Japan Airlines financial results announcement

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JAL announced its financial results for the first quarter of the fiscal year 2018 – the period from April 1 to June 30, 2018.
Here is a summary of the message delivered by Senior Managing Executive Officer of Finance and Accounting of Japan Airlines.

I will explain our consolidated financial results for the first three months of the fiscal year ending March 31, 2019.

Operating revenue for this period increased 8.7% or 27.2 billion yen year over year to 342.1 billion yen. Operating expenses increased 9.3% or 27.1 billion yen year over year. There was an increase of 10 billion yen in fuel costs because of the impact in market conditions. There was also the increase of 4 billion yen with expenses concerning the service launch for our passenger service system but regarding the other expenses, it was in line with normal increase in supply and demand.

As a result, we were able to balance out the increase in expenses with an increase in revenue. The operating profits increased 0.7% or 100 million yen year over year to 24.9 billion yen. Also the operating profit percentage was 7.3%. Net profits for the first quarter decreased 10.3% or 17.5 billion yen year over year due to the increase in losses relating to the disposal of aircrafts, etc.

The market conditions showed an increase exceeding 30% year over year for both Singapore kerosene and Dubai crude oil. The exchange rate between US dollars and the Japanese yen trended toward a strong yen.

Next, I will explain the international passenger conditions.

The load factor showed a 10.5% year over year increase. Through revising seat allocation to meet demand and expanded supply, and by proactively adopting measures to meet a healthy demand, both the inbound and outbound flights increased substantially. Against an increase in available seat kilometers of 7.3%, revenue passenger kilometers increased by 8.8%, increasing passenger load factor to 81.3%, an increase of 1.1 points year over year. It was our best first quarter ever.

Regarding destinations, the US-European routes increased steadily while the China routes showed substantial increase.

Passenger unit revenue increased 7.0%. A large reason for this increase stems from the change in revenue allocation from airline tickets from both international and domestic routes. Passenger unit revenue increase roughly 1.2% in the international routes. Despite there being an increase in the level of fuel surcharge, we saw a favorable trend in business class use, while also realizing some positive effects from the revision in yield management practices through utilizing the new passenger service system. With the above results, international passenger revenue increased 18.2% year over year to 124.8 billion yen.

The number of passengers on our domestic flights increased 2.8% year over year with the increase in individual demand. The load factor increased 68.7%, up 0.3 points year over year. In line with international passengers, it was our best first quarter ever.

Also, the passenger unit revenue showed a decrease of 1.8%. The reason for this decrease is due to the change, from this fiscal year, in the proportional revenue allocation between international and domestic airline tickets for international and domestic flight segments. Domestic flights showed a decrease of 1.2%, but if we disregard the impact of this allocation change, the change in passenger unit revenue was almost the same level as the previous year, showing a decrease of 0.6%.

The reason for the downturn is the competition with other airline carriers and the fare demand in advance purchase fares, which have trended to grow considerably more than the demand for high unit revenue fares. But we were able to capture new demands exceeding the supply growth. As a result, the domestic passenger revenue showed an increase of 1.0% year over year, or 117.2 billion yen.

Furthermore, revenue in cargo and mail operations increased 15.1%, a year over year increase in revenue of 3.1 billion yen to 24.2 billion yen. The significant growth in international cargo revenue was due to favorable trends in freight movement for goods in international cargo, an increase in per unit revenue, and fuel surcharge revenue.

We have kept the earning forecast as is, but comparing our plans with the first quarter results, we were able to start off the fiscal year successfully with an upturn in our operating profits of approximately 2.5 billion yen. From the second quarter, we will strive to steadily implement and achieve our plans for the rest of the fiscal year and show an increase in revenue and profits.

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