Japan airlines turnaround

8/9/2019 Japan airlines turnaround

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of Japan

AirlinesAnkit Goel – 13P124

Kaushik Nihalani – 13P148

Mayank Rathore – 13P150

Nikhil Jain – 13P152

Prabuh Jain – 13P155

!hashank !hukla – 13P1""



History

1#51

JA$ %ot establishe

1#54

&irst s'heuleinternational ser(i'e

1#"1

)o**en'enorthboun route to

+uro,e

1#"-

)o**en'e roun the.orl route

1#83

/orls nu*ber one,assen%er an 'ar%o

trans,ortation,eror*an'e a''orin%

to AA

1#8-

&ull ,ri(atiation

2002

Ja,an Airlines !yis liste on the se'tion o the st

e6'han%e

2004

Ja,an Asia Air.be'o*es .holly o

subsiiary

2010

Ja,an Airlines ero* the rst se'

o the sto'k e6'h



Reasons for the fall

$oss in risky in(est*ents in orei%n resorts an hotels

Multi,li'ity o air'rats an lo. utiliation

n'reasin% 'osts .ith %ro.in% ,ension 7 ,ayroll 'osts

$oss on o*esti' an international routes

a to 'ontinue on loss *akin% routes ue to ,oliti'alobli%ations

Ja,an9s asset ,ri'e bubble an re'essions in :! 7 :K

;y 200#< e'ono*i' o.nturn resulte in e'line in ,assen%ernu*bers

;y en o 200#< the outstanin% ebt stoo at =30

billion





Structural Reforms

>,ti*iation o routenet.ork

ea'ount reu'tions Pension reor*

!ale o air'rat ire'teto.ars reu'in% thenu*ber o air'rat*oels use

A%%ressi(e utiliationo allian'es

Re(ie. o the airtrans,ort business?in'luin% 'essatioro* the use o 'aronly ,lanes

A(oian'e o a(iation

uel ,ri'e Bu'tuationrisk

!ale o subsiiariesire'te to.ars

reor%aniation o %rou,'o*,anies

Pro'ure*ent reor*

&a'ility reor*

)onstru'tion o a*ana%e*ent 'ontrolstru'ture ana''ountin% reor*



The Restructuring Model

CrisisStabiliza

tion

Stakeholder

Manag

ement

Ne!eader

ship

Strategic

"ocus

Critical#roces

s$mpro%ement

&rganization

alChang

e

"inancial

Restructuring



Crisis Stabilization

• JA$ re'ei(e ,ay@in totallin% 350 billion yen ro* the +nter,rise urnaroun nitiati(e )or,oration o Ja,an ?C+)C an issue

shares to +)

• Prior to lin% the ,etition or 'o**en'e*ent o reor%aniation,ro'eein%s< +) hel 'onsultations .ith De(elo,*ent ;ank o

Ja,an n'E an arran%e or a line o 'reit or the JA$ %rou,<

totallin% "00 billion yen< to be a(ailable ro* January 2010



Ne !eadership

• Kauo na*ori took on the task o leain% the turnaroun o Ja,an Airlines )oE in January 2010E e ha ero e6,erien'e in

a(iation *ana%e*ent

• is style .as to ha(e the .hole 'o*,any share a sin%le,hiloso,hy< ro* the to,@rankin% e6e'uti(es to lo.@rankin%

e*,loyees< an then *ana%e the 'o*,any base on that

,hiloso,hy

• ol e6e'uti(es early on that they ha(e to state the

*ana%e*ent9s ,hiloso,hy an share that .ith e(eryone at the'o*,any

• is %oal .as to kee, e(eryone in the 'o*,any in(ol(eE e

e*barke u,on the iea F This is your company' and itsgoal is to make all of you happy(



Strategic "ocus

• )onstru't a *ore eH'ient an strate%i' or%aniation that is 'a,able reliably sharin% the Grou,s *ana%erial ,oli'yE

• +*,hasiin% %reater reIuen'y an s*aller air'rat< *aintain net.'enterin% on anea Air,ort routes an ire't eort to.ars i*,ro(,rotability

• Dire't initiati(es to.ars the stren%thenin% o net.ork< in'luin% tutiliation o bilateral allian'es .ith other airlines

• Addressing event risk @ a stru'ture to be built uner .hi'h eort .ill

*ae to is'o(er si%ns that an e(ent risk *ay o''ur< the a,,ro,riate syste(elo,*ent to be 'arrie out< an aust*ent o Bi%ht stru'tures ae*er%en'y *easures or reu'in% 6e 'osts to be Be6ibly i*,le*ente



Stakeholder Management

• &or %rou, 'o*,anies< res,onsibility or ,rot an loss .as 'larie

• i*,ro(e*ent o the %rou,s o(erall *ana%erial 'onitions

• %reater sharin% o *ana%erial ,oli'y .ith stakeholers

• MrE na*oris ,oli'ies took the or* o a 125@,a%e booklet< CJPhiloso,hy<C 'arrie by all 32<000 re*ainin% e*,loyees

•

ni(iual 'or,orate units .ere hel a''ountable or *a6i*i,rotability – e(en i(isions that .ere not ire'tly %eneratre(enue – or re(i(in% the %rou,

• :nit leaers *eet on'e a *onth to share 'ost@sa(in% ieas a'o*,etiti(e intelli%en'e< an are ire'te to ,ut that inor*ation.ork i**eiatelyE



Critical #rocess $mpro%ement

• Reu'e the nu*ber o air'rat *oels throu%h early retire*ent ineH'ient *oels

• Reu'tion in air'rat sie throu%h e,loy*ent o ne. s*all an *eiusie air'rat *oels

• /holesale eli*ination o un,rotable routes

• )ar%o@only ,lanes ?rei%hters taken out o ser(i'e< an the ser(o'use on 'ar%o ser(i'e usin% ,assen%er ,lane 'ar%o 'o*,art*e

?bellies• nitiati(es taken to a'hie(e *aor reu'tions in real estate@relate e

>H'e< air,ort< .arehouse s,a'e sube'te to thorou%h re(ie.E

• he inrastru'ture< .hi'h ha be'o*e obsolete an o(erly 'o*,li'at

.as u,ate to a''elerate the Bo. o or%aniation@relate inor*ation



&rganizational Change

• ea 'ount reu'tions throu%h early retire*ent an sale o subsiiaries

• /elare an other ?rin%e benets to oH'ers an e*,loyees .ere

re(ie.e

• JA$!< JA$ an J$) *er%e< .ith JA$ as the sur(i(in% entity

• JA$ absorbe an *er%e .ith JA$.ays )oE< $tE an JA$ $R+ )oE< $t

• Multilayer stru'ture an reunant un'tions o the or%aniationeli*inate< an ne. e,art*ents 'reate that .ere to be res,onsible

or 'ash Bo. on an ini(iual route basis

• Mana%erial resour'es 'on'entrate on the air trans,ort business< ansubsiiaries in ,eri,heral els .ere solE



"inancial Restructuring

• !to'k o.ne by JA$! shareholers to be a'Iuire %ratis< an all treasury shato be 'an'elle< an JA$ to reu'e state 'a,ital an 'a,ital reser(es to ero

• Reu'tion in a6es an ,ubli' 'har%es

• &or uel he%e transa'tions usin% eri(ati(es< e'isions .ith .ie is'retionlatitue to be eli*inate< an risk *ana%e*ent to be stren%thene

• +li*ination o Debt

• >n an a,,ro6i*ate 'onsoliate basis JA$ Grou, ha *ore liabilities than assets aten o Mar'h 2010 a*ountin% to #5#E2 billion yenE ;ut< a''orin% to

Reor%aniation Plan there .oul be a *oi'ation o ri%hts< an in(est*ent by +350 billion yen an re'orin% o business ,rots et'E .hi'h .oul eli*inate e6'essi(e liabilities by the en o Mar'h 2011E

• he re,ay*ent rate or Reor%aniation )lai*s shall be the sa*e or all hDebtor )o*,aniesL an .ith the *er%er< the internal 'lai*s a*on% the hDebtor )o*,anies .ill e6tin%uish



Risks and Contro%ersies

he *ost reIuentlyaske Iuestion bythe institutional

in(estors urin% ano(erseas tour to*arket the nitialPubli' >er .as

.hether JA$< aterbe'o*in% a ,ri(ate

'o*,any a%ain.oul be able to*aintain its 'ostis'i,line or not

he $iberalDe*o'rati' Party.hi'h .as al.ays

keen to 'riti'ie therulin% De*o'rati'

Party .as the *aino,,osition to

restru'turin% o JA$an ha 'alle or*easures to kee,

resur%en'e o JA$ in'he'k

he ANA has 'rieoul statin% that

'har%in% the aisan other ta6

breaks has 'reate

an uneIual ,layin%el that .as notair

t alle%ely lobbor 'on'ession

behin the s'ensu'h as the,reerential

allo'ation o lanslots 'o*in% u, okyo9s ane

air,ort aroun 2



Achie%ements

&or the year 2011< the Ja,an Airlines .asna*e )APA Asia

Pa'i' Airline o the ear

JA$ e*er%e as these'on lar%est initial

,ubli' oerin% in 2013ater &a'ebook an the

4th lar%est P> in Ja,an ater lin% or

the 4th hi%hest

bankru,t'y in Ja,an9shistory

n the si6 *ontene 30@!e,@20 Ja,an Airlines )

?JA$ %enerate a ,rot results .

re(enues o :!Dbillion< an o,erat

,rot o :!D1E4 ban a net ,rot

:!D1E3 billion



JA$ returne to healthy ,rotsOE



JA$9s re(i(al story



Thank )ou

Documents

Japan airlines turnaround