Japan Airlines in for 2008-2009 loss

Japan Airlines, the biggest airline in Japan and also the largest carrier in Asia, has said it expects a net loss of 34 billion yen ($374 million) in the year to March 2009 mainly because of the global economic recession, which led to a slump in business travel as well as cargo traffic.

Japan Airlines has, thus, downgraded its earlier forecast of a net profit of 13 billion yen for the year.
In a statement, the airline said it expected an operating loss of 37 billion yen for the year, as against an earlier projection of a profit of 28 billion yen. The airline also lowered its revenue outlook to 1.98 trillion yen from 2.09 trillion yen.

Japan Airlines has suffered a loss of 38.5 billion yen ($423 million) for the fiscal third quarter.

Japan Airlines, based in Shinagawa, Tokyo, Japan, operates scheduled and non-scheduled domestic and international and services and has its main bases at Narita International Airport, Tokyo, and Tokyo International Airport, Tokyo.

According to the statement, Japan Airlines’ sales for October-December 2008 plummeted by 13% from a year earlier to 485.7 billion yen. Travel for domestic passengers, the airline added, was “flat” for the period, but went down regarding international passengers and international cargo.

The Japan Airlines statement said the carrier would go ahead with “turnaround efforts” like job cuts, more fuel-efficient aircraft and a focus on business travellers even while admitting that tough times were likely to stay.

“With business confidence falling and demand expected to drop far more than originally expected,” Japan Airlines said, “the pressure to increase profitability, focus more on cost reduction and increase productivity levels will intensify.”

The airline said it was badly hit by the huge rise in fuel prices, especially in the first half of 2008. Despite the appreciation of the yen, costs of aviation turbine fuel increased by 107.4 billion yen to 414.5 billion yen for the first 9 months of the fiscal year, compared to the same period a year ago, the Japan Airlines statement said.

Meanwhile, a report in Japan’s Asahi newspaper said Japan Airlines may seek “tens of billions of yen in public funds” under a programme intended to strengthen companies hit by the global economic slump.

A few days ago, Japan’s cabinet had approved a Bill aimed at helping out struggling companies outside the financial sector.