Talk of layoffs premature, JAL says

Advertiser Staff and News Services

TOKYO — Japan Airlines Co. and Japan Air System Co. will cut their combined work force by nearly 5,000 over the next five years as part of their merger plan, the Asahi newspaper reported today.

The companies will achieve the reductions, which amount to approximately 10 percent of total workers, by hiring fewer people, the nationally circulated daily said, citing sources it did not identify.

On Monday, Japan Airlines, the country's biggest airline, and No. 3 JAS announced a merger deal that would give them nearly half the domestic market and increase their competitiveness on international routes. The carriers plan to form a holding company next September as a prelude to combining their businesses by 2004.

JAL spokesman Geoffrey Tudor said any talk of layoffs as a result of the merger was speculative. "It's far too early to say" whether jobs will be cut, he said.

Tudor also said the planned merger will have no impact on JAL's operations in Hawai'i.

Domestically, JAL controls 25 percent share of the market but that is only half that of No. 2 All Nippon Airways. Together, JAL and JAS would control 48 percent of the domestic market.

Japan Airlines is struggling to stem losses on international services in the wake of the September terrorist attacks in the United States. The company said bookings on international flights in October fell 40 percent from the same month last year, forcing the carrier to halt 48 flights this month and in December, mostly on trans-Pacific routes and including some to Hawai'i. At the same time passenger numbers on domestic flights fell by about 4 percent, partly because there were fewer travelers connecting from overseas flights.

JAL and JAS said the ratio of their stakes, the name of the new company and the location of headquarters were still undecided. The agreement still needs the approval of the companies' shareholders in meetings expected next spring.

The combined airline will have a work force of 52,000.