Carried along by a tailwind of massive savings from downsizing measures, Japan Airlines Co. announced record profits on May 14 for the fiscal year that ended on March 31.
The company had operating profits of 204.9 billion yen ($2.6 billion) and net profits of 186.6 billion yen.
Those profits were recorded even though the company suffered about a 10-percent decline in sales due to a drop in overall travel following last year's Great East Japan Earthquake.
Although JAL officials are seeking to have their company relisted on stock exchanges this fall, a major question facing company executives is whether they will be able to continue to generate profits in the absence of such downsizing measures.
Among the cost-cutting measures implemented were reducing the workforce by 16,000 employees, selling off jets with poor fuel economy and eliminating unprofitable routes.
An innovation that helped to keep costs down was detailed profitability management by sector, an accounting tool introduced by Kazuo Inamori, JAL's honorary chairman.
Before JAL filed for bankruptcy protection in January 2010, the company was much looser about bookkeeping, often not knowing until two months after a flight whether a route was profitable or not. Under the new system, profitability is known the day after a flight. That has allowed for more efficient usage of its smaller planes, depending on the expected number of passengers.
Filing for bankruptcy protection has also helped JAL keep costs down. The corporate tax burden has been reduced, and interest payments were also decreased after banks agreed to write off about 520 billion yen in loans.
- « Prev
- 1
- Next »
