After filing for bankruptcy two years ago, Japan Airlines has officially rebounded with an annual net profit of 186.6 billion yen (approx. $2.3 billion) for the year ending on March 31st. Cost cutting measures along with a strong currency are credited as being key to the success. Despite last year’s disasters, which did have a noticeable effect on travel demands, the airline recorded sales as high as 1.2 trillion yen ($15 billion).
The carrier’s bankruptcy filing in 2010 was seen as one of Japan’s largest corporate disasters. With over $25 billion in debt, it required a government bailout to prevent collapse. The founder of technology firm Kyocera, Kazuo Inamori, was brought in by the government to lead the airline’s turnaround. After finding a lack of discipline in the company’s spending patterns, Inamori was forced to begin strict cost-cutting measures. Japan Airlines reduced its workforce by almost a third, trimmed employee benefits, de-listed from the stock marker, and most importantly, eliminated flight routes that were unprofitable.
Inamori credits the employees for uniting and working together to increase profits. However he further warns against the company becoming complacent, as the airline industry is frequently victim to “unexpected risks,” and they are now facing strong competition from rivals All Nippon Airways (ANA) and newly emerging budget airlines. Despite the warning, the near future continues to look positive for Japan Airlines. They are predicting a net profit of 130 billion yen ($1.63 billion) for the current fiscal year, and currently plan to re-list on the stock market in September of this year. In addition, with continuing cost reduction measure, they aim to save another 50 billion yen ($626 million) over the next five years to March 2017.
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