08-Nov-2005 9:43 AM
Japan Airlines remains on Creditwatch negative after H1 results - S&P
TOKYO (XFNews) - The 'BB-' long-term credit ratings of Japan Airlines Corp (JAL) and its subsidiary, Japan Airlines International Co Ltd will remain on CreditWatch with negative implications, Standard &Poor's Ratings Services said.
Its decision to keep the ratings at existing levels comes after JAL posted lackluster first half to September results earlier today. The firm posted a net loss for the half of 12.0 bln yen, reversing net profit of 82.96 bln yen the year earlier.
The ratings were placed on CreditWatch on September 30, reflecting concerns over operational safety problems, fears of a deterioration in JAL's corporate reputation, and the increased likelihood of a net loss for the year to March 2006, it said.
"In particular, a substantial drop in the number of individual travelers could greatly impact revenues, as individuals provide a higher margin compared with group travelers," the ratings agency noted in its assessment.
"Key factors in resolving the CreditWatch listing include the effectiveness of the restructuring plan, and progress in implementing measures to address high fuel prices," S&P said.
JAL, earlier today said it will cut the basic salaries of its employees as well as remuneration for its directors in an effort to revive profitability that has been battered by high fuel charges.