Annual Report Profile JAL Group Overview Consolidated Financial Highlights Consolidated Operating Highlights Message from the Group CEO Interview with the Group CEO Spreading New Wings of Trust Review of Operations Fundamental Policies and Actions Regarding Corporate Governance 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

Spreading New Wings of Trust Becoming the world’s No.1 airline group in terms of both service quality and business volume

Building a robust business framework that works under any conditions

The sharp rise in fuel prices is just one of many factors to buffet the aviation industry now and in years to come. The JAL Group is preparing to deal with these factors by means of its 2005-2007 Medium-Term Business Plan, which calls for it to restructure its businesses and costs. The overriding goal is to build a robust management framework, a business structure which can produce profits even in the face of factors such as rising fuel costs or slowing demand.

Medium-Term Business Plan: Three Threads

To overcome fierce competition and leverage opportunities

Vision:
What JAL Group strives to achieve

Becoming the world's No. 1 airline in terms of both service quality and business volume means reaching the top level in three separate aspects: service (customer evaluations and on-time record), profitability (consolidated operating profit), and corporate value (market capitalization). To become our customers' airline of first choice, we will endeavor to provide customers with even more convenience by enhancing human service. Our goal for market capitalization is to be the top network carrier in this regard.

Conditions affecting JAL Group:
Analysis

International passenger demand is still recovering, but we have nearly reached competitiveness with our domestic network, and growth in international cargo continues. Negative factors include some over which we have no control, such as rising fuel prices, terrorism, war, and natural disasters, but these are offset by positive factors including the strong growth in Asia and China, as well as Haneda Airport's new runway No.4.Competition is intensifying, and at the same time business opportunities are multiplying.

JAL Group Strategy:
Medium-Term Business Plan

JAL Group has prepared its 2005-2007 Medium -Term Business Plan laying out three strategies: restructuring its international passenger business, revamping cost structures, and aggressively expanding growth markets. It sets out how we will win out over our competition and leverage our opportunities. The Group is united in its determination to build a business model which can be profitable even in the face of slowing demand or higher fuel prices, while maintaining our commitment to safety and CSR.

Vision

Becoming the world's No. 1 airline group in terms of both service quality and business volume means…

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