JAL first airline marking delivery of 100th 747

By Edward Neilan

TOKYO (JP): The top executive of one of the world's leading airlines, which has been awash in red ink for six years, understandably would have plenty to worry about in terms of costs-per-seat-mile, load factors, pilots' salaries and the bottom line.

But Isao Kaneko, president of Japan Airlines since June, shows a quietly confident manner -- some call it a swagger -- as he predicts a profit for the current fiscal year ending March 31, 1999.

"In terms of pure worry, I'm more concerned about the delay of the NBA (National Basketball Association) season due to stalled player-owner talks," said Kaneko, 60, a former basketball player.

"I'm an NBA fan. In fact my boyhood dream of becoming a professional basketball coach rather than a CEO of an airline, will never be fulfilled," said Kaneko. "But I think either is equally highly challenging, exciting and stomach-aching as well."

He said his basketball experience taught him many valuable lessons.

First, teamwork. "An airline has various characters like pilots, mechanics, flight attendants and so on," he said. A basketball team often has a variety of characters like Dennis Rodman, Charles Barkley and John Stockton. A leader has to bring out the best in his or her employee or players."

Second, quickness. "Like passing the ball to a guy who is moving to a better shooting position, we have to quickly shift aircraft and executives around the world."

Third, patience. "As a college (Tokyo University) basketball player, I spent most of the time on the bench rather than on the court. This experience helped a lot, especially when negotiating with labor unions."

As a symbol of its progress in cutting corporate debt and restoring growth, JAL is taking delivery of its 100th 747 aircraft, a 348-seat Boeing 747-400, this week (Nov. 19) in Everett, Washington.

JAL becomes the first airline to reach the 100 mark in 747 deliveries and has purchased more of the aircraft than any other carrier in the world.

The airline is no target for Japan-bashers. JAL has paid US$8.1 billion for its 100 747s and US$13.6 billion for its entire fleet to date.

Including engines, parts, seats, galleys and other fixtures, JAL's expenditure related to aircraft operations and other business activities in the U.S. comes close to US$29 billion, making the airline the biggest foreign corporate customer of the United States.

JAL's projected profit, as the world's eighth largest airline, could signal the start of a comeback of the lackluster Japanese economy, particularly if accompanied by a renewal of consumer expenditures, including on high-ticket travel.

Kaneko served in New York from 1968 to 1972, watching a lot of basketball games in Madison Square Garden after work, and came up on the industrial relations and human resources side of the business.

He probably didn't know the statuesque Niki, a stewardess friend of mine, who must have epitomized JAL's staff problems during the 1980s "bubble economy" years. Niki, with fashion model attractiveness, made more than US$80,000 a year in salary ("JAL even pays for my shoes and stockings," she told me), parked her Alga Romeo coupe in a Rome garage, and was a walking wardrobe of Gucci and Ferragamo.

With high-altitude salaries like that -- Niki wasn't even a pilot! -- JAL flew into the red in a hurry.

Enter Kaneko who made his mark not as an indiscriminate bean- counter but as a careful strategist of human resources.

Admittedly, reduction of personnel is one of Kaneko's hallmarks: ground staff decreased by 2,500 by last year and 2,300 more will leave the company by 2001; a 37 percent drop within a decade. Productivity in terms of available ton-kilometers per employee has risen more than 50 percent from 1991 to this year. Salary payments are down 10 percent across the board.

Other, similar cost-effective measures dominate Kaneko's game plan.

"Unlike basketball," Kaneko says, "there's no single slam-dunk move we can make to put JAL on the path to profit. But in this most exciting and challenging industry, we must, and I'm confident we can, find ways to a bright and sunny future for Japan Airlines before the turn of the century."

Sitting next to Kaneko before his luncheon speech, I related an anecdote of my "best-ever-JAL-flight." It was early 1960s and ironically involved a mishap.

Our Los Angeles to Tokyo DC-8 developed some engine trouble and instead of simply refueling in Honolulu, we had to stop over there for three nights, at JAL's expense, while a part was flown out.

The sun and surf were great, as usual. An added attraction was that author Aldous Huxley, a favorite of mine whom I had never seen in person, was in town. He happened to be having three nights of lectures on three of his books -- Brave New World, After Many A Summer Dies The Swan, and Point Counter Point at a local auditorium. So the "stopover Honolulu" turned out to be beneficial intellectually as well as working on a suntan.

The writer is a veteran analyst of Northeast Asian affairs and a Media Fellow at Hoover Institution, Stanford University.