JAL Group Announces Consolidated Financial Results for the First Three Quarters of Fiscal Year 2012

Published on : Monday, February 4, 2013

The JAL Group (JAL) announced today, the consolidated financial results for the first three quarters of fiscal year 2012 (year ending March 31, 2013).

During this nine-month reporting period, post-quake restoration demand continued to drive the Japanese economy; however, the economic rebound was blunted by a slowdown in the global economy. Recently, signs of a business recovery were seen following the change of administration in Japan, such as the weakening of the yen, and a rise in stock prices. On the other hand, the third quarter encountered risks of possible economic stagnation due to the economic slowdown in Europe, China, etc., deflation in Japan, strained diplomatic relations due to territorial issues, and such, causing the outlook to remain opaque.

Under these economic conditions, international travel demand to Europe, North America and Southeast Asia have been positive and on the domestic front, response to newly established year-end special fares meant to boost demand have been favorable, thus enabling growth in sales. In the face of fuel costs, increase in expenses used in strengthening product and service competitiveness among others, JAL strived to raise profit consciousness through the divisional profitability accounting system, and achieve greater business effectiveness, founded on its strong commitment to ensuring flight safety, with the aim to achieve the targets in the Mid-Term Management Plan.

Consequently, consolidated operating revenue during the reporting period increased year-on-year by 3.6% to 942.0 billion yen, while operating expense increased 4.9% to 783.8 billion yen. Operating income at 158.1 billion yen was 2.2% less than last year, and ordinary income declined 1.2% to 154.2 billion yen. Total net income of 140.6 billion yen for the three quarters represents a 3.7% decline from last year.

In strong efforts to maximize revenue, JAL increased capacity with the opening of new routes between Tokyo (Narita) and Boston on April 22 and San Diego on December 2, 2012, in addition to increasing flight frequency on the Narita=New Delhi route (from five to seven weekly flights) and Narita=Singapore route (from seven to 14 weekly flights) at the end of October. On the other hand, responding to the decline in demand on China routes owing to territorial issues, JAL swiftly adjusted down frequency of flights to minimize impact on revenue. In all, this resulted in international passenger capacity measured in Available Seat Kilometer (ASK) to be 4.1% up from previous year.

Travel demand to Europe, North America and South East Asia has been positive against the backdrop of a strong yen rate. Leveraging the sales network of joint business partner American Airlines, JAL was also able to attract customers expansively from Asia and North America. Furthermore, the numbers of individual-travelers and inbound-Japan tour groups on China routes have shown signs of recovery since November and demand in terms of Revenue Passenger Kilometer (RPK) rose 15.2% versus last year while load factors went up 7.3 percentage points to 76.2%.

Both members of the oneworld member airline, JAL and British Airways started a joint business on October 1, 2012 to provide better links between Japan and Europe and to create more customer benefits in terms of products and services, such as offering codeshare flights between Tokyo (Haneda and Narita) and London (Heathrow), and selling aligned fares. JAL and Malaysia Airlines, which joined the same alliance on February 1, 2013, began a codeshare partnership in July last year between Japan and Asia. This partnership will benefit customers by offering smoother connections between Asia and the Middle East via Malaysia Airlines’ primary hub in Kuala Lumpur, and will benefit both carriers as well with business opportunities to tap new demand.

JAL began offering JAL SKY Wi-Fi, an inflight Wi-Fi connection service that supports passengers’ own smart phones, computers and other wireless LAN devices, between Narita and New York, Chicago, Los Angeles, and Jakarta. As JAL’s original service, it is used by many passengers, and will be progressively expanded to other routes. To increase product and service competitiveness, from January 2013, new seats and new services were introduced under the concept of “service a notch higher in all Classes” on flights between Narita and London. As a result, international passenger revenue grew 6.7% to 308.3 billion yen.

Domestic Passenger
In domestic route operations, JAL increased flights and used larger aircraft mainly on Haneda outbound routes and on Tohoku routes where post-quake restoration demand was strong and where passenger demand resurged after the post-quake decline the year before. The network was also expanded by the resumption of scheduled flights between Fukuoka=Hanamaki and Sapporo=Niigata, while the number of daily flights on the Haneda=Izumo, Sapporo=Sendai, andFukuoka=Miyazaki routes were adjusted accordingly to changes in seasonal demand. As such, domestic capacity, based on ASK, was 4.6% higher than previous year.
In order to boost demand, a new discount was added to Sakitoku and Super Sakitoku fares, which offers greater savings by allowing ticket sales from 55 days before the day of departure. Sales of Sakitoku and Super Sakitoku fares were extended to the year-end period (December 29~31, 2012) for the first time to enable as many customers as possible to enjoy savings even during this peak travel period for returning to their hometowns or leisure traveling. RPK is 5.0% up from the same period last year and load factor increased 0.2 percentage points to 63.5%.

Enhancing its product and service offerings, JAL introduced the popular JAL First Class service on more flights and from August 2012, also expanded the service on the Haneda=Okinawa route. Class J seats which are highly commended by corporate clients were also offered on increased number of flights to improve convenience and comfort. Thus, revenue from domestic operations in the nine months to December 31, 2012, grew 6.2 billion yen (1.7%) to 373.4 billion yen.

International and Domestic Cargo
International cargo operations experienced sluggish inbound and outbound overall demand, but sales sections responded flexibly and found ways to maximize revenue by exploring new customer-avenues, improving service to existing customers, and acquiring transit cargo. In sales activities, Haneda airport’s convenient location was optimized to aggressively attract shipment of perishables and Express cargo, and connection services between international and domestic flights at Haneda were expanded to boost shipments to and from regional Japan.

Domestic cargo operations encountered sluggish demand from the second-half of the fiscal year, but through efforts in strengthening customer relations, revenue was successfully maintained. In December, when cargo demand has a tendency to increase, JAL operated nine chartered cargo flights between Haneda and Okinawa to meet the customers’ needs.

The volume of international and domestic cargo transported during the reporting period in revenue-cargo-ton-kilometer (RCTK) terms thus increased year-on-year by 4.8% with revenue of 57.5 billion yen.

Source:- Jal

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