JAL 2013 profit dented by yen depreciation and retrofit costs, but still an enviable 13% margin

Japan Airlines continues to generate one of the highest margins among the world's major airlines, with Japan's second-largest carrier reporting a 12.7% operating margin for FY2013, the 12 months to 31-Mar-2014. JAL is well on track to meet its goal of delivering at least a 10% operating margin for five consecutive years, a feat not only rare amongst airlines but one coming from an airline that only a few years ago had a spectacular bankruptcy filing and which competes in a highly contested international marketplace.

But inside JAL the outlook is more conservative. The carrier is rightfully discouraged that FY2013 profits fell despite growth in revenue. The culprit is the depreciating yen, increasing fuel costs and overseas landing charges, among other fees. JAL's FY2013 fuel bill was significantly up while other airlines reported decreases, even with increased consumption. JAL is also incurring elevated maintenance costs from a retrofit programme to the long-haul and domestic aircraft JAL hopes will increase its competitiveness.

JAL continues to evaluate its position after receiving fewer Tokyo Haneda slots - but now that the steam is cooling JAL is recognising the damage may not be so bad after all.