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Apr 30, 2013
JAL Group Announces Medium Term Management plan Rolling Plan 2013

FY2012: A year that our ability to execute the Medium Term Management Plan was tested

FY2013: A year that the true value of our Medium Term Management Plan will be evaluated

FY2014-FY2016: A period to achieve Management Targets in the Medium Term Management Plan, and start new growth


TOKYO April 30, 2013:
JAL Group today announces its Medium Term Management Plan Rolling Plan 2013.(year ending March 31,2014)


The JAL Group must humbly reflect and learn from its mistakes of the past. While making well-thought-out plans, we had managed the company without sufficiently reviewing the progress or achievement level of our plans, or analyzing or reviewing the results.


We decide to establish the Medium Term Management Plan Rolling Plan because of implementing the JAL Group Medium Term Management Plan for Fiscal Years 2012-2016, we feel it is important to constantly check what measures are in force to reach our targets, identify those measures that need to be improved, and explain to our staff, our customers, our shareholders, and all stakeholders that we are working earnestly to achieve our targets.

To accomplish this, we have confirmed that, on the basis of the current operating environment, the Management Targets as stated in our Medium Term Management Plan will remain the same.

And with the aim;

      to enable JAL Group staff to reaffirm the direction we are heading for, and to understand our current positioning; and

      to demonstrate to customers, shareholders and all stakeholders that the JAL Group intends keeps its promises,

we have drawn up the Medium Term Management Plan Rolling Plan 2013.


Review and Policy of Future Action: We will humbly reflect on the past year, identify those measures that need to be improved to achieve our targets in the remaining four years, correct them, and execute them. By achieving our Management Targets, we aim to realize the JAL Group Corporate Policy.


JAL Group Corporate Policy

The JAL Group will;

Pursue the material and intellectual growth of all our employees;

Deliver unparalleled service to our customers; and

Increase corporate value and contribute to the betterment of society.


Progress on Differentiating JAL to Survive Future Competition


As various changes in the competitive environment are expected during the period covered by the Medium Term Management Plan, we will enhance the JAL Brand and clearly differentiate JAL from other airlines in three areas; “route network”, “products and services” and “cost competitiveness” in order to provide services that deliver a fresh and enjoyable travel experience to passengers on every journey, and subsequently, become the world’s most preferred airline group.

1.       Enhancement of JAL Brand


Through the combined efforts of employees, we will maintain flight safety, improve the quality of our products and services, typified by JAL’s unique inflight Internet service on international flights and new seats, achieve the world’s top on-time performance, etc., in order to provide customers with unparalleled service. We will continue to enhance the JAL Brand as a full-service carrier to clearly distinguish itself from Low Cost Carriers (LCC).

2.       Route network, products and services


In FY2012, JAL launched nonstop services to from Narita to Boston and San Diego, increased the number of flights from Narita to Singapore and also from Narita to Delhi, and improved our mid/long haul route network. We also improved our service lineup, such as revamping seats on our 777-300s, renewing in-flight meals under a brand new concept, and providing the only in-flight Internet service in Japan. Domestically, JAL resumed services between Fukuoka
Hanamaki and NiigataSapporo, and improved its regional route network.


The suspension of 787 operations since January 16, 2013 has led to the postponement of the launch of Helsinki flights and change of aircraft on Asian routes, causing delays in our initial business developments. We will continue to intensively place our aircraft on
mid/long haul routes (Europe, North America, and Southeast Asia), and improve our route network, products and services.


On domestic routes, we launched new routes and increased flights, centering around Haneda and Itami airports to build a highly convenient network for our customers.

3.       Cost Competitiveness


We are maintaining measures to dramatically improve cost efficiency, on the conditions of protecting safety and maintaining and enhancing quality. In FY2012, we achieved a cost-efficiency improvement of 10 billion yen against our Medium Term Management Plan target of 50 billion yen. We will continue to create and enforce measures to achieve our target. These measures will be designed through innovative ideas, unbound by conventional ways of thinking. We will do our utmost to build a cost structure that is unshakeable and resilient to any changes in the external environment, such as fluctuations in exchange rates.


We have approached our goal of distinguishing JAL and setting it apart from other airlines in five areas; “safety initiatives, route network, products and services, Group management, and human resources development.” [JAL Medium Term Management Plan Rolling Plan 2013]& [JAL Medium Term Management Plan Rolling Plan 2013(Summary)] provide a “Review” and “Future Action” concerning these issues.

Progress of Management Targets

1. JAL recognizes that “flight safety” is the basis of the existence of the JAL Group and our social responsibility. As a leading company in safety in the transportation sector, JAL will maintain the highest standards of safety.

Though we did our utmost to achieve the targets of zero aircraft accidents and zero serious incidents, regrettably, one aircraft accident and four serious incidents were registered in FY2012. We apologize sincerely to passengers onboard and persons affected for resultant concerns and inconvenience. Taking this situation seriously, we will investigate into these incidents, rigidly enforce preventive measures, and strive to maintain flight safety so that customers can rely on us and fly with peace of mind.


2. JAL will provide unparalleled services to continuously deliver a fresh and enjoyable travel experiences for customers. We aim to achieve “Customer Satisfaction No. 1” by FY2016.

By improving our route network, products and services, we have narrowed the gap with higher ranking airlines in the JCSI survey. However, consistent efforts are necessary to achieve our target of No. 1 in customer satisfaction. We will analyze our results in FY2012, and meet the challenge of developing new services with speed.


 MID rolling fig1.JPG


3. JAL aims to establish sufficient profitability and financial stability levels capable of absorbing the impact of economic fluctuations and risk events by achieving “10% or above operating margin for 5 consecutive years and 50% or above equity ratio in FY2016”.


(FY2012 results)

As a result of a revenue increase, particularly international passenger revenue, and cost reductions through productivity improvement, etc., we achieved an operating profit of 195.2 billion yen (+57.2 billion yen vs the Plan) and an operating profit margin of 15.8%.

As a result, equity was 565 billion yen (+97 billion yen vs the Plan), and the equity ratio was 46.4% as of the end of FY2012.


(FY2013 Plan)

While striving to increase revenue through competitiveness improvement, our ability to improve profitability could be impacted by major cost increasing elements, including rising fuel costs due to fluctuating exchange rates, compounded by the suspension of 787 operations.

Our financial goals are an operating profit of 140 billion yen (same as the Plan), and an operating profit margin of 11.0%.

In addition, we aim to achieve equity of 644 billion yen (+75 billion yen vs the Plan), and an equity ratio of 50.6% as of the end of FY2013.


We are close to reaching the equity ratio target of 50%. Our aim is to proactively and continuously pay dividends to our shareholders while at the same time retaining the level of earnings that permit us to make investments for our future growth and in response to changes in the business environment, as well as to build a strong financial foundation. We will continue to manage our business with emphasis on profitability, and do our best to share the fruits of corporate growth with our shareholders.


Summary of the Financial Results/Plan


UnitBillions of  Yen

FY2012

FY2013

Operating Revenue

1,238.8

1,272.0

Operating Expense

1,043.5

1,132.0

Operating Profit

195.2

140.0

Operating Profit Margin

15.8%

11.0%

Ordinary Income

185.8

127.0

Net Income

171.6

118.0

Equity Ratio

46.4%

50.6%


Note
The figures in the plan stated in section 3-5 do not take into consideration any major change in fuel (Singapore kerosene) or FX assumptions stated in 3-2.Fuel and Foreign Exchange Assumptions, or any drastic change in demand due to terrorism, war, Catastrophes, etc.

Positioning of Each Fiscal Year

On completing the first year of fiscal years 2012 through 2016 of the Medium Term Management Plan, we have defined the positioning of each fiscal year as below.


■FY2012

A year that our ability to execute the Medium Term Management Plan was tested

Drawing on lessons learned in the past owing to nonperformance of measures or omission of analyses, we put forth concerted efforts group-wide to demonstrate that JAL has changed and has become a company that keeps its promises to its stakeholders.

As shown in our report of financial results for FY2012, we achieved our initial targets. However, this is only the first year of our five-year Medium Term Management Plan, and from here, it is important that we review the process that leads to results and utilize our findings in future actions, without being complacent with the status quo.


■FY2013

A year that the true value of our Medium Term Management Plan will be evaluated

FY2013 will be a year in which we will be tested as to whether we can overcome apparent risks at the beginning of the fiscal year (e.g. suspended 787 operations, currency fluctuations), and establish a high profitability structure.


We will enhance human services, from reservations and sales to airports and in-flight services, without overdependence on hardware (e.g. aircraft, seats, airport facilities) or software (e.g. in-flight entertainment, in-flight meals), and provide unparalleled services to continuously deliver a fresh and enjoyable travel experiences for customers in order to keep high profitability and show that the Medium Term Management Plan is JAL’s firm promise with its stakeholders.


■FY2014-FY2016

A period to achieve Management Targets in the Medium Term Management Plan, and start new growth

The Medium Term Management Plan is subtitled “To the next growth stage on establishing a high profitability structure.”

While aiming to establish a high profitability structure in FY2012-FY2013, the latter half of the Medium Term Management Plan, will be a next stage for achieving sustainable growth.

This will be a period for us to steadily achieve the Management Targets in the Medium Term Management Plan, while leveraging business opportunities, especially the increase of international departure and arrival slots at Haneda Airport, enforce measures for the next growth stage under the keywords “autonomous, challenge and speed”, and build a company that survives future competition and develops sustainably.


Please refer to the attached
[JAL Medium Term Management Plan Rolling Plan 2013]& [JAL Medium Term Management Plan Rolling Plan 2013(Summary)] for the details. JAL will do announcement as soon as the starting date and the details of the new networks, products and services have been confirmed.

 

Medium Term Management plan Rolling Plan 2013.pdf 

 

Medium Term Management plan Rolling Plan 2013(summary).pdf

 

*Please see the attached file.
20130430 Medium Term Management plan Rolling Plan 2013.pdf 

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