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JAL to slash work force as part of restructuring

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[August 31, 2010]  TOKYO (AP) -- Japan Airlines outlined restructuring plans Tuesday that include cutting 30 percent of its global work force and additional financing to keep flying after filing for bankruptcy protection in January.

The plans, submitted to the Tokyo District Court and in the works for several months, also include selling off subsidiaries and dropping unprofitable domestic and international routes.

The announcement culminates years of difficulty for Japan's flagship carrier, battered by safety lapses, ballooning pension payments and the need to streamline its flight routes amid intensifying global competition.

The plan is being orchestrated as a government-backed bailout, under a group called the Enterprise Turnaround Initiative Corp. of Japan, after JAL filed for bankruptcy protection with more than $25 billion in debt.

Some 16,000 jobs, or about 30 percent of JAL's group work force of about 48,700, will be cut, although the job reductions will be partly the result of selling off subsidiaries, according to JAL.


It includes a 521.5 billion yen ($6.2 billion) debt waiver mainly from financial institutions and a 350 billion yen ($4.2 billion) investment in JAL by ETIC, the company said.

"This revitalization plan is the start of the rebirth of JAL," Chairman Kazuo Inamori told reporters at the Tokyo Chamber of Commerce and Industry Building. "We must do our utmost to make sure that this does not end as just fantasy."

Inamori was appointed in February for a three-year term. But he said he hoped to step down in two years. Inamori said JAL was posting growth in recent months thanks to aggressive cost-cutting efforts.

The plan also calls for the retirement of 103 aircraft, and the dumping of 10 international and 39 domestic routes.

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The Japanese government and JAL officials are hopeful that the slimmed down carrier can return to profitability through its turnaround plan, including possibilities such as going into the low-cost carrier business.

But JAL stopped short of giving specifics on the low-cost carrier plans, and said it was still being studied.

JAL shares were delisted from the Tokyo Stock Exchange on Feb. 20.

JAL is also seeking antitrust immunity with alliance partner, U.S. carrier American Airlines, based in Fort Worth, Texas, to form a joint venture across the Pacific -- a step that would help strengthen the Japanese airline's operation through the oneworld alliance.

[Associated Press; By SHINO YUASA]

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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