On February 2, JAL announced its consolidated group financial results for the third quarter of the fiscal year ending March 31, 2023. The presentation was given by Hideki Kikuyama, Representative Director, Senior Managing Executive Officer and General Manager of Finance & Accounting Division, and Norimasa Aoki, Managing Executive Officer and General Manager of General Affairs Division.
Looking at sales by business segment, international flights saw a recovery in travel demand due to the easing or removal of entry restrictions in many countries, a gradual recovery in demand for business travel by Japanese companies, and a rapid recovery in inbound demand due to the significant easing of entry restrictions in October 2022.
Despite the impact of the 8th wave of the new coronavirus, domestic flights showed a steady recovery due to the absence of behavioral restrictions and voluntary restraints on travel, as well as the tailwind from the government’s “nationwide travel support” program to stimulate demand. As a result, international passenger revenue for full-service carriers increased 509.7% (240 billion yen) year-on-year to 287.1 billion yen. Domestic passenger revenue increased 92.7% (up 161.4 billion yen) to 335.5 billion yen.
In the cargo business, which is also performing well in the Corona Disaster, marine transportation is beginning to normalize. Although total demand is down from the previous year, partly due to the impact of the economic slowdown in North America, profit margins remain high, resulting in a 13.9% y/y increase (22.4 billion yen) to 183.4 billion yen. The figure is higher than before the Corona disaster.
As for LCC operations (ZIPAIR and Spring Japan), ZIPAIR, which handles medium- to long-haul routes, has been expanding its route network by launching a new Narita-San Jose route, and has been continuously profitable since July.
On the other hand, as for Spring Japan, it continues to struggle under the severe situation of increasing flights on China routes. As a result, LCC business revenue was 20.1 billion yen. Mileage, Life, Infrastructure, and other businesses posted a 51.4% y-o-y increase (up 56.9 billion yen) to 167.7 billion yen.
From the above, sales increased 101.7% y/y (507.1 billion yen) to 1.55 trillion yen, and the numbers are approaching pre-Corona disaster levels on the back of a steady recovery in airline demand.
EBIT (Earnings Before Interest and Taxes. Operating income in the previous index) was 34.7 billion yen. Net income was 16.3 billion yen, a 144.6 billion yen improvement from the same period last year. In the third quarter alone, EBIT was 34.4 billion yen and net income was 18.4 billion yen, showing a steady recovery in performance following the previous quarter, which was the first time since the third quarter of fiscal 2019 that the company was profitable on a quarterly basis.
As for the main items of operating expenses, fuel costs were 241.6 billion yen (137.3% of the same period of the previous year), reflecting a significant increase in fuel costs due to soaring market prices and the sharp depreciation of the yen. On the other hand, real fixed costs, which exclude variable factors such as the scale of operations and number of passengers and one-time costs associated with business restructuring, were limited to 367.1 billion yen as a result of cost management efforts to keep them within the 500 billion yen range for the full year.
The group’s consolidated financial position is interest-bearing debt of 892.1 billion yen, of which 100.3 billion yen is due within one year, and total assets of 2,439.6 billion yen. The equity ratio is 32.3% (the figure on the rating, which takes hybrid financing into account, is 39.5%). In addition, free cash flow was 117.3 billion yen as aviation demand continues to recover.
The company revised downward its full-year consolidated earnings forecast for the fiscal year ending March 31, 2023, from the previously announced figures. The company announced net sales of 1,358 billion yen (previous forecast was 1,404 billion yen), EBIT of 50 billion yen (80 billion yen), and net income of 25 billion yen (45 billion yen).
The reasons for the revision include slower than expected growth in domestic passenger revenues (-26.0 billion yen) and cargo revenues not reaching the expected unit price (-11.0 billion yen). The company plans to pay a dividend of 20 yen per share at the end of the fiscal year. Although airline demand is still recovering and the future remains uncertain, the company plans to pay a dividend of 20 yen per share at the end of the fiscal year, since it has achieved profitability for the current fiscal year and has some prospect for the future.
© Source travel watch
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