Japan Airlines Returns to Profit
TOKYO - Japan Airlines Corp. reported Friday that it returned to earning profits in first half of the fiscal year as international travel picked up from a decline a year ago caused by the war in Iraq and the SARS outbreak in Asia.
The holding company for the Japanese carrier recorded net group profit of 82.96 billion yen (US$783 million; euro 608 million) in the six months ended Sept. 30, a reversal from a 57.6 billion yen loss the same period a year ago. Revenue rose 14 percent to 1.08 trillion yen (US$10 billion; euro 7.9 billion) from 944 billion yen.
The number of international passengers, and the revenue they yielded, rose over the previous year. Domestic passenger traffic was hurt in part by a spate of typhoons that hit Japan this summer.
International cargo operations got a boost from a growing demand for digital consumer products, the company said.
JAL revised its earnings forecast for the full year through March 31, 2005, at net income of 23 billion yen (US$217 million; euro 169 million), down from the forecast it gave in May at 36 billion yen (US$340 million; 264 million). But the forecast is an improvement from the 88.6 billion yen loss the carrier marked a year ago.
It also revised its revenue downward to 2.13 trillion yen (US$20 billion; euro 15.6 billion) from 2.19 trillion yen (US$21 billion; euro 16 billion). The lowered forecast was still above JAL's revenue for the fiscal year ended March 2004 at 1.9 trillion yen (US$18 billion; euro 14 billion).
JAL said that although international travel had recovered, travel to Southeast Asia and Europe and not rebounded as well, and overall international passenger performance still lagged below company expectations.
Rising fuel costs are also expected to hurt earnings, it said. Fuel costs for the first half totaled 137 billion yen (US$1.3 billion; euro 1 billion), up 13 percent from a year ago. But cost cuts, including more efficient use of aircraft and personnel, offset some of the damage from higher fuel costs, it said in a statement.
The stronger yen served as a plus for the airline, adding 9.3 billion yen (US$88 million; euro 68 million) to the results.
In the second half, JAL expects international cargo to continue to be strong. But the fuel bill for the year is expected to total 304 billion yen (US$2.9 billion; euro 2 billion), higher by 55 billion yen (US$519 million; euro 403 million) from a year ago.
Fears about the war in Iraq and the SARS respiratory illness that broke out in Asia sent international travel plunging a year ago.
Last month, All Nippon Airways Co., a major Japanese airline, also reported hefty first fiscal half earnings gains, citing a rise in international travel. Japan's No. 2 carrier, also known as ANA, reported a 45 percent rise in group net profit for the half-year.