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 Aug 06 2007
 

JAL Group Announces 1st Quarter Consolidated Results for Financial Year 2007



Tokyo August 6, 2007: Today the JAL Group announced consolidated financial results for the first quarter (April through June 2007) of FY2007, the current financial year ending March 31 2008.

Total operating revenues for the three-month period were 520.6 billion yen, 1.5 billion yen (- 0.3%) down on the same period last year. The decrease occurred primarily as a result of the trading company JALUX no longer being categorized as a JAL Group consolidated subsidiary, after JAL Group reduced its stake in the trading company in March 2007.

However, in the air transportation segment, there was an increase in total revenue. Operating revenue for the air transport segment including both international and domestic passenger and cargo businesses, increased by 3.0% up 12.1 billion yen from 409.9 billion yen to 422.0 billion yen. An increase in unit price contributed to increases in international and domestic passenger revenue of 2.5% and 2.9% respectively.

Compared to the previous year, supply measured in available seat kilometers (ASK) was 4.2% lower as a result of the airline's strategy of route restructuring and fleet downsizing. JAL is focusing on high profit and high growth routes and suspending low profits scheduled routes to build a more profit-focused network. The company is also downsizing its fleet, replacing older aircraft with new mostly medium and small size aircraft to strengthen its competitive edge. In terms of ASK, international and domestic passenger supply were down 5.9% and 1.5% respectively.

Total demand measured in revenue passenger kilometers (RPK) was down 6.9% on the previous year, reflecting the decrease in supply (ASK). In terms of RPK, international and domestic passenger demand was down 8.6% and 3.4% respectively when compared to the previous year.

On a consolidated basis, non-airline business revenue decreased as a result of JALUX ceasing to be a JAL Group subsidiary at the end of last financial year.

Operating expenses were 529.2 billion yen, down 24.9 billion yen or 4.5% on the same period last year. The reduction in total operating costs is a result of steady implementation of cost reforms outlined in the JAL Group medium-term corporate plan. The reforms include route restructuring, fleet downsizing, personnel reductions, fuel consumption reductions measures, and contingency measures such as a decrease in JAL staff's basic wage.

The Group posted a first quarter net result of a 4.2 billion yen loss, an improvement of 22.4 billion yen on the previous year's first quarter net loss of 26.7 billion yen.

JAL Group First Quarter Consolidated Results for FY07

Units: billions of yen

1st Quarter FY07

(April 1 - June 30, 2007)

1st Quarter FY06

(April 1 - June 30, 2006)

Previous Year Comparison

Previous Year

% Comparison

Total operating revenue

520.6

522.2

-1.5

99.7%

International passenger

172.1

167.8

4.2

102.5%

Domestic passenger

155.4

150.9

4.4

102.9%

International cargo

44.4

43.8

0.6

101.4%

Other

148.7

159.5

- 10.8

93.2%

Total operating expenses

529.2

554.1

-24.9

95.5%

Operating income (loss)

- 8.5

- 31.9

23.3

-

Ordinary income (loss)

- 3.2

- 35.5

32.3

-

1st quarter net income (loss)

- 4.2

- 26.7

22.4

-

(Figures rounded down to one decimal place.)

AIR TRANSPORT SEGMENT DETAILS

a) Operating Income of Air Transport Segment -

FY06 Q1

FY07 Q1

yr-yr

yr/yr

Operating Revenue

409.9

422.0

12.1

103%

International Passenger

167.8

172.1

4.2

103%

Domestic Passenger

150.9

155.4

4.4

103%

International Cargo

43.8

44.4

0.6

101%

Domestic Cargo

6.8

6.7

0.0

99%

Other

18.8

20.2

1.4

108%

Incidental Business

21.6

23.0

1.4

107%

 

 

Operating Cost

443.0

432.9

-10.0

98%

Fuel

97.5

97.5

0.0

100%

Airport facilities

32.4

32.4

0.0

100%

Maintenance

34.9

33.0

-1.9

95%

Passenger services

12.0

11.8

-0.2

98%

Commissions

29.0

26.1

-2.8

90%

Aircraft Depreciation

18.3

17.8

-0.5

97%

Aircraft leases

26.6

26.9

0.3

101%

Personnel

78.3

72.5

-5.8

93%

Other

114.0

114.9

0.9

101%

 

 

Operating Income

-33.0

-10.8

22.1

-

b) International passenger traffic

Depreciation of the yen against the Euro and US dollar resulted in weak tourism demand on Europe and Hawaii routes. Demand was particularly strong on Korea routes. China and Southeast Asia route demand grew at a steady pace particularly with regard to business passengers. Demand exceeded expectations on transpacific and Oceania routes. Demand measured in revenue passenger kilometers (RPK) decreased 8.6% when compared to the same period last year, mainly due to an overall decrease in supply. Even though flight frequency on China routes was increased in the second half of FY2006 (the year ending March 31, 2007), total supply measured in available seat kilometers (ASK) was 5.9% lower than last year due to reduction in flight frequency and suspensions of under-performing routes. Increased business passenger demand and fuel surcharge increases in the second half of FY2006 meant that unit price increased by 12.2% from the same period a year earlier. International passenger revenue increased by 4.2 billion yen to 172.1 billion yen an increase of 2.5% on the previous year. A total of 3,091,999 passengers were carried on JAL international flights, down 3.1% on the previous year.

c) Domestic passenger traffic

Individual passenger and corporate demand gradually recovered. To stimulate demand JAL offered a range of special seasonal fares. JAL carried 10,028,920 passengers on domestic routes during the first quarter, 3.3% down on the previous year. This was mainly due to fare increases which in particular affected demand from group passengers. Overall, demand measured in revenue passenger kilometers (RPK) was down 3.4% on the same period a year earlier. Due to route restructuring in Japan, supply measured in available seat kilometers (ASK) was 1.5% down on the previous year. Unit price increased by 6.6% from the previous year due to fare increases. Domestic passenger revenue was up 4.4 billion yen or 2.9% to 155.4 billion yen.

d) International cargo traffic

Cargo demand from Japan to China grew tenfold, and demand from Japan to other destinations was also strong. There were concerns about demand out of Europe and Southeast Asia due to the depreciation of the yen, but demand from China to Europe via Japan was strong. Traffic measured in revenue cargo ton kilometers was up 2.1%. Unit price decreased 0.7% when compared to the previous year. Revenue was up 1.4% to 44.4 billion yen.

e) Fuel: This year's first quarter fuel costs averaged of US$79.3 per barrel of Singapore Kerosene, compared to an average price of US$82.0 in the same period last year. Even though the average cost per barrel fell slightly year on year, the price of fuel still remains at a high level. The weak yen against the US Dollar, and a reduced fuel hedging benefit also had a negative impact on the total fuel bill. These were offset by steady implementation of the reforms outlined in the medium-term corporate revival plan which includes such fuel reduction measures as fleet downsizing and route restructuring. As a result, the fuel bill for the quarter was 97.5 billion yen, the same total fuel bill for the same period last year.

f) Miscellaneous: Steady progress has been made in implementing the cost reduction measures outlined in the medium-term corporate revival plan FY2007-2010, which includes personnel cost reductions, promotion of e-business and a review of business work processes, and a review of sales commission rates and contracts made with companies outside the JAL Group,

g) Foreign exchange: The average US dollar - yen exchange rate for the period was US$1.00 = 119.3 yen, compared to a rate of US$1= 115.0 yen for the previous year. The exchange rate had a negative effect on operating income of minus 2.1 billion yen. However a foreign exchange non-operating profit gain of 8.6 billion yen was achieved through such measures as hedging.

h) Financial Targets for the consolidated results for the year ending March 31, 2008 remain unchanged on the forecast made on May 9, 2007.

Unit:

Japanese yen () billions

FY 2007

(Year ending March 31, 2008)

Difference vs. FY 2006

Total operating revenues

2197.0

- 104.9

International passenger

724.0

- 0.8

Domestic passenger

691.0

15.4

International cargo  

192.5

2.0

Other

589.5

- 121.3

Operating income

35.0

12.1

Ordinary income

21.0

0.5

Net income

7.0

23.2

*Figures rounded down to the nearest tenth of a billion yen.

Key assumptions used for above figures: 120 = US$1.00; average aircraft fuel price = $75 per barrel

JAL Group Consolidated Traffic Statistics First Quarter

First Quarter FY2007

(April 1 - June 30 2007)

First Quarter FY2006 (April 1 - June 30 2006)

Change %

Or points

INTERNATIONAL

Passenger number

3,091,999

3,192,191

96.9%

Revenue passenger Kilometers (000)

14,024,825

15,341,359

91.4%

Available seat Kilometers (000)

20,675,767

21,961,711

94.1%

Revenue seat load factor

67.8%

69.9%

- 2.1 points

Revenue cargo ton Kilometers (000)

1,071,818

1,049,579

102.1%

Mail ton kilometers (000)

40,685

38,548

105.5%

Revenue ton Kilometers (000)

2,412,255

2,510,256

96.1%

Available ton kilometers

3,714,138

3,819,694

97.2%

Revenue weight load factor

64.9%

65.7%

- 0.8 points

DOMESTIC

Passenger number

10,028,920

10,368,755

96.7%

Revenue passenger Kilometers (000)

7,459,864

7,724,386

96.6%

Available seat Kilometers (000)

12,592,882

12,779,296

98.5%

Revenue seat load factor

59.2%

60.4%

-1.2 points

Revenue cargo ton Kilometers (000)

94,032

90,637

103.7%

Mail ton kilometers (000)

20,055

19,327

103.8%

Revenue ton Kilometers (000)

673,080

697,319

96.5%

Available ton kilometers

1,475,472

1,500,428

98.3%

Revenue weight l/factor

45.6%

46.5%

-0.9 points

TOTAL

Passenger number

13,120,919

13,560,946

96.8%

Revenue passenger Kilometers (000)

21,484,689

23,065,745

93.1%

Available seat Kilometers (000)

33,268,649

34,741,007

95.8%

Revenue seat load factor

64.6%

66.4%

- 1.8 points

Revenue cargo ton Kilometers (000)

1,165,850

1,140,216

102.2%

Mail ton kilometers (000)

60,740

57,875

105.0%

Revenue ton Kilometers (000)

3,085,335

3,207,575

96.2%

Available ton Kilometers (000)

5,189,610

5,320,122

97.5%

Revenue weight l/f

59.5%

60.3%

- 0.8 points

International results include data from JAL, Japan Asia Airways and JALways. Domestic results include data from JAL, Japan Transocean Air, JAL Express, Japan Air Commuter, Hokkaido Air System, J-Air and Ryukyu Air Commuter.

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