In January 2010, Japan’s prime minister, Yukio Hatoyama, asked a retiree to take over the country’s flag carrier. Kazuo Inamori would turn 78 at the end of the month. He had founded the electronic components maker Kyocera and the mobile carrier KDDI, and he was an ordained Buddhist monk. He agreed, and said he would do the job without pay.
On January 19, Japan Airlines filed for protection under the Corporate Rehabilitation Law. By the count on Inamori’s official site, its debt came to about 2.3 trillion yen. That day its shares fell as low as 3 yen. The plan called for about 15,600 job cuts, a third of the workforce, by March 2013. In February, Inamori became chairman.
“Everyone believed secondary bankruptcy was inevitable,” he said later. His official archive describes the staff he found as lacking a sense of crisis, or any feeling that the company was theirs.
He brought two things from Kyocera. One was a philosophy he had drawn from more than half a century in business, which became the JAL Philosophy. By his account, he started there, with intensive study sessions for executives and visits to front-line workplaces to talk with staff himself.
The other was amoeba management, which Kyocera had used since 1963. It splits a company into small units and runs each one as its own profit center, so that every member can see how their unit is doing.
At JAL, that meant flights. Hajime Tozaki, an aviation expert at Waseda University, wrote that the old JAL had looked at income and spending across the whole network and paid little attention to whether individual routes made money. Inamori wanted to know exactly. By his account, the profit of every route and every flight became available the following day. Each month, departments presented their figures over a three-day meeting while he told their leaders what to do next. JAL’s own report for the year to March 2012 says a “divisional profitability management system” was put in place from April 2011 “to raise the profit consciousness of each department.”
There was a harder side. According to Tozaki, jumbo jets and subsidiaries were sold, pay fell to around 20 percent below rival All Nippon Airways, and pensions were cut by half for current staff and by 30 percent for retirees. Banks forgave 521.5 billion yen of debt, and a fund backed by the government put in 350 billion yen.
The numbers turned fast. JAL had an operating loss of 133.7 billion yen in the year to March 2010. Two years later it reported an operating profit of 204.9 billion. Some competitors grumbled that it was cutting its tax bill by carrying past losses forward. On September 19, 2012, two years and eight months after filing, JAL was back on the Tokyo Stock Exchange.
Two months before that, Inamori gave more than 4,000 business managers his own explanation. Philosophy and amoeba management had worked, he said, but they did not seem to be the whole story: “the revival of Japan Airlines did not result from my actions. Rather, it seems to have resulted from a Divine intervention.”