JAPAN: JAL flies back to profits in FY07

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Japan Airlines Group announced an impressive earnings turnaround to a net profit of ¥16.9 billion (US$162.1 million) for the fiscal year ended 31 March from a loss of ¥16.2 billion a year earlier. Th e carrier cited a strategy of focusing on premium strategies on its international operation and route restructuring on its domestic network for the turnaround.

International cargo revenue was down 1.2 per cent to ¥188.2 billion year-on-year with an associated 3.1 per cent decrease in revenue cargo ton kilometres. This was largely due to the retirement of fi ve classictype B747 freighters and the replacement with smaller B767 freighters.

JAL noted that while exports to the US decreased from the previous year, exports to China, Europe and East Europe were either steady or on the rise, which helped off set the impact of the US economic slowdown.

For the first three months of 2008, JAL reported its cargo business was down one per cent, with international freight traffic down 4.6 per cent in March alone.

International passenger demand bolstered by "premium strategies" launched over the past two years spearheaded the growth of international revenue, up 4 per cent to ¥754.3 billion.

This included a focus on high-profit, high-growth routes and enhancing the role of its low-overhead international subsidiary JALways.

JAL increased frequencies to China, India, Russia and Vietnam and also raised its profile through a greater commitment to the Oneworld alliance, revamping lounges and check-in areas at Tokyo Narita’s Terminal 2 and introducing JAL Premium Economy and first class on some domestic routes.

Also key was a fleet rationalisation plan through a shift to twin-engine aircraft and retirement of older 747s and MD-81s, with record high fuel prices accelerating the disposal of fi ve 747-200Fs that will be replaced by 767-300Fs on routes to China, Vietnam and Indonesia.

Net profit would have been much higher but for a series of extraordinary losses resulting from special early retirement programs, funds set aside for antitrust investigations by US and EU authorities – which saw the carrier fined US$110 million – and temporary depreciation costs.