Japan Airlines Corp. reported Friday that it returned to profit in the first half of the fiscal year as international travel recovered from a decline a year ago caused by the war in Iraq and the outbreak of SARS in Asia, and added that rising fuel costs will lead to fare increases.
JAL posted a group net profit of 82.9 billion yen, compared with a 57.5 billion yen loss posted in the same period a year before. The positive result was mainly attributed to a recovery in international passenger numbers and a boost in cargo revenues.
During the April-September period, the nation’s largest airline posted a group operating profit of 86.8 billion yen, while its consolidated sales rose 14 percent to 1.08 trillion yen.
The number of international passengers climbed 46.2 percent from a year earlier to 7.24 million, elevating revenue generated from international flights by 38 percent to 346 billion yen.
Although the number of domestic flight passengers declined 7.2 percent to 22.5 million, JAL’s domestic flight revenues remained almost flat thanks to an increase in revenue per passenger.
In fiscal 2003, the airline industry’s international flight business was hit hard by the war in Iraq and SARS.
But now, rising fuel prices are posing another concern to the industry, while a rash of typhoons that hit the nation caused many cancellations of domestic flights. JAL said cancellations of domestic flights due to typhoons have cost the carrier 5 billion yen in operating profit.
These negative factors forced JAL to revise downward its earnings projection in May for the year to March. The carrier expects a group net profit of 23 billion yen, down 36 percent, and an operating profit of 53 billion yen, down 35 percent from the previously announced figures.
Soaring fuel prices have cost JAL some 15.5 billion yen more during the first half than a year earlier, the company said. JAL now forecasts a 55 billion yen rise in fuel costs for the full fiscal year. JAL is implementing cost-cutting measures, aiming to slash 47 billion yen in operating and maintenance costs.
To cope with soaring oil prices, JAL said it would raise domestic airfares by 300 yen — 200 yen for some routes — starting Jan. 11. The carrier also plans to raise international fares by 5 percent starting in January.
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