REVIEW OF PERFORMANCE
World economic recovery was the keynote for fiscal 2004, as the U.S. and Chinese economies expanded and Europe showed signs of recovery. The economic situation in Japan was marked by a substantial improvement in corporate profits, but sluggish consumer spending held the recovery to a modest level. The economic expansion in the U.S. and China led to robust international cargo demand. International passenger traffic, which had been negatively impacted by last year's string of external events, including the SARS outbreak, also showed a steady recovery. Overall, however, business conditions remained difficult, as typhoons battered domestic passenger travel demand, and fuel prices reached historic levels. The Group responded with profitability improvement programs which resulted in a 10.3% growth in net consolidated sales year-on-year, to ¥2,129.8 billion, operating income of ¥56.1 billion, and net income of ¥30.0 billion.

FUTURE CHALLENGES
The JAL Group recently issued its 2005-2007 Medium-Term Business Plan, which sets forth the objective of bringing together holding company and operating companies into a single entity at an early date. The streamlined management structure will carry out fundamental reforms of our operations and cost structure, leading to a more robust enterprise, one which can respond flexibly to the rapid changes in international business conditions.
  We also wish to take this opportunity to express our deepest apologies to our stockholders and investors for the serious concern caused by the order for operational improvements and Administrative Warnings taken vis-à-vis the JAL Group by the Japan Civil Aviation Bureau (JCAB) of the Ministry of Land, Infrastructure and Transport in March of this year, in response to a series of safety problems that occurred. JAL Group is entrusted with the lives and property of many customers. Flight safety is the basis for our existence and our social responsibility. In the future, those of us in management will exercise strong, fully committed leadership, taking the lead in our efforts to rebuild safety systems across the Group, devoting our utmost efforts to restoring trust from every segment of society.
  Our approach to maximizing corporate value, predicated on a relentless commitment to flight safety, is to push forward with a high-quality service which appeals to our customers, and with structural reforms focusing on simplification, in pursuit of our goal of becoming the world's No. 1 airline group in terms of both service quality and business volume.
  We appreciate the continued support of our stockholders and investors.

Representative Director
Toshiyuki Shinmachi,
Group CEO and President

PROFILE
Joined Japan Airlines in 1965, serving as Managing Director and Senior Managing Director, and later Vice President, JAL Systems. Elected President of Japan Airlines in June, 2004. Assumed position of Group CEO and President in April, 2005.

Toshiyuki Shinmachi