JAL upgrades full-year profit forecast

JAL upgrades full-year profit forecast

JAL upgrades full-year profit forecast

The FINANCIAL -- JAL Group (JAL) on October 31 announced the consolidated financial results through the second quarter – the period from April 1 to September 30, 2017.

During the first six months of the fiscal year, ending March 31, 2018 (hereinafter referred to as the “second quarter”), the Japanese economy had experienced a moderate recovery while employment and income rates also improved across the country. When taking a look at the economic situation for the overseas market, although an unstable economy was observed in select European countries, the overall market has been on a positive recovery trend.

Under these conditions, the JAL Group continued to work toward achieving the goals as outlined in the Medium Term Management Plan, where the company continues to refine the Full Service Carrier business model by adapting to global change, and making the necessary capital expenditures for safety and service enhancements to become the customers’ airline of choice. With safety as the foundation of JAL`s business model, the company will align all actions with the principles outlined in JAL Philosophy and the amoeba management system, realizing greater management efficiencies, and providing the finest service to our customers.

As a result of the above, consolidated operating revenue increased by 6.2% year-on-year to 692.3 billion yen and operating expense increased by 6.0% to 593.2 billion yen, while operating income increased by 7.2% year on year to 99.0 billion yen and ordinary income increased by 8.8% to 97.6 billion yen. Profit attributable to owners of parent for the second quarter was 77.9 billion yen, up 9.2% year on year, according to JAL.

International Passenger

In international passenger operations, inbound demand from overseas remained robust and outbound demand has been buoyant, resulting in higher load factors than the year before.

Regarding route operations, in addition to the launch of a new service between Tokyo (Haneda) and New York (JFK) on April 1, 2017, JAL opened new routes between Tokyo (Narita) and Melbourne on September 1, 2017 and between Tokyo (Narita) and Kona on September 15, 2017, and thus expanded its route network.

On the marketing and service front, JAL and TripAdvisor, Inc. (hereinafter “TripAdvisor”) have joined forces to further stimulate inbound demand by communicating the best of Japan through a special portal, “Untold Stories of Japan,” on TripAdvisor’s website.

On the product side, a new cabin configuration “JAL SKY SUITE 787” has been introduced to JAL`s 787-9 aircraft. Business Class is retrofitted with the latest fully-flat seat “JAL SKY SUITE Ⅲ” aimed at expanding fully-flat Business Class seat service on medium- and long-haul international routes. Premium Economy Class will be installed with “JAL SKY PREMIUM” seat, which has received positive reviews on other JAL SKY SUITE aircraft, and Economy Class will be fitted with “JAL SKY WIDER” seat that offers roughly 5cm more seat pitch. The new JAL SKY SUITE 787-9 is now in service on the Tokyo (Narita)=Kuala Lumpur route and the Tokyo (Narita)= Dalian route.

As a result of the above, capacity on international routes measured in Available Seat Kilometers (ASK) increased by 0.5% year-on-year, and international passenger revenue was 229.3 billion yen, up 7.6% from the year before.

Domestic Operations

In route operations, JAL expanded Embraer 190 operations primarily on regional flights to and from Osaka (Itami). The state-of-the-art ATR42-600 turboprop was introduced to Japan Air Commuter (JAC) flights between Kagoshima and outlying islands to improve inflight comfort and convenience on JAL’s regional route network. During the summer high demand period, late-night flights were increased on the Tokyo (Haneda)=Sapporo (New-Chitose) route, centered on weekends, to make travel more convenient.

On the product side, JAL is providing free Internet access across all domestic routes operated with JAL SKY NEXT aircraft. This is the only inflight Wi-Fi service available free of charge on Japan-domestic routes, and it has been well received by users. In addition, the 737-800 aircraft, operated by Japan Transocean Air, are progressively being retrofitted with JAL SKY NEXT cabin interiors to add greater convenience and comfort in air travel.

Airport services saw renovations of Sakura Lounge at Fukuoka Airport and Hiroshima Airport, and the opening of the newly renovated luxury lounge for top-tier domestic passengers, Diamond Premier Lounge, at Fukuoka Airport, following those opened at Haneda, New Chitose (Sapporo), and Itami (Osaka). Meal and drink service menus were improved and service hours were reviewed to improve the quality of lounge services.

As a result of the above, capacity on domestic routes measured in Available Seat Kilometers (ASK) increased by 0.5% year-on-year, and domestic passenger revenue was 265.0 billion yen, up 4.6% from the year before.

International and Domestic Cargo

In international cargo operations, the company secured strong demand from both overseas and the domestic market and as a result, cargo volume during the reporting period when measured in Revenue Cargo Ton Kilometers (RCTK) increased by 20.9% year-on-year. Revenue increased by 26.1% from the previous year and recorded 25.6 billion yen.

In domestic cargo operations, through expanded sales efforts, JAL increased its cargo demand for the domestic market, but due to various factors, domestic cargo revenue slipped 0.6% year-on-year to 11.1 billion yen.