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

Targets under 2005-2007 Medium-Term Business Plan Basic initiatives and keywords

The 2005-2007 Medium-Term Business Plan involves three threads: restructuring international passenger operations, revamping cost structures, and aggressively expanding into growth markets. Its year-on-year targets are to achieve net profit of ¥10 billion or more in fiscal 2005, return the international passenger business to profitability in fiscal 2006, and reach consolidated operating income of ¥100 billion or more in fiscal 2007. We will push ahead with safety and CSR initiatives and make further service improvements, striving to become the airline group of first choice.

Numerical targets for current plan period

Three annual targets to attain through the reforms and marketing programs described so far

Basic Management Strategy

Basic initiatives

Safety

Flight safety is the basis of the JAL Group's existence and is its prime corporate responsibility. We strive to instill the highest possible level of safety consciousness in each and every employee of the Group, and continue to work to strengthen the Group-wide safety management framework and achieve consistently high levels of safety. The goal is that customers can board our planes in complete confidence.

Corporate Social Responsibility (CSR)

Our CSR activities, leveraging the unique characteristics of the aviation business, focus on our relationships with all stakeholders - customers, shareholders, employees and the community - from economic, environmental and societal perspectives.

The key to reform: "simplification"

Simplification is the key concept behind the structural reforms in the Medium-term Business Plan - whether it be by making our Group management structure leaner or by optimizing administrative processes through the application of information technology. One aspect of making our Group management structure more lean is bringing the holding company and operating companies together into a single entity. Our goal is to accomplish this integration in fiscal 2006, the goal being to speed up the way decisions are made and communicated.

Schedule for bringing holding company and operating companies together into one entity

Reduce organizational duplication and speed up how decisions are made and communicated by creating a single entity

Cabin Attendant Tomoko Nakata Japan Airlines International Co., Ltd. Providing top-quality cabin service Out of all the airlines to which I applied for employment, I chose to join JAL because of the strong positive impression made on me at the job interview: the JAL staff were so much more hospitable. Once I began work at JAL, this first impression was confirmed as correct. Every day, as I perform my tasks, I always keep in the forefront of my mind the need to respond appropriately to the constantly changing needs of our passengers, so as to be able to provide the very best service. Only in this way can we expect customers to keep coming back, and only if they do so can we continue being the airline group of choice.

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