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JAL Group Announces Consolidated Financial Results for Second Quarter of Fiscal Year 2021

The JAL Group today announced the consolidated financial results for the second quarter of FY2021.

1) JAL Group Consolidated results for the Period April 1, 2021 – September 30, 2021

JAL Group’s business environments in the Second Quarter of FY2021, the prolonged COVID-19 still made the international passenger demand very limited as before yet, and the
domestic passenger demand also showed a slow recovery. Overall, the passenger demand
remained to be in a tough circumstance. On the other hand, the air cargo demand remained to be in good situations due to an excessive-demand caused by the decrease of passenger
flight capacity and the strong air cargo demands especially on international routes. Amid this
business environment, securing safety for our passengers and employees, which is our
Group’s basic foundation, as the first priority, the JAL group has been seeking to fulfill its
responsibilities by sustaining both international and domestic air transport network for
passengers who needs to travel.

The revenue for the Second Quarter was 290.6 billion yen an increase of 95.8 billion yen,
49.2% from the same period in the previous year and the operating expenses were 442.9
billion yen, an increase of 23.4 billion yen, 5.6% from the same period in the previous year.
EBIT loss was 151.8 billion yen, a decrease of 72.1 billion yen from 223.9 billion yen in the
same period last year, and the loss attributable to owners of the parent was 104.9 billion yen, an improvement of 56.2 billion yen from 161.2 billion yen in the same period in the previous year.

International passenger revenue was 29.8 billion yen, (225.0% up from the same period in
the previous year). and domestic passenger revenue was 89.9 billion yen, (29.1% up from
the same period in the previous year). Cargo mail revenue was 98.3 billion yen, an increase of 84.0% compared to the same period in the previous year.

Details of the consolidated financial results are as follows (Including LCC):
(1) Other Revenue = Travel Agency, Mileage, Ground Handling or etc.
(2) Others = Gain or Loss on Sales of Flight Equipment, Other Revenue, Share of Profit or Loss of Investment and Income/Expenses from Investment
(3) EBITDA Margin = EBITDA / Revenue  EBITDA= EBIT + Depreciation

2) JAL Group Summary of Consolidated Statement of Financial Position and Cash Flow

-The interest-bearing debts is 701.2 billion yen. Repayment within one year including lease payments is just 66.2 billion yen, while sufficient long-term funds are secured.

-Equity ratio as 39.3%, net D/E ratio still remains low at 0.4x in spite of the increase of the interest-bearing debts.

-Operating cash flow significantly improved from negative 149.9 billion yen in the previous fiscal year to negative 95.8 billion yen this fiscal year.

リリースQ2.PNG

 

3) Second Quarter of FY2021 and recent initiatives

Safety and Secure initiatives
- For comfort measures, we have been working on various measures. We have implemented “JAL FLY SAFE” ,a thorough countermeasure against infectious diseases. For better hygiene and clean environments, we have completed a “contactless” touch-screen check-in kiosks project at all of 42 domestic airports. and sustained antiviral and antibacterial coating to our flights and all of our domestic airports.

-Also, contactless “JAL SMART AIRPORT” has expanded to all of the airport facilities at Haneda Airport and Sapporo (New Chitose) Airport. Okinawa Naha Airport introduced automated baggage check-in machines. Moreover, a new boarding procedure with facial recognition called “Face Express” has been in full operation for all flights at Haneda Airport and international flights at Narita International Airport. 

-Those measures were highly valued by SKYTRAX and newly-established “COVID-19 Excellence Award”, which is given to airlines with excellent prevention measures, was given to us, following the best rating by SKYTRAX in their COVID-19 Safety Rating and the highest Diamond rating by APEX in their “Health Safety Powered by SImpliFlying Audit” in the last year.

-In order to promote safe and comfort air travel in the post-COVID era, we started measures to provide benefits to those who present a vaccination certificate or a negative result certificate. 

Service and product improvement and new business expansion

-We introduced “Anytime Award Ticket” for domestic flights that enable our customers to make a booking with their miles even in a peak season.

ESG Management to achieve SDGs

-Jointly with All Nippon Airways (ANA), we developed a joint report on the promotion and viability of SAF toward CO2 net zero emissions by 2050.

-Started a sustainable project at newly selected World Heritage Amami islands.
Acted toward regional promotion and social issues solutions.

Expense

-We responded to the decrease of demand by making continuous efforts of reducing our capacity to minimize our operating cost, together with fixed cost restructuring by in-sourcing operations instead of outsourcing, reducing IT expenditure and reducing personnel cost including executives’ salaries and employees’ bonus cut.

-Actual fixed cost for 1st Half FY21 was 230.9 billion yen, reduction of 18.6 billion yen from 249.5 billion yen in the same period in the previous year.Q2.PNG                 Q2 Breakdown.png

Initiatives for liquidity at hand, Liquidity and cash burn

-We decided hybrid financing of about 350 billion yen in order to achieve an aggressive goal of securing investment funds in advance for sustainable growth in the post-COVID business environment and a defensive goal of maintaining or improving financial ability for further financial foundation improvement just in case of a further-prolonged COVID effect.

-Cash burn was limited to 14 billion yen per month in the 2nd Quarter. With the recovery in demand and cost reduction efforts, we expect cash-burn will diminish in the 3rd Quarter, and it turns positive in the 4th Quarter.

Q2 Cash Balance.PNG

4) Explanations of Forecast of Consolidated Financial Results

The prolonged COVID effect is making a future air passenger demand unclear yet, and solid international passenger demand recovery is expected to take some more time because border restrictions are not likely to be lifted soon mainly in Asian countries. Contrary, the current domestic passenger demand is steadily recovering from October with the lift of the declaration of the state of emergency, together with the decreasing number of new infection and patients in serious condition. Based on these business environments, we made certain assumptions on recovery of both domestic and international air passenger demands. In addition, we included into our assumptions further group-wide cost-cutting efforts and the current good cargo demand as well. Consequently, we disclose our consolidated financial performance forecast as follows: The full-year revenue will be 766 billion yen, the full-year EBIT will be a loss of 198 billion yen, and net loss attributable to owners of the parent will be 146 billion yen.

Please note the above forecasts may vary due to future COVID infection situations, border restrictions or recovery of international or domestic air passenger demands.

Q2 Full year Performance.PNG

5) Dividends

As the spread of COVID-19 still continues, air transport industry including ourselves is being affected
substantially. However, we believe it is our best interests to pursue liquidity at hand and financial robustness as our first priority.
Regrettably, we determined not to pay interim dividends at the Aug 3rd board meeting. We sincerely apologize to our shareholders and investors, and would like to ask for their understanding amid the very difficult situation that we are currently in.
For the forecast of the year-end dividends per share and the total dividends per share for the fiscal year ending March 2022, it will remain undetermined yet and will be decided later, depending on future COVID infection, recovery of domestic and international passenger demands and its impact or our future financial situations.

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