking office. This very public break with policy came in the form of mixture of guarantees and promises of further support measures for JAL on the condition of reform.
One of the most painful reforms is the requirement for JAL to cut their pension by a two thirds consent of it’s retirees. It is this requirement that has JAL seeking professional mediation.
While most western carriers such as BA and AA are no strangers to pension shortfalls, this is a more difficult issue in Japan. Japanese culture still holds on to the idea, even if it is an illusion, that a company has a tacit understanding to look after the employee during the course of their lives. While the reality has been quietly changing over the past decade, and represents one of the core changes occuring in Japanese society, it is difficult for for the culture as a whole to adapt to this particular change.
Overall JAL has most likely “shelved these discussions” with AMR and DL and moved on to chart it’s own course. It is a mixture of national pride, culture, and their potential to turnaround that make it plausible that JAL can chart an independant course.
As for AMR and Mr. Arpey, you would think that he of all people should know that threats, no matter how veiled, rarely will win you many friends in Japan- much less help you conclude a successful deal.
What a month it has been for Japan Air Lines! Prior to the Japanese elections at the end of August, which swept Yukio Hatoyama and the Opposition Democrats to power for the first time in 54 years, JAL believed it was to be the recipient of a carefully crafted short-term financings package with the previous government.
This left the normally conservative JAL with a serious problem, and as other carriers have already long ago realised – there were very few places to turn for funding. So what is Asia’s largest carrier to do when it finds a new government that came to power on a promise to wean Japanese Corporations off of preferred public funds?
A Helping Hand
Well we did not have to wait long to find that other carriers were more than interested in lending a helping hand. From OneWorld partner American Airlines leading the charge to Tokyo, to SkyTeam’s Delta it suddenly seemed that there was ample opportunity for JAL to forge new partnerships. Soon, some of the larger members of the major alliances were scrambling to put together a deal. In that frenzy of activity, including AA’s major liquidity drive which found them with 2.9MM USD in cash for various strategic moves, a few finer points seemed to be being papered over. To keen observers of Japan, none of these ovetures really seemed to fully add up. From talk of mergers to liquidity buyouts it seemed as though the principals and the mainstream reports all but ignored some of the more practical issues with Japanese ownership laws, which make US foreign ownership rules look positively liberal.
I would not want to play chess with JAL
The whole affair also seemed to focus on the partnership possibilities and missed some of the all important cultural cues that caused some to wonder if JAL were not just strategically playing their suitors. Surely JAL has to know at the start that without a swift and unlikely change in Japanese law, at best, they could only accept well under 10% of any liquidity offer that included stocks and other securities.
Also surprising was the move by JAL’s potential suitors, as none of the carriers involved in the negotiations could actually be accurately described as in a position to throw a financial lifeline to a new partner. Of particular mystery was AA/BA’s combined approach, with AA’s health only now beginning to stabilise and BA being self described as being in a “critical cash position”. So tenuous is BA’s position that they recently asked staff to voluntarily forego a month of pay, or work a part-time schedule. Delta is still wrapping up the final costs from it’s acquisition of Northwest Airlines. So what was in it for them? Access to the lucrative Japanese market and the coveted slots of Haneda were a good start. Having a foothold in once of the densest markets in Asia was certainly another.
I did it ”My Way”
During the past month none of this ever really added up for us at TWC. Now in the wake of the Japanese Government and the Japanese Development Bank’s latest promise of support and assistance, and the caveats that come with it, will JAL be able to navigate its way to clear air? We would argue that while cultuarally Japanese companies, and their employees, still want to fulfill the covenant of lifetime employment, it is no longer practical. It is a positive sign that JAL make the hard choices that other carriers have already had to make in recent years. I do not think that we should underestimate the pain and cultural complexity that they will have to negotiate while cutting the bottom line. In many ways it will be harder than in the right-to-work culture found in the U.S.
So as JAL’s President steps down- some would say in less-than-honourable circumstances- the carrier is this month intensifying the scale and depth of its voluntary restructuring. Having been with three carriers who stared down insolvency, and two who succumbed, all I can think is no matter how hard the cuts, there is no replacement for charting your own voluntary course through these hard times. I wish JAL nothing but luck as they do things “their way”.