JAL warns on profits as for­eign travel dips Loss of fuel sur­charge tak­ing a toll on rev­enue

Kuwait Times - - BUSINESS -

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

TOKYO: Ja­pan Air­lines pas­sen­ger planes on the run­way at Haneda air­port in Tokyo on Jan­uary 29, 2016. The car­rier said yes­ter­day its bot­tom line in the six months through Septem­ber shrank to $682 mil­lion, down more than 30 per­cent from a year ago, with a stronger yen also tak­ing a toll. — AFP

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