Japan Airlines first-half profit up fivefold on strong demand, cost cuts
Tokyo (AFX) - Japan Airlines Corp said Tuesday its net profit
in the first half to September grew nearly fivefold from a year earlier as its
international flights fared well and restructuring efforts bore fruit.
Under a mid-term turnaround program, JAL, Asia's largest carrier, replaced its large, ageing aircraft with smaller but more efficient planes to enhance profitability as well as discontinued flights on loss-making routes.
The company posted first-half net profit of 7.31 billion yen compared to 1.51 billion the year before.
Operating profit surged 594.3 percent to 56.65 billion yen.
Revenue from the air transportation business rose to 931.63 billion in the first half from 910.95 billion a year earlier. It made an operating profit of 49.79 billion yen from a loss of 3.48 billion the year before.
"We reduced the number of flights both on domestic and international routes in line with our strategy to focus more on profitability. But we still managed to expand our revenue through higher fares on other routes.
"We believe our strategy to downsize was right," Yoshimasa Kanayama, executive manager at JAL, told a news conference.
The carrier lifted its full-year operating profit estimate to 48 billion yen from 35 billion expected earlier. It raised the revenue projection to 2.238 trillion yen from 2.197 trillion. The company maintained its net profit target at 7 billion yen.
Despite the upgrade, company executives said the airline remains cautious about the second-half outlook because of rising fuel prices.
JAL is expecting its fuel cost to total 430 billion yen this fiscal year, up 5.0 billion yen from its previous estimate, as it expects Singapore Kerosene prices to average 100 US dollars per barrel in the second half and 91 dollars for the full year, Kanayama said.
The carrier has hedged about 73 percent of its fuel requirement for the second half, he said.
JAL is continuing to find ways to strengthen its capital base, said managing director Tetsuya Takenaka.
"We think we are in a better shape now but we also think we need to strengthen our capital and prepare for future risks," he said.