Airline Leader Presentation, JAL Group CEO Mitsuko Tottori

Transcript

Mitsuko Tottori:Hello, this is Mitsuko Tottori from Japan Airlines. It's an absolute honor to speak before you today. On behalf of Japan Airlines, I'd like to express my sincere gratitude to the organizers for giving us this opportunity. We are truly delighted to serve as the airline host for this event and proud to have JAL Air Your Future Love participate as a badge sponsor. Today, I'd like to express the JAL Group's forward-looking strategy focusing on our business environment. and directions for future growth. Our agenda covers 4 key topics: an overview of the JAL Group, the current state of Japan's aviation industry, what JAL strives to realize, and our future strategies spanning routes, mileage, To begin, let me share a brief snapshot of the JAL Group by the numbers. As of March 2026, we operate 211 routes in total, comprising 140 domestic and 71 international routes. Thank you, Mitsuko. As Japan is an island nation, air travel plays a vital role in our national infrastructure, resulting in a high frequency of domestic flights relative to our land area. Driving this network is a fleet of 234 aircraft supported by over 39,000 dedicated employees. Financially, our annual revenue reached ¥2.013 trillion in fiscal 2025, which translates to roughly $30.4 billion, establishing a solid foundation for our future growth. Please note that dollar conversions from here on out are based on our exchange rate of ¥150 per dollar, as outlined in our 2035 Vision. Next, let me turn to the current state of Japan's aviation industry. As we all know, the spread of COVID-19 had a profound impact on Japan's aviation and tourism industries. However, driven by robust demand, inbound tourism has made a remarkable recovery. In fact, we successfully welcomed over 40 million international visitors in 2025. On the other hand, the recovery of outbound trade by Japanese citizens has yet to reach pre-pandemic levels. This is largely due to increased travel expenses driven by the depreciation of the yen inflation, and fuel surcharges. Looking ahead, the Japanese government has set an ambitious target of welcoming 60 million international visitors by 2030. From an economic perspective, domestic consumption by inbound travelers is classified as a service export. Today, this inbound spending has grown so significantly that its scale is now second only to Japan's automotive industry. This highlights just how crucial inbound demand has become for the Japanese economy. As a leading Japanese airline, we are fully committed to fulfilling our responsibility to support and drive this vital economic pillar. However, as you are all aware, rising costs driven by the Middle East situation present a significant challenge. In Japan, this is compounded by the opening— ongoing depreciation of the yen, creating a severe double pressure on our business. Meanwhile, Japan is facing a shrinking population. As this graph illustrates, the decline in the working-age population is particularly severe. Consequently, Securing the next generation of talent to support the aviation industry has become a critical challenge. Considering these expanding opportunities and complex challenges, I would now like to share JAL's strategic vision for the future. This vision is outlined in our JAL Group Management Vision 2035, which we announced in March. To overcome social issues, we have formulated a 10-year vision that remains unwavering regardless of changes in our surrounding environment. Our core theme focuses on 2 pillars. Well-being for society and people through meaningful connections, and environmental and social sustainability. Let me now walk you through the key strategies we are implementing to bring this vision to life. First is our strategy to transform our business portfolio. We will accelerate growth in 2 key areas: international operations and the My Asian Lifestyle business. For domestic operations, we will complete structural reforms to secure stable profits. By addressing social issues, such as using drones to deliver medical supplies to remote islands, we will create new value and expand our business domains. To handle market volatility and geopolitical risks, we will build a more resilient portfolio. As shown in the graph, we aim to grow our EBIT while generating half of it from full-service carrier operations and the other half from non-full-service carrier businesses. To drive our international growth, we will expand ASK by standardizing our fleet and introducing large aircraft while continuing to improve operational efficiency. Furthermore, the expansion of Narita Airport will significantly increase slot capacity, an opportunity we will fully leverage to grow both our passenger and cargo businesses. In addition to expanding our own capacity, we continue to expand our partner airline portfolio with carriers inside and outside the OneWorld Alliance, most recently establishing a strategic partnership with Korean Air. Maintaining domestic routes is not just our company's issue. It is a shared challenge across the Japanese aviation sector due to demographic decline and rising costs. Under these conditions, government-led initiatives are underway to preserve the network, making collaboration with other carriers an essential strategy. While enhancing our own productivity through digital transformation, we will actively engage in these industry-wide partnerships. Such as optimizing schedules and frequencies based on demand without compromising customer convenience. Our unique strength is that we treat our mileage program not just as a loyalty program, but as a business in its own right. The Mileage and Lifestyle segment is the heart of our non-aviation growth. We will boost miles issuance revenue by expanding JAL Card and adding new business partners. Next, we will increase the value of miles and accelerate global investments. As the graph shows, expanding our customer base beyond current limits will drive dramatic growth. Looking through our customers' eyes, Mileage& Lifestyle makes earning miles easy and fun in daily life through the JAL Card. This connects us with a broader audience beyond traditional flyers. We are expanding globally as well. For example, in the US, users can now transfer Capital One points to JAL miles. In turn, those miles turn into thrilling experiences like reward flights, live sports, gourmet dining, and entertainment. We will stay close to our customers every day to bring more color and value to their lives. Alongside the business strategies I have shared, we are committed to maximizing human value through our collaboration with technology. Let me give you a clear example. Today, passengers must go through numerous procedural steps before boarding. However, as facial recognition using pre-registered mobile data becomes widely adopted, customers will enjoy a seamless, hassle-free journey throughout the airport. From the perspective of our ground staff, Their role will shift from routine processing and manual tasks to delivering genuine hospitality and uniquely human value. By driving productivity, we will offset labor shortages and cushion the impact of rising costs, all while continuing to improve customer service quality. Looking through— As I have shared today, Japan's aviation industry faces many challenges and demands change. Yet, with the surge in inbound travel and rapid technological progress, we also see immense opportunities for growth. We will navigate these dynamic conditions carefully and strive to lead both our industry and Japan into the future. To drive empathy and action across our customers and workforce, we introduced I, a new slogan Soaring Together. It embodies our promise to gently uplift our customers' spirits, empower their dreams, and build a prosperous future together. We will carry this positive spirit forward to achieve the targets of our Management Vision 2035. Please look forward to what JAL will achieve next. Thank you for your time and attention.

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