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JAL Posts 90 Billion Yen Operating Income, Swinging into the Black,
Driven by Strong International Traffic and Successful Cost-Saving
End-May 2008
Japan Airlines announced the consolidated financial results for
the fiscal year 2007 which ended on March 31, 2008. Although the
total operating revenue declined by 3.1% to 2,230.414 billion yen,
the operating income soared by 192.8% to 90.013 billion yen and the
ordinary income also hiked by 139.3% to 69.817 billion yen,
registering the highest figures set since the integration with Japan
Air System.
As some of the subsidiaries were removed from the consolidated
financial statement, the group's total operating revenue fell
accordingly. The FY2007 under report posted a net profit of 16.921
billion yen, swinging significantly into the black from the
prior-fiscal year's net loss of 16.267 billion yen.
In terms of air transport segment, which is the airline's core
business, the total operating revenue rose 1.4% to 1,826.717 billion
yen while the operating income increased by 76.0 billion yen to
78.698 year-on-year. The improvement is attributed to the ongoing
network restructuring, fleet downsizing, "premium strategies" and
cost-reduction measures, said JAL in a statement.
The domestic routes now enjoy nearly the same competitive base as
the rival airline, ANA, steadily boosting its core business of air
transport, added JAL.
The substantial increase of operating revenue from its air
transport segment, which is the airline's core business, is largely
attributed to a reduction of the operating costs by 50.8 billion yen.
The jet fuel costs decreased by 8.1 billion yen while, by contrast,
its rival airline, ANA's fuel bill increased by 30.6 billion yen.
Due to the rising market price, the fuel costs surged by 55.3
billion yen, but the strong yen helped the airline to reduce the fuel
costs by 5.8 billion yen. Furthermore, by implementing the strategy
of fleet downsizing and fleet renewal with more fuel-efficient
aircraft, JAL managed to reduce its total fuel uplift in the
equivalent of 26.4 billion yen. The fuel hedging of 31.2 billion yen
has also brought the airline a fuel cost moderating effect.
At present, JAL has no money-loosing routes, but once the jet
fuel prices surge and affect flight operations, JAL said, the network
restructuring will become imperative again. The airline is currently
evaluating the fuel surcharges to be applicable after July and will
announce it within the month of May.
JAL suggested that its self-help efforts to off-set the increase
will be difficult, if the fuel price soars to US$140 per barrel,
thus, indicating a possible increase of the fuel surcharge.
*FY2008 Expects Profit, But with Negative Growth Rate
Japan Airlines forecasts its operating revenue for the fiscal
year ending on March 31, 2009 to decline by 2.1% to 2,184 billion
yen, operating income to decrease by 44.5% to 500 billion yen,
ordinary income to fall by 57% to 30 billion yen. The net profit will
be 13 billion yen, down 23.2% compared to the previous fiscal year.
The decreased operating income by 40 billion yen is mainly due to
a sharp drop in the air transport segment which produced 78.6 billion
yen during FY2007. The airline estimates the international passenger
segment to bring an operating income of 55 billion yen while it
predicts that the domestic passenger segment to bring an operating
loss of10 billion yen. The cargo segment is estimated to produce no
operating income and loss.
The aggregated operating income from the core business is
forecast to produce 39 billion yen. Air transport business "will no
longer become profitable," JAL said, as long as the fuel prices and
the domestic market environment continue to remain unfavorable to
airlines.
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