Restructuring / Turnaround Strategies Case Study

Japan Airlines' Losses Mount: The Restructuring Strategies

Abstract:
Japan Airlines Corporation (JAL), founded in 1952, was the oldest airline company of Japan. JAL had been running its business as a monopoly in an environment highly regulated by the Japanese government. However, with the subsequent deregulation of the Japanese Aviation industry in 1985, it had to face competition from other airlines. A series of highly publicised safety gaffes forced its customers to switch to competitors' services, endangering JAL's survival. An internal power struggle, which had been brewing for some time, coupled with harsh media-led criticism eventually led to a change of leadership in the company. Though the new leadership formulated a restructuring package, scepticism run high about the success of the restructuring process.

Pedagogical Objectives:

• To discuss the effects that change in environment has on a corporation's fortunes
• To discuss the management problems that government-owned companies face post privatisation
• To discuss the evolution of the Japanese Aviation industry and the competitive environment that ensued subsequent to deregulation of the industry
• To discuss problems that JAL was facing and their causes
• To discuss JAL's restructuring strategy and its potential success.

Keywords : Japan Airlines; Civil aviation industry in Japan; Civil Aeronautics Law; International carrier; 45-47 framework; Deregulation; Freedom rights; Aggregate cost formula; Zonal airfare system; Restructuring / Turnaround Strategies Case Study; Flag carrier; Japan Airlines Corporation's (JAL's) safety record; Restructuring strategies; Bureaucratic culture; Power struggles; Cost cutting measures