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Japan Airlines CEO to step down amid growing woes

The chief executive of troubled Japan Airlines Corp will step down, Japan's biggest carrier said yesterday, amid growing financial woes and a spate of embarrassing safety lapses.

Toshiyuki Shinmachi, who has been under pressure from board members to resign, will step down and become chairman upon shareholders approval at a meeting in June, Japan Airlines said in a statement.

His replacement will be Haruka Nishimatsu, 58, senior vice president in charge of finance and purchasing, it said.

Pressure had been growing against Shinmachi recently, and dozens of management-level employees at the airline had signed petitions demanding his resignation. But Shinmachi had repeatedly refused to quit.

The airline has been sinking deeper into trouble, unable to wipe out safety problems despite repeated problems to clean up its act. Japanese travelers have been switching by the droves to rival carrier All Nippon Airways.

About a dozen other senior bosses will also step down from JAL and its two major subsidiaries as part of the shake-up, which was approved at an extraordinary board meeting yesterday.

The changes come ahead of a merger of the two main JAL operating companies, JAL International and JAL Domestic, from Oct. 1.

Shinmachi had previously rejected demands from a group of managers and the airline's largest individual shareholder to step down but will now give up control of day-to-day operations, moving to the post of chairman.

For the fiscal year ending March 31, Japan Airlines expects a ?47 billion (US$405 million) loss on ?2.195 trillion sales. Last month, JAL said it lost ?11 billion in the October-December quarter.

Japan Airlines shares, which have fluctuated wildly during the past year, rose 4.8 percent to finish at ?326 in Tokyo as news spread about the planned management change, reported in newspapers yesterday and by Kyodo News agency.

JAL's image has been badly tarnished by a series of safety problems since early last year, eroding passenger numbers and driving it deeper into the red. Soaring oil prices have also taken their toll.

Recent incidents have included a Tokyo-Taipei flight operated by a JAL affiliate that took off with a faulty latch in December, and a domestic JAL aircraft that flew with the reverse thruster on an engine still locked.

A graduate of the prestigious University of Tokyo with a degree in economics, Nishimatsu joined Japan Airlines in 1972, and has mainly worked in the finance operations and investor relations.

Nishimatsu is seen as a "centrist" who has not sided in the dispute between Shinmachi and the board members demanding his resignation, Kyodo reported.

Nishimatsu faces a major challenge leading the turnaround effort because of deep divisions within its ranks, Credit Suisse First Boston analyst Osuke Itazaki said.
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