JAL To Cut Costs By Revamping Purchasing

Japan Airlines plans to cut annual procurement costs in the fiscal year starting April 1 by JPY20 billion yen (USD$203.3 million) through an overhaul of its purchases, the financial daily Nikkei said in its Wednesday edition.

The paper said JAL hopes to spend less by, among other things, introducing competitive bidding or choosing from estimates of multiple suppliers.

Nikkei said JAL also intends to cut inventories of replacement parts and reduce its use of paper by cutting down on the number of inflight magazines and tour pamphlets it prints. The airline also intends to consolidate two warehouses at Tokyo airports used to store items sold on flights.

JAL further plans to cut fuel costs JPY3 billion a year by switching to a landing method that saves fuel by regulating engine output and by using airport electricity to power aircraft idling at gates.

The airline is expected to post a net loss of about JPY34 billion for the year ending March 31 and is seeking to reduce cots by JPY50 billion in the upcoming fiscal year.