JAL Group Announces Consolidated Financial Results for the Nine Months Ended December 31, 2016

During the nine months of consolidated financial results for the fiscal year ending March 31, 2017 (April 1, 2016 to December 31, 2016, hereinafter referred to as "the third quarter"), the Japanese economy showed weakness, however personal spending was stable in general. In overseas economies, weakness was observed in Asia's emerging markets, resource-rich markets and China markets. Crude oil prices, which affect our fuel purchasing costs and international passenger and international cargo revenues were lower than the year before but increased rapidly from December, triggered by an agreement to reduce crude oil production which was announced at a meeting of the Conference of the Organization of the Petroleum Exporting Countries. Meanwhile, the Japanese yen grew stronger against the US dollar, but started to depreciate from December after the Federal Open Market Committee of the US Federal Reserve Board decided to raise its benchmark interest rate.

Under these economic conditions, we worked to increase profit consciousness of every staff through sound management based on the JAL Philosophy and precise amoeba management system, realize greater management efficiencies, and provide unparalleled service to our customers, anchored in our firm commitment to flight safety in order to reach the targets set out in Rolling Plan 2016 for the JAL Group Medium Term Management Plan announced on February 18, 2016.

As a result of the above, consolidated operating revenue decreased by 4.7% year-on-year to 975.4 billion yen and operating expense decreased by 1.8% to 838.1 billion yen, while operating income decreased by 19.2% year on year to 137.3 billion yen and ordinary income decreased by 20.2% to 136.0 billion yen. Net income attributable to owners of the parent for the third quarter was 108.2 billion yen, down 24.6% year on year.

(1) JAL Group Consolidated Results for the Period April 1 - December 31, 2016

Unit: Billions of yen	Fiscal Year 2015 (Apr. 1 - Dec. 31, 2015)	Fiscal Year 2016 (Apr. 1 - Dec. 31, 2016)	Difference vs. Prior Year	% vs. Prior Year
Operating Revenues	1,023.4	975.4	- 47.9	95.3
International Passenger Domestic Passenger Int. and Dom. Cargo Others	345.9 384.1 60.4 232.7	314.4 380.8 48.9 231.1	- 31.5 - 3.2 - 11.4 - 1.6	90.9 99.1 81.0 99.3
Operating Expenses	853.3	838.1	- 15.2	98.2
Operating Income	170.0	137.3	- 32.7	80.8
Operating Margin	16.6%	14.1%	- 2.5 points	-
Ordinary Income	170.4	136.0	- 34.4	79.8
Net Income attributable to owners of the parent	143.6	108.2	- 35.4	75.4

Figures are rounded down to the nearest tenth of a billion yen while percentages are rounded off to the first decimal place.

(2) Air Transportation Segment

International Passenger

In international passenger operations, inbound demand remained robust and outbound demand picked up in the third quarter (October-December) to previous year levels. As a result, we achieved a record highest revenue passenger load factor of 79.5% in the third quarter (October to December).

As for alliances, Iberia joined in the trilateral joint business with British Airways and Finnair on routes between Japan and Europe on October 18, 2016, adding Iberia's hub airport Madrid to London and Helsinki to our network and bringing more connection options when traveling between Japan and Europe.

Japan Airlines was named the most punctual Asia-Pacific Major International Airline in both mainline and network categories for calendar year 2016 by FlightStats. This is the seventh time and the fifth consecutive year for JAL to receive an award as the best on-time Asia-Pacific carrier.

As a result of the above, capacity on international routes measured in Available Seat Kilometers (ASK) increased by 0.5% year-on-year, demand measured in Revenue Passenger Kilometers (RPK) increased by 0.3% year-on-year, the Load Factor (L/F) was 79.9% year-on-year (down 0.2 percentage points), and international passenger revenue was 314.4 billion yen, down 9.1% from the year before due to a decrease in fuel surcharge revenue and such.

Domestic Passenger

In domestic passenger operations, we deployed measures to stimulate demand and strived to strike a balance between supply and demand to increase profitability. As a result we achieved a record highest revenue passenger load factor of 71.9% in the third quarter (October to December).

On the product side, we completed revamping of all applicable aircraft to JAL SKY NEXT configured aircraft, which was first introduced in May 2014. To enable as many passengers to experience inflight Wi-Fi service available on JAL SKY NEXT-operated flights, we conducted a "15 minutes for free campaign" (*) on all flights, and also increased free video programs. In these ways and more, we are doing our best to deliver a comfortable and enjoyable travel experience.

(*) JAL will upgrade free inflight internet campaign on select domestic flights from February 1 through August 31, 2017.

We also started a new service called Dokokani Mile (traveling somewhere with mileage) from December 2016, Japan's first-ever domestic award ticket and a co-creation innovation by JAL and Nomura Research Institute. The service concept of "traveling somewhere with mileage and leaving the destination up to JAL" aims to create new demand, bring them to local areas, and boost air travel in Japan by offering domestic award tickets for less than half miles required than usual.

As a result of the above, capacity on domestic routes measured in Available Seat Kilometers (ASK) decreased by 1.6% year-on-year, demand measured in Revenue Passenger Kilometers (RPK) increased by 0.3% year-on-year, the Load Factor (L/F) was 69.3% year-on-year (up 1.3 points), and domestic passenger revenue came to 380.8 billion yen, down 0.9% from the year before.

International and Domestic Cargo

In international cargo operations, as market demand picked up from the July-September period and continued to grow, we worked on capturing robust demand in an effort to maximize revenue. Third-quarter cargo volume measured in Revenue Cargo Ton Kilometers (RCTK) rose 6.7% year-on-year. However, revenue fell 25.0% year-on-year to 31.8 billion yen, weighed down by lower fuel surcharge revenue, lower foreign-currency-denominated cargo revenues caused by the strong yen, and lower cargo revenue in accordance with the revised settlement method.

In domestic cargo operations, signs of recovery were observed in the October-December period, but shifts to surface transport and a drop in perishable shipments caused by adverse weather pushed down cargo volume measured in Revenue Cargo Ton Kilometers (RCTK) to 2.5% year-on-year, and domestic cargo revenue fell 4.8% year-on-year to 17.1 billion yen.

(3) JAL Group Consolidated Financial Position

	FY2015 As of March 31, 2016	The Third Quarter of FY2016 As of December 31, 2016	Difference
Total Assets (billion yen)	1,578.9	1,625.3	+ 46.3
Net Assets (billion yen)	870.5	953.4	+ 82.8
Equity Ratio *1(%)	53.4	56.8	+ 3.4 points
Interest-bearing Debt (billion yen)	92.6	96.2	+ 3.6
Debt/Equity Ratio *2	0.1	0.1	- 0.0

Figures are rounded down to the nearest tenth of a billion yen while percentages are rounded off to the first decimal place.

Note:

1. Shareholders' equity is total net assets excluding minority interests.

2. Debt-to-equity ratio is interest-bearing debt divided by shareholders equity.

(4) Consolidated Financial Forecast for the Fiscal Year Ending March 31, 2017

The consolidated earnings forecast remains the same as the full-year forecast announced in "Consolidated Financial Results for the Six Months Ended September 30, 2016" on October 31, 2016.

Unit: Billions of yen	Operating Revenues	Operating Income	Ordinary Income	Net Income attributable to owners of the parent
Forecast for the full fiscal year ending March 31, 2017	1,280.0	170.0	163.0	161.0

(5) Dividend Policy

We intend to pay 25% of profit attributable to owners of the parent after adjusting income tax deferred to our shareholders as dividends. According to our full-year consolidated earnings forecast, we expect to pay a year-end dividend of 92.00 yen per share.

	Dividends per Share
	Fiscal Year End	Total
Fiscal Year 2016	92.00 yen	92.00 yen
Fiscal Year 2015	120.00 yen	120.00 yen