Chief Executive of Japan Airlines to Quit

The chief executive of troubled Japan Airlines Corp. will step down, the nation's biggest carrier said Wednesday, amid growing financial woes and a spate of embarrassing safety lapses.

Toshiyuki Shinmachi, who has been under pressure from board members to resign, will step down and become chairman upon shareholders approval at a meeting in June, Japan Airlines said in a statement.

His replacement will be Haruka Nishimatsu, 58, senior vice president in charge of finance and purchasing, it said.

Pressure had been growing against Shinmachi recently, and dozens of management level employees at the airline had signed petitions demanding his resignation. But Shinmachi, 63, had repeatedly refused to quit.

The airline has been sinking deeper into trouble, unable to wipe out safety problems despite repeated problems to clean up its act. Japanese travelers have been switching by the droves to rival carrier All Nippon Airways.

Nishimatsu said he felt a deep responsibility in taking helm at the battered airline.

"The JAL Group is now in a crisis that endangers its very survival," he said on a nationally televised press conference.

For the fiscal year ending March 31, Japan Airlines is forecasting a 47 billion yen ($405 million) loss on 2.195 trillion yen ($18.9 billion) sales. Last month, JAL said it lost 11 billion yen ($94.7 million) loss in the October-December quarter.

JAL's image has been badly tarnished by a series of safety problems since early 2005, eroding passenger numbers and driving it deeper into the red. Soaring oil prices have also taken their toll.

Recent incidents have included a Tokyo-Taipei flight operated by a JAL affiliate that took off with a faulty latch in December, and a domestic JAL aircraft that flew with the reverse thruster on an engine still locked.

Hiroshi Maeda, honorary professor of aeronautics at Kyoto University, said Japan Airlines had lost its past glory as it failed to keep up with intensifying competition, including the threat from ANA.

"They used to have such pride," he said. "They must revitalize their corporate culture or the troubles won't go away."

Japan Airlines shares, which have fluctuated wildly during the past year, rose 4.8 percent to finish at 326 yen ($2.80) in Tokyo as news spread about the planned management change, reported in Wednesday newspapers and by Kyodo News agency.

A graduate of the prestigious University of Tokyo with a degree in economics, Nishimatsu joined Japan Airlines in 1972, and has mainly worked in the finance operations and investor relations. He will also replace Shinmachi as president, according to the airline.

Nishimatsu is seen as a "centrist" who has not sided in the dispute between Shinmachi and the board members demanding his resignation, Kyodo reported.

Nishimatsu faces a major challenge leading the turnaround effort because of deep divisions within its ranks, Credit Suisse First Boston analyst Osuke Itazaki said.

"It's not clear if he has the power to manage the entire company," he said.

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