Japan Airlines Experienced Reduction in Losses During January-March Quarter

You might already know that price of fuel, petrol are increasing in world market on a permanent basis and because of this continuous price hike, automobile and airline companies are now facing strong challenges to carry on their business. In fact, many companies have seen extensive losses over the last one year.

Japan Airlines also faced financial losses, but the good thing is that it could reduce loses in the January-March quarter, compared with the losses it faced in the same period of previous year. However, Japan Airlines has forecasted lower profit for the current fiscal year, considering the increasing fuel costs and tough competition in the market. Japan Airlines is the largest airline companies in Asia in terms of sales.

AP reported:

Soaring fuel bills, costly early retirement packages and a tarnished image from a series of safety lapses have hurt JAL in recent years. It has struggled to win back customers who began booking with rival All Nippon Airways.

Although international business travel was relatively good for JAL in the fiscal year ended March 31, domestic passenger demand was stagnant, according to the airline.

JAL became profitable for the fiscal year ended March 31, marking 16.9 billion yen ($163.1 million) in profit, a turnaround from the 16.2 billion yen in red ink it chalked up the previous fiscal year — its second straight year of red ink.

It seems that soaring fuel price is not the only reason behind its current situation. Rather, I think, mismanagement and other internal problems have also contributed to bring the airline company down and forced the passengers to look to other companies. Naturally, in this competitive world, the rival companies are always active to grab more market share. So, Japan Airlines authority should give more focus on their internal management to ensure the passengers full safety in order to bring back the reliability of the passengers.

Japan Airlines posts profit twice more than expected

On Friday, Japan Airlines (JAL) posted a net profit of more than twice their expectation resulting from cost cuts. Last fiscal year, the airline made 16 billion yen and their forecast was 7 billion. The company will report its final result on May 9. AFP reports:

JAL said it now expects to post an operating profit of about 90 billion yen for the year to March, much higher than an earlier forecast of 48 billion yen and up from the previous year's 22.9 billion yen.

Revenue fell to about 2.23 trillion yen from 2.30 trillion the previous year, JAL said in a statement.

JAL has slashed thousands of jobs and scrapped unprofitable routes in a bid to restore its financial health.

It has also stepped up efforts to lure in high-paying business customers, including by introducing first-class service on domestic routes last year.

Interesting thing is that the air lines has been incurring loss for the last two years in a row and in the previous year, it lost 16.2 billion yen.

Now, the airlines is planning to sale 49.4% share of its credit card firm, to Mitsubishi UFJ Financial Group (MUFJ) for $402 million. The firm will merge with two other credit card firms: Mitsubishi UFJ Nicos, and Japan Credit Bureau (JCB). Currently, JAL credit card firm has 2.03 million members and a yearly transaction of 1.5 trillion yen. After the merger, the membership will rise to three million.

The company is going to lose a large amount of money over price fixing charges. Last month, it agreed to pay a fine of $110 million to the US Justice Department over price-fixing charge. It will pay another hefty fine to the European Union authorities. The company set aside 6.19 billion yen ($59.2 million) for fine payment. Aside these, rising fuel cost will also affect its profit margin.

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AFP