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JAL chairman stepping down after stabilizing airline

Japan Airlines chairman Toshiyuki Shinmachi announced his resignation yesterday to make room for younger leadership, saying he had seen the carrier through a successful turnaround.

The company reported a ?13.1 billion (US$122 million) profit in the October-December quarter yesterday, reversing a ?10.8 billion loss from the same quarter the previous year. It was the second straight quarterly profit after more than two years of losses.

Japan's biggest airline, known as JAL, has worked hard to improve its fortunes, cutting staff, dropping unprofitable routes and shifting to fuel-efficient aircraft.

Shinmachi, 65, told a board meeting he will quit March 31, having seen the company get on track to profit, JAL said. The move is also an effort to rejuvenate managerial ranks, it said.

Shinmachi became president in 2004 and took office as chairman in 2006, partly to take responsibility for the airlines' faltering finances and a spate of safety problems. The chairman's seat will be left vacant, JAL said.

The airline has been struggling in recent years, hurt by a rising fuel bill, costly early retirement packages and a tarnished image from a series of safety lapses. The airline has been trying to regain customer confidence after Japanese passengers have instead opted for rival All Nippon Airways.

JAL swung into the black in the July-September quarter of last year after losing money in the fiscal first quarter and the previous two straight fiscal years.

Sales for the quarter ended Dec. 31 declined 4.4 percent to ?558.2 billion partly because of the sale of a part of JAL's stake in a trading company called JALUX.

JAL said international travel to China, Vietnam and India was strong in recent months, offsetting a gradual decline on previously popular routes such as Europe and Hawaii, which are now less popular because of the declining.

Adding to its bottom line in October-December were cuts in expenses, which decreased ?65.8 billion from a year earlier. Quarterly revenue from international flights rose 5.7 percent while revenue from domestic passengers and cargo declined slightly.

JAL left its forecast for the fiscal year through next month at ?7 billion in profit on sales of ?2.238 trillion. In fiscal 2006, JAL had posted a ?16.2 billion loss.

The management reshuffle in 2006 followed safety problems that began in 2005, and tarnished JAL's image, including wheels falling off during a landing and an engine that burst into flames.
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