Japan Airlines continues to face stiff headwinds as it attempts to navigate its way back to profitability. And there is a way to go for the airline. This month, amid border closures and travel restrictions, Japan Airlines’ domestic passenger numbers are at 30% of 2019 levels. The airline’s international passenger numbers are just 5% of 2019 levels.
A state of emergency & border restrictions hamper Japan Airlines
Speaking at a CAPA Live event on Wednesday, Japan Airlines CEO Tadashi Fujita outlined the steps his airline is taking to recover from the global travel downturn. He said a state of emergency within Japan and tough border restrictions were making it tough for Japan Airlines.
Mr Fujita does not see much relief on the horizon until the vacation program gathers pace, both in Japan and elsewhere.
“At this moment, the number of passengers domestic is 30% compared to 2019 and only 5% of the international flights (compared to 2019),” the Japan Airlines CEO said.
“The Japanese government has planned to accelerate vaccination rapidly from June. The passenger demand of the domestic flights will be expected to recover if the vaccination remains on track with the plan.”
Japan Airlines CEO is not just relying on vaccine rollout
Japan Airlines reported a loss of US$2.6 billion in the 12 months to March 31, 2021. It was the Japanese flag carrier’s first loss since 2012. Three months later, operations for the first half of June are running at just 64% of June 2019 levels. That is a small improvement on the May 2021 figure of 60% of May 2019 operational levels.
But Tadashi Fujita told CAPA Live the airline was working hard to manage the travel downturn. Ultimately, the airline is eyeing a return to profitability by 2023. While the airline boss is counting on travel restrictions easing once the vaccination program ramps up, he acknowledges the airline cannot just sit back and wait for that to happen.
Tadashi Fujita outlined his plan for steering Japan Airlines through the downturn. By 2023, he wants Japan Airlines to be back flying at 2019 levels and ready for growth. That is a medium-term goal, but the CEO is plotting an upward trajectory between now and then. How does Mr Fujita plan to achieve this? He told CAPA Live a medium-term management plan and restructuring the airline’s business model should assist.
“JAL has established top-level financial foundations after the bankruptcy (in 2010), but that was not enough. We must continuously put all our effort into making the financial foundation more robust,” Tadashi Fujita said.
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Safety, comfort, and sustainability underpin planning & strategy at Japan Airlines
Underpinning the management plan and restructuring is safety, comfort, and sustainability. The Japan Airlines CEO says safety is the airline’s number one priority. He says safety includes protecting passengers and employees from health risks when flying on Japan Airlines.
Also important is maintaining the airline’s operational capabilities and network. In June, Japan. Airlines has 136 of its 155 aircraft in service. The airline is flying to 81 destinations, including 31 outside Japan. Mr Fujita sees this as maintaining an essential public service.
Finally, the CEO stresses the importance of building and maintaining strong financial defenses.
“We are aiming to become a sustainable company by rebuilding the financial foundation and improving the productivity,” Mr Fujita says.
According to Tadashi Fujita, these are the three pillars guiding planning and restructuring at Japan Airlines. He argues that if the airline remained focused on these, and aided by the vaccination rollout, Japan Airlines should emerge from the travel downturn a better airline than it was before.