JAPAN AIRLINES

PRESS RELEASES

  • July 31, 2019

JAL Group Announces Consolidated Financial Results for First Quarter of Fiscal Year 2019

The JAL Group (JAL) today announced the consolidated financial results for the First Quarter of FY2019.

To summarize the business environment in the First Quarter, based on rising uncertainties due to U.S.-China trade frictions and other economic factors, the Japanese economy was affected to an extent. At the same time, favorable conditions for inbound travel demand were seen in the industry where the number of international passengers remained high. For the domestic sector in Japan, the 10 day holiday period called Golden Week saw strong travel demand among the younger generation, as recent consumption patterns show a shift in value toward the experience gained in travel over goods in both international and domestic sectors. In these economic conditions, the total international passenger and cargo demand saw limited growth but the domestic sector was rather strong throughout the First Quarter.

Crude oil prices, which affect fuel costs and international passenger and international cargo revenues, continued to increase when compared to the previous fiscal year but prices started to drop in late May due to concerns on the world economy, as well as the ongoing trade frictions between the U.S. and China. However, fuel prices slightly rose back up in the middle of June, partly attributable to the tension between the U.S. and Iran, which left fuel price projections unclear. The JAL Group is taking action to mitigate the impact on its financial performance by utilizing hedging techniques and applying fuel surcharges on international flights, while monitoring the economic situation.

As a result, the operating revenue for the First Quarter increased 4.0% year over year to 355.7 billion yen, while operating expenses increased 5.5% year over year to 334.6 billion yen. The operating profit decreased 15.6% year over year to 21.0 billion yen and ordinary profit decreased 7.9% from the previous year to 21.2 billion yen. The net profit attributable to owners of the parent was 11.9 billion yen, down 32.1% from the previous year.

1. JAL Group Consolidated Results for the Period April 1, 2019 - June 30, 2019

Unit: Billions of yen

  Fiscal Year 2018

(4/1/2018 – 6/30/2018)

Fiscal Year 2019

(4/1/2019 – 6/30/2019)

Difference

vs. Prior Year

% vs. Prior Year

Operating Revenue

342.1

355.7

+ 13.6

104.0

International Passenger

Domestic Passenger

Cargo (Inter/Dom)/Mail

Other

124.8

117.2

24.2

75.7

127.8

123.9

22.7

81.1

+ 3.0

+ 6.6

- 1.4

+ 5.3

102.4

105.7

93.9

107.1

Operating Expense

317.1

334.6

(331.3)

+ 17.5

(+ 14.1)

105.5

(104.5%)

Operating Profit

24.9

21.0

(24.4)

- 3.8

(- 0.5)

84.4

(97.9%)

Operating Profit Margin

7.3%

5.9%

(6.9%)

- 1.4 point

(- 0.4 point)

-

 

Ordinary Profit

23.1

21.2

- 1.8

92.1

Profit attributable to owners of parent

17.5

11.9

- 5.6

67.9

Figures have been truncated and percentages are rounded off to the first decimal place.
Number in parentheses (  ) is based on previous depreciation method.

2. Air Transportation Segment

International Operations
In international passenger operations, business demand from Japan weakened as the global economic growth slowed down, including routes to North America. In addition, the supply-demand situation worsened on European routes due to a surplus in the industry. However, inbound business demand has remained strong for North American routes and saw a slight recovery for routes in China and Southeast Asia. In addition to the new Narita=Seattle route, launched on March 31, 2019, the company changed its flight frequencies on some routes and optimized its cabin configuration.

Based on key initiatives, the available seat kilometers (ASK) increased by 2.9% year over year, passenger traffic grew by 0.5% year over year, revenue passenger kilometers (RPK) rose by 1.4 % year over year, and the load factor reached 80.2%.

For partnerships, JAL continued to strengthen and expanded agreements with leading airlines. JAL announced the expansion of codeshare flights with Garuda Indonesia (from May 8, 2019), Cathay Dragon (from May 29, 2019) and Xiamen Airlines (from June 3, 2019). To promote joint businesses with partner airlines, JAL disclosed an application for antitrust immunity with Malaysia Airlines Berhad on May 27, 2019.

On the product and service front, JAL revamped its First Class lounge at Narita Airport on April 1, 2019, improving its meals and overall lounge experience. For the Hawaiian routes, the company introduced the ARASHI HAWAII JET, featuring a livery of a famous Japanese pop idol group, which has been in operation from May 22, 2019. JAL and JTB also partnered up to provide improved package tours from local cities in Japan to strengthen its competitiveness.

As a result of the above, international passenger revenue was 127.8 billion yen, up 2.4% year over year.

In international cargo operations, due to the trade frictions between the U.S. and China, cargo revenue decreased by 3.3% year over year.

Domestic Operations
In domestic passenger operations, both leisure and business demand continued to remain strong, especially to Okinawa and Hokkaido. In addition to JAL`s competitive products and services, extra flights on high-demand routes, such as to Okinawa were operated during the peak season.

Based on key initiatives, available seat kilometers (ASK) increased by 0.7%, passenger traffic grew by 4.3% year over year, revenue passenger kilometers (RPK) rose by 5.5% and the load factor reached 71.9%.

For route operations, JAL agreed on a codeshare partnership with Amakusa Airlines on the Kumamoto=Osaka (Itami) route. Codeshare flights will start from August 1 and reservations have been open since June 1. JAL aims to revitalize the Amakusa area by encouraging more travel in these areas.

For the product and service front, JAL decided to accept reservations 330 days prior to departure starting from September 10, 2019. Also, the company renewed its website for domestic reservations and purchases on May 14, improving the reservation flow and added functions for smartphone users.

As a result of the above, domestic passenger revenue was 123.9 billion yen, up 5.7% year over year.

3. JAL Group Consolidated Financial Position

 

FY2018
As of March 31, 2019

FY2019
As of June 30, 2019

Difference

Total Assets (billion yen)

2,030.3

2,016.8

- 13.5

Net Assets (billion yen)

1,200.1

1,179.1

- 20.9

Equity Ratio (%) 1

57.4

56.8

- 0.6 point

Interest-bearing Debt (billion yen)

142.3

142.0

- 0.3

Debt/Equity Ratio 2

0.1x

0.1x

+ 0.0x

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, 2020

Unit: Billions of yen

Operating   Revenue

Operating Profit

Ordinary  Profit

Profit attributable to owners of the parent

Entire Fiscal Year

1,563.0

170.0
(180.0 *)

171.0

114.0

Note The forecast above represents estimates of future results based on the information available at the time of release and the company’s reasonable judgment on this information. They are inherently subject to risks which may result in a divergence in the actual result from the forecasts and estimates contained herein.

* Number is based on previous depreciation method. The new depreciation method has changed in which assets are classified to each component, for example, based on economic lives of components, such as aircraft fuselage, engines and cabin interior, and each component is depreciated separately.
Dividend Per Share

 

2nd Quarter End

Fiscal Year End

Total

FY2019 (Forecast)

55.0 yen

55.0 yen

110.0 yen

Note Revisions to the most recently disclosed dividend forecast: None

 

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