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Thursday, March 2, 2006

Strife-ridden JAL removes Shinmachi from its helm

Staff writer

Japan Airlines Corp. announced Wednesday that JAL President Toshiyuki Shinmachi will be relieved of his post and be replaced by Senior Vice President Haruka Nishimatsu.

News photo
Toshiyuki Shinmachi

JAL hopes the ouster of Shinmachi, who will become chairman without the right to represent the firm, will put to rest the internal management strife at the holding company of Japan's largest airline group.

JAL announced Shinmachi's sidelining Wednesday evening in Tokyo following approval of the plan at an extraordinary board of directors' meeting. Shinmachi's effective ouster is designed to have him take the blame for the airline's safety and financial problems.

At a news conference following the board's decision, Shinmachi said he is responsible for not being able to recover customer trust and for revising downward the carrier's earning projection for this full fiscal year.

He also said he should take the blame for having prolonged the company's internal strife.

"I keenly feel my responsibility as CEO for each of the problems," Shinmachi said. "I decided to express my responsibility and resign, aiming to let employees reunite (to rebuild the company)."

The appointments are expected to take effect in June after a general shareholders' meeting, JAL officials said.

Shinmachi, 63, during a meeting with a major shareholder Feb. 16, expressed his intention to stay on as the holding company's president and chief executive officer for the group until March 2007.

Shinmachi admitted the airline decided to settle the internal strife sooner to avoid further damage to the group's image.

News photo
Haruka Nishimatsu

JAL said the holding firm's executive vice president, Katsuo Haneda, and Senior Managing Director Hidekazu Nishizuka, who are close to Shinmachi, will also step down.

Nishimatsu, 58, is seen as a compromise pick between those close to Shinmachi and those demanding his ouster.

Nishimatsu, who was also at the same news conference, said the JAL group is tasked with regaining the trust of customers, the society and shareholders, adding the carrier will announce its fiscal 2006-2010 business plan Thursday.

Referring to the management conflict, Nishimatsu said enhancing communication among employees is key to avoid a recurrence.

"I want to create a (corporate) culture that enables (employees to freely) express their ideas," he said.

On Feb. 10, four directors of group firm Japan Airlines International Co. visited Shinmachi with a petition bearing the signatures of 50 managers to urge him to resign along with Haneda and Nishizuka.

Since then, the number of managers who have shown support for the move has risen to about 400, Shinmachi said.

Of the four executives from JAL International, Kiyoshi Kishida, a former pilot who is now a managing director, will be promoted to executive director of the holding firm and given representation rights.

Another managing director, Makoto Fukada, will become head of JAL's Beijing office, while the two senior vice presidents -- Tetsuo Takahashi and Hiroyasu Omura -- will resign at month's end.

Nishimatsu joined the airline in 1972 and became director of the holding company last June, after serving as head of the financial resources division and other posts. He has a strong background in financial affairs and is expected to be influential in JAL's negotiations with banks and in improving its finances.

On Feb. 6, JAL said it had incurred a net loss of more than 23 billion yen in the three quarters through December, and projected a 47 billion yen net loss for the current business year through March 31.

The projected loss compares with a net profit of 17 billion yen the previous year.

Information from Kyodo added

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The Japan Times

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