JAL warns on profits as foreign travel dips Loss of fuel surcharge taking a toll on revenue
Japan Airlines yesterday slashed its fullyear earnings outlook, and warned its fiscal firsthalf net profit nosedived owing to a slump in its international business. While falling oil prices have helped carriers’ profits-fuel is often an airline’s single-biggest expense-the loss of a fuel surcharge imposed to deal with previously skyhigh crude prices was taking a toll on the bottom line, the carrier said. For the six months through September, JAL said its net profit shrank to 71.4 billion yen ($682 million), down more than 30 percent from a year ago.
The firm also warned that full-year net profit would come in at 161 billion yen, down from a previous estimate of 192 billion yen for the fiscal year through March. JAL’s full-year revenue is now seen at 1.28 trillion yen, against 1.34 trillion yen projected earlier. The revisions were “primarily due to weaker demand in international passenger operations and less revenue per passenger both in international and domestic than expected”, the airline said.
By contrast, rival carrier All Nippon Airways said it saw another rise in net profit, pointing to cost-cutting efforts and a pickup in business travel from Europe, North America and Asia.
The carrier’s parent, ANA Holdings, posted net profit of 57.4 billion yen in the first half, up 6.4 percent from a year ago, although revenue edged down 2.9 percent to 885.0 billion yen.
The firm said its profit gain was largely due to “tight operational management and control of expenses”. ANA left its net profit forecast unchanged at 80 billion yen but slightly trimmed its full-year sales projection to 1.74 trillion from 1.8 trillion. The company said its fortunes continued to recover after taking a hit from worries over terror attacks in Europe and earthquakes at home.
Demand for flights to Europe took a hit this summer following a series of attacks including the murder of an 85-year-old French priest.
The killing at a church in northern France came after a 19-tonne truck was ploughed into a crowd celebrating Bastille Day in Nice, killing dozens of people and wounding more than 300 people. “In international passenger services, leisure demand continued to falter on European routes from Japan due to the impact of terrorist attacks,” ANA said. “But passenger numbers were up year-on-year thanks to robust trends in business demand primarily on US, European and Asian routes, and strong demand for visits to Japan from all areas,” it added.
ANA said the number of international passengers rose more than 10 percent for the six months, while that of domestic passengers edged down 0.1 percent. “The number of travellers to Europe is expected to recover as concerns over terrorism in the region subside,” Hiroshi Hasegawa, an analyst at SMBC Nikko Securities, said before the results were published. Demand for domestic flights for the first half were also affected by deadly earthquakes in southern Japan in April. “But the impact of the earthquakes in Kumamoto is also shrinking,” Hasegawa said. — AFP