After several years of "external surgery" that finally resulted in profits this year, Japan Airlines will concentrate on "internal surgery" as part of its reformation in the coming years.
The Oneworld member, which emerged from court-led rehabilitation in 2010 after racking up successive years of losses and huge debts, posted a higher-than-expected net profit of Y186.62 billion ($2.3 billion) in the year to 31 March. Revenue was Y1.205 trillion, while operating profit reached Y204.92 billion.
Chairman Masaru Onishi, who was plucked out of relative obscurity to become president in 2010 before taking on his present role this year, says in an interview in Beijing that several measures were undertaken as part of this "external surgery" that led to the profits.
These include the culling of its workforce by around a third to 32,000, the retirement of older fuel-inefficient aircraft such as its Boeing 747-400s and the shrinking of its network by axing unprofitable services. With its new "game changing" Boeing 787s, it has started services to cities such as New Delhi, Boston and Moscow, and also has plans to serve San Diego and Helsinki. It has also reduced costs and filled gaps in its network via the Oneworld alliance and joint ventures with American Airlines and British Airways.
"But if we want to remain profitable and become a company that can handle any future challenges, we now need 'internal surgery'," says Onishi.
"This means changing the mindset of our employees and the company's processes. Previously, the headquarters did all of the planning and issued the orders, and the employees executed that. That can't continue. We want everyone, especially those in the front line and dealing with the customers, to be involved in the planning and the execution."
Changing the mindset and processes at a company that has long had a top-down work culture will take time, admits the 56-year-old Onishi, who joined JAL in 1978. But it has begun to reap rewards - last year, instead of waiting for instructions from Tokyo, JAL's employees pushed for route changes and the redeployment of aircraft after a devastating earthquake off Fukushima, helping the airline to cope with the crisis better than expected.
A change in mindset also led to plans for a Tokyo-based low-cost airline in a joint venture with Oneworld partner Qantas. Jetstar Japan will begin services in July, and compete with All Nippon Airways' joint ventures AirAsia Japan and Peach. For a traditionally risk-averse company, this is a radical move away from its premium business model.
Onishi says that this is a recognition that Japan's open skies policy and the deregulation of the industry signals the need for the country's airlines to find new ways to compete and be responsive to passenger demand.
"We continue to do what we are good at - being a full service carrier. But we found a partner, Qantas, who knows us and has experience in the low-cost market. Jetstar Japan is all about helping us to offer customers a choice, and that is what we want to do," says Onishi.
"But there aren't any drastic changes for JAL. We are shifting from quantity to quality, and we will just aim to grow steadily and diligently in the coming years."