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The JAL Group Announces Consolidated Financial Results For First Quarter of Fiscal Year 2016

August 1, 2016 Financial No Comments Print Print Email Email

The JAL Group (JAL) today announced the consolidated financial results for first quarter of fiscal year 2016 – the period from April 1 to June 30, 2016. For the details, please refer to attached [Consolidated Financial Results for the Three Months Ended June 30, 2016].http://www.kirimaya.com/resorts/

During the first three months of the fiscal year ending March 31, 2017 (April 1 to June 30, 2016, hereinafter referred to as “the first quarter”), the Japanese economy is on a moderate recovery; however private consumption is almost flat, while consumer confidence appears to be pausing. In overseas economies, a sense of uncertainty pervaded the British and European economies stemming from the LEAVE won a majority in the United Kingdom European Union membership referendum. Weakness was also observed in new emerging markets in Asia and resource-rich countries led by China’s economic slowdown. Due to effects of a series of earthquakes that struck Kumamoto Prefecture in the Kyushu region in April (the 2016 Kumamoto Earthquakes), tourism demand in Kyushu declined. Crude oil prices, which affect our fuel purchasing costs, international passenger revenue and international cargo revenue, have been lower than the year before, and the JPY/USD foreign exchange rate showed the Japanese yen getting stronger.

Under these economic conditions, the JAL Group strived to increase management efficiencies and provide the finest service to our customers, anchored in our firm commitment to flight safety in order to reach the targets set out in Rolling Plan 2016 for the JAL Group Medium Term Management Plan announced on February 18, 2016.

As a result of the above, consolidated operating revenue decreased by 4.8% year-on-year to 297.2 billion yen and operating expense decreased by 0.2% to 275.1 billion yen, while operating income decreased by 39.1% year on year to 22.0 billion yen and ordinary income decreased by 49.8% to 19.7 billion yen. Profit attributable to owners of the parent for the first quarter was 14.7 billion yen, down 54.9% year on year.

(1)   JAL Group Consolidated Results for the Period April 1 – June 30, 2016

Unit: Billions of yen

Fiscal Year 2015

(April 1 – June 30, 2015)

Fiscal Year 2016

(April 1 – June 30, 2016)

Difference

vs. prior year

% vs. prior year

Operating Revenues

312.0

297.2

– 14.8

95.2

International Passenger

Domestic Passenger

Int. and Dom. Cargo

Others

109.4

109.9

20.5

72.1

99.5

109.4

15.4

72.7

– 9.9

– 0.4

– 5.0

+ 0.6

90.9

99.6

75.2

100.9

Operating Expenses

275.7

275.1

– 0.6

99.8

Operating Income

36.2

22.0

– 14.1

60.9

Operating Margin

11.6%

7.4%

– 4.2 points

 

Ordinary Income

39.2

19.7

– 19.5

50.2

Profit attributable

to owners of parent

32.6

14.7

– 17.8

45.1

Figures are rounded down to the nearest tenth of a billion yen while percentages are rounded off to the first decimal place.

(2)   Air Transportation Segment

International Passenger

In international passenger operations, inbound demand remained robust primarily on Southeast Asia routes, but growth of outbound demand from Japan became stagnant.

In route operations, the Tokyo (Narita) and Dallas/Fort Worth service launched the year before has been well-received by customers, and flight frequency was increased from four weekly services to daily services from March 20, 2016, bringing greater convenience to customers. On the Narita=Moscow route, flight frequency was increased by one weekly flight to four weekly flights from April to June, and further, to five weekly flights from July to October in order to cater to passenger demand.

On the product side, we are expanding routes operated with JAL SKY SUITE configured aircraft, offering full-flat seats in Business Class with unobstructed aisle access from every seat, and Economy Class seats in a seating arrangement which is more spacious than the norm, befittingly named “New Spacious Economy.” As of the end of June 2016, JAL SKY SUITE aircraft including the 777-200ER, 777-300ER, 787-8, 787-9 and 767-300ER are operated for 28 flights on 24 routes.

As a result of the above, capacity on international routes measured in Available Seat Kilometers (ASK) increased by 1.2% year-on-year, demand measured in Revenue Passenger Kilometers (RPK) increased by 0.4% year-on-year, the Load Factor (L/F) was 78.2% year-on-year (down 0.6 percentage points), and international passenger revenue was 99.5 billion yen, down 9.1% from the year before due to a decrease in fuel surcharge revenue and such.

 

Domestic Passenger

In route operations, in response to falling passenger demand caused by the 2016 Kumamoto Earthquakes, we speedily adjusted aircraft capacity to meet demand principally on Kyushu routes from Tokyo (Haneda) to improve profitability, while operating many unscheduled flights mainly between Fukuoka and Kagoshima to supplement disrupted surface transport services in Kyushu.

Furthermore, to support recovery from the Kumamoto Earthquakes, we set up a special fare “Support Sakitoku” offering greater discounts applicable to routes to/from Kyushu. We cooperated in relief efforts to the best of our ability, such as meeting passenger demand to Kyushu to visit hometowns or volunteer in quake stricken areas, and providing free transportation for volunteer groups and relief supplies.

As a result of the above, capacity on domestic routes measured in Available Seat Kilometers (ASK) decreased by 2.6% year-on-year, demand measured in Revenue Passenger Kilometers (RPK) decreased by 1.7% year-on-year, the Load Factor (L/F) was 63.7% year-on-year (up 0.6 percentage points), and domestic passenger revenue came to 109.4 billion yen, down 0.4% from the year before.

 

International and Domestic Cargo

International cargo operations saw a decline in demand on transpacific routes amongst others, and a 4.1% year-on-year decrease in cargo volume when measured in Revenue Cargo Ton Kilometers (RCTK). International cargo revenue came to 9.9 billion yen, down 32.6% year on year due to various factors such as a decline in fuel surcharge revenue caused by lower fuel prices, effects of the strong yen on foreign currency denominated cargo revenue, and netting international cargo sales commission from revenue due to a change in adjusting method.

In domestic cargo operations, though demand of parcel shipments was strong, cargo volume measured in Revenue Cargo Ton Kilometers (RCTK) decreased by 3.8% year-on-year, and domestic cargo revenue stood at 5.4 billion yen, down 4.7% from a year ago, due to intensifying competition, and such.

 

(3)   JAL Group Consolidated Financial Position

 

FY2015

As of March 31, 2016

1st Quarter FY2016

As of June 30, 2016

Difference

 

Total assets (billion yen)

1,578.9

1,554.2

– 24.6

Net assets (billion yen)

870.5

848.7

– 21.8

Equity ratio *1(%)

53.4

53.0

– 0.4 points

Interest-bearing debt (billion yen)

92.6

79.8

– 12.8

Debt/Equity Ratio *2

0.1

0.1

– 0.0

Figures are rounded down to the nearest tenth of a billion yen while percentages are rounded off to the first decimal place.

Note: 1. Shareholders’ equity is total net assets excluding minority interests.

2. Debt-to-equity ratio is interest-bearing debt divided by shareholders equity.

 

(4)   Forecast of JAL Group Consolidated Financial Results

There are no changes in the forecast of consolidated financial results for the full fiscal year ending March 31, 2017, announced in “Consolidated Financial Results for the year ended March 31, 2016” disclosed on April 28, 2016.

[Reference]

Unit: Billions of yen

Operating Revenues

Operating Income

Ordinary Income

Profit  attributable to owners of parent

Forecast for the full fiscal year ending March 31, 2017

1,343.0

201.0

193.0

192.0

Note: The forecast above represents estimates of future results based on the information available at the time of release and the company’s reasonable judgment on this information. They are inherently subject to risks which may result in a divergence in the actual result from the forecasts and estimates contained herein.

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