Japan Airlines Co. said Friday it expects to post a net loss of between ¥240 billion and ¥270 billion in the current business year through March, its first red ink since its relisting in 2012, as the coronavirus pandemic sharply reduced demand for air travel.
JAL said it logged a net loss of ¥161.23 billion in the first half of fiscal 2020. Earnings before interest and taxes saw a loss of ¥223.97 billion on sales of ¥194.79 billion, down 74% from a year earlier.
“We have seen very severe results following the continued impact of the virus,” Hideki Kikuyama, a senior managing executive officer of JAL, said at a news conference.
The airline said the number of international passengers plunged 97.7% in the six months through September from a year earlier, as many countries restricted entries since the outbreak of COVID-19.
The number of domestic passengers also dropped 76.1% due partly to a resurgence of virus infections across Japan during this summer’s holiday season, despite the government’s launch of a subsidy program for trips in Japan.
However, Kikuyama said its financial standing has been “steadily recovering” due to its cost-cutting efforts, including reducing payroll costs and advertisement fees. Its net loss in the July-September period stood at ¥67.5 billion, an improvement from a ¥93.7 billion net loss in the previous quarter.
He said JAL will strengthen its low-cost carrier business with its subsidiary airline Zipair Tokyo Inc. to make up for revenue losses.
The company believes it will take “three or four years” for the number of international business passengers to return to pre-pandemic levels.
It expects the number of international passengers to return to a level of between 25 percent and 45% in March from a year earlier, with that of domestic passengers coming back to around 80% on a year-on-year basis.
As part of further efforts to ride out the pandemic, JAL plans to retire a total of 24 Boeing 777 large passenger jets and return five Boeing 737 jets on lease by the end of fiscal 2022, expecting to cut fixed costs by around ¥60 billion.
In addition, JAL directors will face a 55% cut in remuneration in its next business year starting in April.
Regarding its financial condition, the company said it had ¥346.6 billion in cash at the end of September and will expand its unused commitment line to ¥300 billion by November.
“We have maintained a healthy financial base,” despite the business difficulties, Kikuyama said.
Meanwhile, Japan Airlines is considering having about 500 of its employees temporarily work at companies outside of its group per day, people familiar with the matter said Friday, as airlines looks for ways to reduce costs and avoid job cuts.
The company wants to maintain its current workforce despite extensive flight suspensions and massive losses expected in the current business year.
Its employees are taking on jobs at other companies, including at parcel delivery firm Yamato Holdings Co. and public offices, among others, for up to two years, they said.
The duration of such jobs varies, with some work only lasting a day, they said. If compensation for their other jobs falls short of their regular salaries at the airline, JAL makes up the difference.
JAL’s rival ANA Holdings Inc. also plans to have 400 or so employees work temporarily at other companies such as retailers.
KDDI Corp., a major mobile phone carrier, said Friday the company will accept employees from ANA and JAL for temporary work assignments.
“We want to do what we can to support (the airlines), aiming for a mutual benefit,” KDDI President Makoto Takahashi said at a news conference to report his company’s earnings.
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