Industrial Report of Japan Airlines 3 Crew unions

April 2009

1. Current Japanese economy

 

According to the Monthly Economy Report published by the Cabinet Office in the beginning of Mar. 2009 (for Feb.2009)

 

The economy is worsening rapidly while in a severe situation.
\ Exports and Industrial production are decreasing very substantially.
\ Corporate profits are falling substantially and business investment is decreasing.
\ The employment situation is getting worse rapidly.
\ Private consumption is decreasing moderately.

  As for short-term prospects, while the economy is likely to continue worsening for the time being, there is fear that rapid reduction of production will lead to significant employment adjustment. Moreover, attention should be given to the risks that the economy would become severer due to the worsening global financial crisis, concerns over further slowdown in overseas economies and effects of fluctuations in stock and foreign exchange markets..

 

2. JAL Corporation and Consolidated Subsidiaries April - December 2008 & Third Quarter FY2008 Results

URL: http://press.jal.co.jp/en/release/200902/001117.html
PDF: http://press.jal.co.jp/en/uploads/3Q08%20Result%20Final.pdf

3. Managements’ Strategy against Global Financial Crisis

a) Fleet Strategy: Still working on introducing “Fuel-efficient” aircrafts and retiring aircraft such as classic-type 747 by the end of July 2009. E170 was introduced to our affiliates J-AIR. Because of Boeing 787 Dreamliner’s delivery is still unknown, as an alternate, increased the order of 767s and 777s. Also, JAL is trying to reform its cargo business by starting code-share flights with NCA (Nippon Cargo). As a result, not only by the impact of financial crisis, equal to seven 747-400 aircrafts might be grounded.
It is an irony, because there is a movement that JALways (JAZ) non-unionized, outsourced 747-400 crew to be canceled their contracts. As a result, our long year actions to protect Job Security will be moving forward greatly.

b) Expansion of Subsidiary Airlines: JAL will expand the use on international and domestic routes of Group subsidiary airlines: JALways (JAZ), JEX (JAL Express), J-AIR. JALways operates on international routes, primarily leisure and Asia business routes. Not only non-unionized crew but also a lot of JAL-Japanese Crew is engaged in this JAZ operation without contract.
JEX currently serves domestic Japan routes, but in FY2009 will start operating 737-800 aircraft on international routes, primarily China.
J-AIR operates CRJ regional jets in Japan and its operations have expanded with the introduction of Embraer 170 to the JAL fleet.

 

c) Personnel Cost Reduction & Workforce Productivity Improvement

Ø          In FY2007, JAL management initiated a review or devalues of employees work content and work processes, work form, manpower allocation and restructuring &selling the affiliated businesses such as JAL Card (Credit card company).

Ø          JAL expects to achieve its target of a 10% increase in the productivity of its workforce by the end of FY2008, one year earlier than originally expected.
JAL Flight Crew dep. obstinately insists that 10% increase in the productivity should be achieved by efficient crew assignment (*), and by taking away our summer vacations (=SV: 3days) till the end of FY2010.

Ø          JAL had cut our retirement benefit by approximately 9% since Apr.1st without agreement.

Ø          Detrimental revision of requirements for ‘Announcement of a Leave Of Absence.
(*) A number of JAL crew is assigned to the “Ground Job” in addition to their daily flight roster. There is no agreement on this issue. Efficient crew assignment means withdrawal from these GJs.

Ø           “5% Wage Cut” from Oct 1st, 2008
Pay cut for all employees from Apr. 2006 (10% reduction of base wage) had ended by the end of March, 2008.
Nevertheless, by reviewing the wage system, JAL continues to reduce personnel costs resulting in a reduction in costs of 10 billion yen on a yearly basis.
On Oct.1st, JAL management changed the Wage Table by “legal way”, without any agreement with 7 unions but agreement with company-union, “JALFIO”. The management explained that this wage cut had to be done because of the increase of JAL’s capital by \150 billion, issuing 61.4million new Preferred stock. These stocks were bought by the general trading company, Mega-banks and brokerage firms.
By this capital increase, JAL accelerates the aircraft renewal and plans to concentrate on making satisfaction for a debt (e.g. Total debt: FY2008 $13.2 billion
→ FY2010 $96.6).
The
Preferred stock carries no voting rights, but has a convertibility feature into common stock (term: min.3, max.10years), and also it is not mandatory to divide the profits to those Preferred stock holders if company’s achievement is worse. We are now in the Spring negotiation season, but the management insists that dividends are the life line for JAL, and unable to raise (or resume) our salaries.
On the other hand, did the management construct highly maneuverable risk-hedge, or highly profitable constitution?

Ø          Possible additional wage cut in FY2009
JAL management referred to “additional reduction of personnel costs”. There is no precise information about this.

d) Urgent Cost Reduction Action- Suspending most of the Flight Training for Cost Reduction

From the end of last Dec. to end of this Mar, management suddenly suspended most of our “Upgrade” or “Conversion” Training. The reason was the worse foresight of the result of FY2008. For the Flight Crew Department, the action taken was above “Ugly” one, and for example, Maintenance Department stopped their air conditioning system in their hangar in this cold winter season. Cabin Attendant Department has already begun reducing their stay night or the rest days for their long-haul flight since last October.

Against this reckless drive, we had many negotiations, and finally achieved the answer to restart CAUG (Captain Upgrade Training), but other conversion trainings or FOUG (F/O Upgrade Training) are still suspended till Mar 31st. During the suspension, these flight crews’ rosters are mostly “blank” (though paid allowances and/or basic salaries). All flight crew unions strongly opposed against this “foolish” and “self-destructive” action, and finally urged the management to say “we’ll never do this again”.

e) Actions taken against Management’s reckless drive

JFU, JPU (former JAS pilot union) and other JAL unions prepared to go on strike on Mar.18th. Finally, the strike was avoided.

3). FT/DT issues

On 25th Mar. 2007, we concluded a temporary agreement for scheduling. Substantial negotiations on scheduling issues started and negotiation was held several times and this temporary agreement was renewed last Oct till the end of March 2009.

The topics will be the long-haul flight (NRT-BNE, (8+55) by 767, and so on.

 

4. Flight Engineers’ job issues concerning with the retirement of B747 classics

The management has announced all B747 classics’ retirement by the end of Jul. 2009, and therefore flight engineers job security and future problems have appeared consequently. There are a hundred of flight engineers in JAL, and this problem have to be solved by this summer. Unions have been demanding that all flight engineers should be able to remain as flight crew position and paid accordingly until each FEs’ retirement, or to get a pilot conversion training without company’s sorting but based on one’s will.

In early 2006, the company has presented a plan for the FEs after B747’s retirement as follows;

1.      Basically all FEs will be repositioned to ground staffs position and paid accordingly. Five year transition period to reach ground staffs salary table to ease the sudden wage down. (Year 1st 4/5 wage, 2nd 3/5, 3rd 2/5, 4th 1/5)

2.      Conversion training to a pilot will be given, if he satisfies certain criteria which are, of course, set by the company.(FEs’ age, seniority, former intention/result of conversion training)

3.      Early retirement. This retirement will be treated as “personal reason” and only advantage compared to the regular retirement is the relief measure explained above as an additive to the normal retirement allowance.

 

In Japan, ANA, another major carrier has already presented a plan for the FEs after B747’s retirement, and the conditions are much better. In some cases of early retirement, the allowance can be paid 100million YEN (1million USD) higher than in JAL.

At first, Management was negative toward solving this issue, but three crew unions’ persistent efforts led the Management into negotiations.


In March 2007, we mentioned our decision that we can conclude the agreement. Nevertheless, there were still lot of unsatisfactory terms, therefore several saving clause had been left, and Management promised that they would keep on negotiating.

This October, the Management revised their proposal, but it still does not refer to our demand at all, such as company sorted pilot conversion training. They give no chance for the young FEs even if we insist that they are able to work longer…

5) Accident Investigation in Japan

The Ministry of Land, Infrastructure, Transport and Tourism, the Ministry of Foreign Affairs of Japan, the Ministry of Justice and the National Police Agency have deliberated and agreed to submit the notification of differences to ICAO on August 4, 2008 for the first time in 14 years stating that Article 5.12 “cannot be perfectly fulfilled.”

Recently, we faced a North West accident which 43 passengers were injured during the holding in Narita Approach area.

http://search.japantimes.co.jp/cgi-bin/nn20090221a1.html

In this case, pilots had been questioned by an accident investigator.