Home' Asian Aviation : AAV Dec Jan 2010 Contents 16 AsianAviation | DECEMBER 2010 / JANUARY 2011
Justin Wastnage / Brunei
JAL's Onishi targets turnaround
Japan's most re cognisable recent Prime
Minister, Junichiro Koizumi, succeeded
in large part because he was a pragmatist.
By confronting several of Japan's structural
problems, he won a landslide election for his
Liberal Democratic Party.
Masaru Onishi, president of Japan Airlines
( JAL), has a similar task ahead of him: facing up
to the structural issues that saw the former national
carrier of Japan le for bankruptcy protection in
January, a er losses of nearly 100 billion yen (US$1.2
billion) in a single quarter. His main priority is to
change the mindset of JAL employees from that of
quasi-governmental salarymen to employees of a
competitive, e cient airline.
Onishi avoids comparisons with US Chapter 11
bankruptcy-protection laws that have been criticised
for unfairly sheltering failed carriers from outside
"I don't know Chapter 11 rules well enough. I
know our own corporate rehabilitation law better,"
he says. ese conditions include a pledge to repay
the 300 billion yen cash injection the company has
received within seven years and slash its workforce
by a third.
JAL's 730 billion yen debts were also wiped out
as part of the deal with the government-backed
stimulus fund, the Enterprise Turnaround Initiative
Corporation of Japan, thus reducing working capital
Onishi has experience in working with cash-
strapped entities, having come in to the presidency
from running JAL's regional airline subsidiary
Japan Air Commuter. He is joined at the helm
of JAL by new Chief Executive Kazuo Inamori,
founder of both ceramics giant Kyocera and
telecommunications supplier KDDI.
While Inamori has an outsider's view of the
restructuring, Onishi has the aviation experience
to ensure the carrier does lose more market share to
All Nippon Air ways (ANA), which already leads
domestically. Onishi and his board are waiting for
the Japanese courts to authorise JAL going into
administration, although work has started already
to transform the company.
Onishi is bullish. "We will try to repay the loan
quicker than the seven years," he says. He adds he
is con dent that other developments in Japan's
aviation sector, such as the opening up of Tokyo's
Haneda airport to international routes, will help in
reviving the carrier's fortunes.
e airport's new international terminal opened
in October and airlines were queuing up to get
their ser vices into the airport, which is just 14km
away from central Tokyo, compared with 58km
for Narita International Airport. Around 100 new
ser vices to points in Europe, North America and
Asia are scheduled to start before mid-2011.
JAL is in the best position to capitalise on the
airport's development, Onishi says. "We have the
biggest domestic network and our hub is Haneda,"
he points out.
Still, Onishi's top priority is to change the mindset
of the workforce, which will be a challenge given JAL's
history as a government-owned carrier. " e mentality
was not only to pursue pro t but only to be cautious.
We have to realise that we're a commercial business and
this needs to be the priority for all sta ," Onishi says.
ere will be casualties, with the workforce set to
be reduced by 15,700 employees. Onishi and Inamori
must then try to expand the business without replacing
these sta members. e airline chief 's second priority
is to keep the business as small as possible, running on
"We need to be a very lean company; at a business
unit level and at an individual level as well as an
enterprise," he says.
e third priority on Onishi's list is to establish a
system of communicating feedback throughout the
company, so that every employee knows the current
standing of their business unit, their department and
the entire company. "Everyone needs to know the
results to be involved," he says.
Such thinking would be typical of a US rm, but
is still radical in a Japanese business, especially one
that started out as a government-owned enterprise.
Onishi's plan is to reset the priorities of workers more
familiar with bureaucratic procedures than chasing
Onishi would clearly like to go further than the
airline's rather conservative restructuring programme
sets out. He talks of setting up California-style thinking
cells within business units to drive new projects, and
the ruthless pursuit of cost savings. Yet he says no other
airline in the world o ers an adequate business model
"Our management studied lots of models but did
not nd one to base ourselves on," he says.
e new board of JAL is promoting a "bottom-
up" ow of ideas, attempting to shape an agile, lean
company that takes good ideas from workers on the
ground. Such practices work at egalitarian out ts like
Ireland's Ryanair, but in a hierarchical structure such
as JAL's this may be tougher to put into practice.
Yet Koizumi proved that the Japanese can accept
change -- once convinced, coerced or charmed into
doing so. e former prime minister was capable of
all three approaches. At JAL, Onishi will have to
emulate Koizumi's skills if he is to turn the business
The challenges facing
JAL President Masaru
Onishi include resetting
the mindset of the
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