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Japan Airlines Corp. said Wednesday it booked a 16.27 billion yen group net loss in the business year through March mainly because of a cut in deferred tax assets forced by its auditor, which imposed stricter accounting rules on the struggling airline.

It is the second year in a row Asia’s leading carrier has fallen into the red on a group basis since posting a 47.24 billion yen loss in fiscal 2005.

But JAL stressed the results indicate its main business is recovering and that more passengers are flying the carrier.

In its earnings report for the 2006 business year, JAL said it booked a pretax profit of 20.58 billion yen, recovering from a 41.61 billion yen loss the previous year, and an operating profit of 22.92 billion yen, compared with a 26.83 billion yen loss, on operating revenues of 2.302 trillion yen, up 4.7 percent.

A one-time special loss of 6 billion yen earmarked for an early retirement program for 2007 also weighed on JAL’s earnings for the year.

The auditing firm forced JAL to reduce its deferred tax assets after estimating that its taxable income would hit a low in the future, JAL said earlier.

A company usually books its deferred tax assets as capital, but only when the company can show evidence it is likely to produce future profits. Deferred tax assets represent an overpayment of taxes to be returned later.

However, JAL emphasized that its regular business remains on the path to recovery thanks to fare hikes and withdrawal from unprofitable routes.

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