Japan Airlines Co.’s net profit for the six months to September dropped 17.8 percent to $833 million, as the strong yen and rising fuel costs bit into its bottom line, JAL said Thursday.
But it boosted its outlook for the full year, striking an optimistic note on prospects for customer numbers on both domestic and international flights.
In a half that saw the grounding of its fleet of Boeing 787 Dreamliners after a series of safety glitches, the company said it had made ¥81.94 billion, with an operating profit that was down 14.6 percent at ¥95.84 billion.
Sales, however, edged up 4.0 percent to ¥659.30 billion.
The numbers were healthier than main rival All Nippon Airways Co., which issued a grim earnings report, citing high fuel costs and the worldwide grounding of Boeing’s next generation aircraft as contributing factors.
JAL, which returned to the market last year after a high-profile bankruptcy, did not give a specific reason for its weaker earnings.
But the depreciation of the yen, which has slid to around 100 to the dollar compared with 80 a year ago, was seen amplifying the cost of fuel as well as user fees for international airports.
Japan’s thorny ties with its neighbors also dented demand for flights to South Korea and China.
Tokyo is embroiled in separate territorial spats with both countries.
But JAL said revenues from its international services increased “despite the suspension of Boeing 787 flights and stagnant demand on Korea and China routes.”
“On June 1, 2013, JAL resumed operation of the Boeing 787 on completing . . . all necessary safety measures, after battery problems grounded the fleet in January 2013 and caused substantial concerns and inconvenience,” the carrier said.
JAL and ANA were stung by the January grounding of Boeing’s new aircraft. After a long-running probe, the planes were allowed to fly again in June.
JAL said it increased the use of the fuel-efficient Dreamliner on international flights to increase overall efficiency, while reducing Narita-Beijing flights because of shrinking demand.
Domestic flights also fared well, with expanded routes and improved services, including upgraded airport lounges.
Unlike ANA, which cut its full year profit forecasts by two-thirds, one-time flag carrier JAL upgraded its annual forecasts, citing strong demand for flights to Southeast Asia and cost-cutting efforts.
The figures were also expected to benefit from an adjustment in foreign exchange movements and falling fuel prices.
The new net profit projection came to ¥128 billion, up from the previous estimate of ¥118 billion.
Operating profit is now expected to come in at ¥155 billion, compared with ¥140 billion, on sales of ¥1.286 trillion, up from ¥1.272 trillion.