Protect Jobs Regardless, Past Savior of Japan Airlines Says

(Bloomberg) -- No matter how hard Covid-19 squeezes its finances, Japan Airlines Co. must stick to a philosophy of preserving jobs and keeping workers happy, according to its former assistant chairman Yoshihito Ohta, who played a key role in the company’s turnaround from collapse a decade ago.

Like most carriers around the world, Japan Airlines has been floored by the pandemic. It forecasts losses of as much as 270 billion yen ($2.6 billion) this fiscal year, its first slide into the red since emerging from one of the country’s biggest-ever bankruptcies. Rival ANA Holdings Inc. also warned of a record loss and both have turned to subordinated loans and new share sales for support.

The pandemic has forced the aviation industry to shed hundreds of thousands of jobs globally, but Japan Airlines is maintaining most of its wider 35,000-strong workforce despite being left with extra staff for its more threadbare flight schedule. A few hundred employees have been sent to work short-term at places such as KDDI Corp. and Nojima Corp., as well as in factories, call centers and local governments. ANA has done similar, though it is reducing its headcount too.

A Japan Airlines spokesperson said workers won’t be furloughed and they’d have opportunities to learn new skills as part of the company’s “basic policy.” Low-cost unit Zipair Tokyo Inc. said in October it would take on about 100 staff from the wider Japan Airlines group.

“They seem to be sticking to the principle,” Ohta said in an interview with Bloomberg News last week. “It isn’t easy for them to do so, but I am the very person who kept telling them to do their best to protect jobs no matter what happens in the future.”

Corporate culture in Japan tends to be more skewed toward job security. Ohta joined Japan Airlines in 2010 as the right-hand man of Kazuo Inamori, the founder of electronics giant Kyocera Corp., and a central plank of their recovery plan was to focus on the happiness of staff rather than shareholders. The government had turned to Inamori, who trained as a Buddhist priest and also founded KDDI, to lead the carrier’s restructuring.

A year later, Japan Airlines returned to profit and emerged from bankruptcy to relist on the Tokyo stock exchange in 2012. It “became a completely different company after a year,” Ohta said, adding that staff “would never trust corporate philosophy again” if jobs were slashed now.

Shares of Japan Airlines have slumped 45% this year, lagging a Bloomberg gauge of global carriers. They rose 0.4% Wednesday.

Japan Airlines worked hard to regain workers’ trust during the restructuring, which had “a huge impact” on the company, said Katsuhito Iwai, emeritus professor in economics at Tokyo University. Now, it is “making a bet, in a way” that it can ride out the unprecedented impact of Covid-19 by adhering to the philosophy that served it well before.

The carrier “is keeping an old way of doing business, but on a global scale companies are also heading in that direction,” Iwai said. “JAL is taking a very traditional Japanese way of management.”

The approach could be gaining traction elsewhere, such as in the U.S., with the long-held notion of shareholder capitalism shifting as some companies look to prioritize employees more.

Ohta left Japan Airlines in 2013. He is now chairman of MTG Co., a health and beauty company.

“A company can’t say nice things when things are going well and tell employees that they are no longer part of the company after a crisis,” Ohta said. “Aim high when things are going well, and help out each other when things are hard.”

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