TokyoTomo Travel Guide

Japan Airlines worsened substantially its consolidated financial results for the first half of fiscal year 2009 (April 1- September 30, 2009) ending in March 31, 2010, posting a consolidated net loss of 131.2 billion yen compared to a net income of 36.6 billion yen in the corresponding period a year earlier. Despite the network restructuring including route suspensions and frequency reductions and cost-cutting measures implemented, JAL failed to secure more revenue due to the continuing economic downturn in Japan and abroad. Consolidated operating revenue declined drastically by 28.8 percent to 763.9 billion yen compared to the same period a year earlier (previous year: 1,073.5 billion yen). The airline posted an operating loss of 95.7 billion yen compared to an operating income of 30.2 billion yen and an ordinary loss of 114.4 billion yen compared to an ordinary income of 18.0 billion yen respectively in the corresponding period a year ago. JAL now applied for the Turnaround ADR (alternative dispute resolution) Procedure on November 13. Although the airline already requested the Enterprise Turnaround Initiative Corporation of Japan (ETIC) to support its restructuring, it would take time before the decision is made. The Turnaround ADR Procedure, if accepted, will allow JAL to postpone its debt repayment obligations temporarily and thereafter it will continue discussions with the ETIC while pursuing the Turnaround ADR Procedure.

The air transport business segment brought an operating revenue of 666.9 billion yen, but it incurred an operating loss of 97.2 billion yen. Considering the overall consolidated operating loss is 95.7 billion yen, it is obvious that the operating loss brought by the air transport business segment is extremely high. International passenger operating revenue declined sharply 42.8 percent to 225.4 billion yen. It can be analyzed that passenger revenue in terms of unit price was down significantly by 35.5 percent, hit by the global sluggish economy, the stagnant travel demand especially due to cutback on business trips and the drastic reduction of the jet fuel surcharge. The number of international revenue passengers fell by 10.0 percent to 5,470,825.

The overall traffic demand, measured by revenue passengers kilometers (RPK), dropped by 11.3 percent and the seat capacity, measured by available seat kilometers (ASK), was reduced by 11.9 percent, bringing the average seat load factor up by 0.4 percentage points to 67.8 percent (see related chart). The passenger agency commission paid, among others operating expenses, decreased by 44.3 percent to 29.7 billion yen, following an abolishment of the international agency commission.

Travel-related business segment managed to secure profits. Its operating revenue declined by 24.4 percent to 136.2 billion yen and operating income dropped 66.2 percent, yet posted an operating income of 310 million yen. By division, JALPAK posted an operating revenue of 46.8 billion yen, down by 38.8%, but its operating loss narrowed to 200 million yen compared to an operating loss of 300 million yen in the same period a year ago. JAL TOURS registered an operating revenue of 63.2 billion yen, down by 8.8 percent, but managed to secure an operating income of 300 million yen against 500 million yen in the year-earlier period.

Since JAL is currently formulating its business revitalization plan, it is difficult for the airline to forecast future performance and, consequently, the airline withdraw the full-year consolidated business forecast announced earlier for FY2009 ending in March 2010.

”Will Lower International Network Share,” Says President Nishimatsu – Hints at Possible Rejuvenation of Management

Haruka Nishimatsu, JAL’s President & CEO mentioned during the results briefing held on November 13 that the current network ratio between domestic and international routes is nearly fifty-fifty, adding that a share of the international network will be gradually reduced. However, the airline will not reconsider the network restructuring except for the routes previously announced until after the business revitalization plan is formulated. Also, asked to comment on rejuvenation of the management, Nishimatsu said that he is keenly aware of his responsibility as the company president (for the current company’s business situation) and must put together the revitalization plan, indicating his will to fulfill his obligations. At the same time, President Nishimatsu cited that once the road map becomes visible in the ongoing restructuring business plan, he would respond in reason to the rejuvenation of the management, indicating a possibility of revamp of the present management including his own position.

Source: Travel Vision

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