Japan Airlines Seeks Return to Profit

By YURI KAGEYAMA

TOKYO – Money-losing Japan Airlines earmarked 62 billion yen ($535 million) Thursday to beef up safety in an effort to win back customer trust after a series of flight problems.

Asia’s top carrier by sales and passenger numbers also promised to return to profitability in the upcoming fiscal year.

The revival plan comes a day after JAL picked a new chief executive and president, Haruka Nishimatsu, a finance expert, to replace Toshiyuki Shinmachi.

Under a five-year business plan through March 2011, Japan Airlines Corp. said it will invest in training programs and safety education equipment, set up a new database and strengthen maintenance facilities to restore consumers’ confidence.

JAL’s image has been badly tarnished by a series of safety lapses since early 2005, including wheels falling off during a landing and an engine that burst into flames.

The airline has been reprimanded repeatedly by the government, but the errors have continued in recent months, including an affiliate that took off with a faulty latch and an aircraft that flew with the reverse thruster on an engine still locked.

“Safety and customer satisfaction will be at the forefront of the JAL Group’s medium-term business plan,” the airline said in a statement, vowing to rebuild its “safety record one day at a time.”

The airline also plans to spend another 65 billion yen ($561 million) to improve services such as in-flight entertainment and meals, business-class seat expansions, ways to handle delays and airport systems to provide better service.

JAL said it would expand its low-cost subsidiary JAL Express, but also said it would focusing on high profit and growth routes, such as those to China and other spots in Asia.

Japan Airlines, long admired as the proud flagship carrier that boasted this nation’s trademark courtesy and services, has also struggled to ward off powerful competition from its domestic rival All Nippon Airways, which recently posted better earnings as customers who had been loyal to JAL switched in droves to ANA.

Shinmachi had been in office less than a year after his predecessor resigned to take responsibility for the safety lapses. But pressure had been mounting for Shinmachi to step down as the airline continued to rack up losses and the safety troubles failed to end.

At Wednesday’s news conference, Nishimatsu described his airline’s plight as “a crisis that endangers its very survival.” His appointment needs shareholder approval in June.

For the fiscal year ending March 31, Japan Airlines is forecasting a 47 billion yen ($406 million) loss on 2.195 trillion yen ($18.9 billion) sales. In the October-December quarter, JAL lost 11 billion yen ($95 million).

The airline said it hopes to post a 3 billion yen ($26 million) profit for the fiscal year ending March 31, 2007, and boost profitability to 55 billion yen ($475 million) by fiscal 2010.

JAL shares rose for the second day, closing at 327 yen ($2.80), up 0.3 percent.