Japan Airlines Corp. on Monday reported narrower losses for the first quarter of fiscal 2006, but it faces tough times ahead as it struggles to deal with soaring fuel prices and falling domestic passenger numbers, and thus may hike international fares possibly by year's end.

JAL reported a net loss of 26.7 billion yen for the April-June period, compared with a net loss of 38.3 billion yen the previous year.

The country's largest airline posted an operating loss of 31.9 billion yen, compared with a loss of 32 billion yen a year earlier. Sales rose 3.7 percent to 522.2 billion yen.