Annual Report Japan Airlines Corporation at a Glance Consolidated Financial Highlights Consolidated Operating Highlights Message from the Management Interview with the Group CEO Dream Skyward II: Stepping-stone to become "the world' s No.1 airline group" Review of Operations Corporate Social Responsibility (CSR) Activities Management's Review and Analysis of Financial Position Consolidated Balance Sheets Consolidated Statements of Operations Consolidated Statements of Stockholder' Equity (Note8) Consolidated Statements of Cash Flows Notes to Consolidated Financial Statements Report of Independent Auditors Consolidated Subsidiaries JAL and Its Subsidiaries and Affiliates Directory JAL Group Route Network Board of Directors Investor Information

Dream Skyward II: Stepping-stone to become “the world’s No.1 airline group”

Aiming for a V-shaped recovery now that full integration has been accomplished

Formulation of the FY2004-06 Medium-Term Business Plan for maximizing corporate value

In March 2004 the JAL Group took an additional step to add depth to its FY2003-05 Medium-Term Business Plan, which was formulated in March 2003 with the aim of improving profitability and enhancing the soundness of the Group’s financial condition. This was the formulation of a new plan: the JAL Group FY2004-06 Medium-Term Business Plan. Today the JAL Group is taking maximum advantage of the effects of the recently completed business integration, proceeding step-by-step along the path towards being the world’s No.1 airline group in terms of service quality and business volume taken together.

In the 2003 fiscal year, external factors such as the Iraq conflict and SARS had a significantly adverse impact on demand and revenues, compelling the Company to post a net loss. The harsh environment for the airline industry is likely to persist from fiscal 2004 onwards, but as we move into an age of international exchange and interaction, there can be no doubt that the airline industry will continue to grow.

Approximately a year and a half after the initial integration of JAL and JAS, the JAL Group completed the integration process in April 2004 after making successful progress with the necessary operations, including the integration of flight names and information systems and of airport counters. In addition to the structural reform measures already being implemented, there is projected to be an integration effect of ¥68 billion in fiscal 2005, and that effect is projected to increase still further from fiscal 2006 onwards, aided by a reduction in the supplementary costs of the integration. The FY2004-06 Medium-Term Business Plan was drawn up with the goal of maximizing corporate value by positioning the Group to enjoy the benefits of the complete integration to the maximum extent. We will increase the soundness of the Company’s financial condition, and achieve higher profitability, aiming for a V-shaped recovery in fiscal 2006 with consolidated operating income of ¥145 billion and ROE of at least 10%.

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