JAPAN AIRLINES Co., Ltd.
Financial Results
2 nd Quarter Mar/2020（FY2019）

JAL Supports Japan National Rugby Team and Japan National Wheelchair Rugby Team.

October 31, 2019
JAL Supports Japan National Rugby Team and Japan National Wheelchair Rugby Team.

Today’s Topics
P.3
P.7

P.15
P.21

FlightStats
The best on-time
Asia-Pacific Airline

FTE

Accessibility Leadership Award

Health and Productivity
Management Brand

SKYTRAX
The World’s Best Economy Class
The Best Economy Class Seat

SKYTRAX
5-Star Airline(Note) Regarding figures in tables of this material, amounts are rounded down to the nearest hundred million yen, and the second decimal point in ratios is rounded off to one decimal point.

2

Overview of Financial Results for 1st Half Mar/20
 Combined with increase in Domestic Business and decrease in International
Passenger and Cargo revenue altogether, Operating Profit decreased​

Operating Revenue

Operating profit・Net profit (1)・Operating profit margin（JPY Bn）（JPY Bn）
800.0

750.0

750.1

+9.6 Bn(+1.3％)

759.8

120

Operating
ProfitMarginNet (1)
ProfitOperatingprofit(86.5)

80

73.3
12.9%

60

20.0%

81.3

(11.4%)

40

650.0

25.0%

96.8

100

700.0

（ OP Margin ）Figures in ( ) exclude(2)
the depreciation method change

51.2

10.7%

15.0%

10.0%

20
600.0

1st Half
Mar/190

1st Half
Mar/20Fuel/FX Markets
1st Half
Mar/19

1st Half
Mar/20

5.0%

1st Half
Mar/20Operational Precondition/ASK
1st Half Mar/20 (y/y)

y/ySingapore Kerosene(USD/bbl)

85.9

78.6

▲8.5%

Dubai Crude Oil(USD/bbl)

70.8

65.2

▲7.9%

109.5

109.2

▲0.3％

FX Rate (JPY/USD)

1st Half
Mar/19International
RoutesDomestic
Routes

Total

+2.5％

+1.7％

+2.2％

(1) Net profit attributable to owners of the parent(2) Before the depreciation method change, all components attached to aircraft were depreciated altogether with aircraft. With the new method, assets areclassified to each components, based on economic lives of components such as engines and cabin interiors, and depreciated separately.

3

Recent Topics
 Allocation of Haneda Slots

 Environmentally friendly aircraft for domestic routes

 Toward Sustainable Development

 More accessible services for all passengers

Haneda Int’l slot allocation
 12 Slots AllocatedCodeshare Expansion(※)

Includinglate night slot

Air Transport

US (6)、China (2)、Finland (1)、(※)
Russia (1)、India (1 )、Australia (1)New Routes
 Narita＝Vladivostok Route（2020.2.28～）

 Narita＝Bengaluru Route Cathay Dragon（2019.5.29～）

 Launch of state-of-the-art

and comfortable aircrafts

 Xiamen Airlines〈A350-900〉

 Aircalin• Haneda=Fukuoka(2019.9.1～）• Haneda＝Sapporo(2019.10.27～）• Haneda＝Naha（2020.2.1～）

 （2019.12.3～）〈787-8〉（2019.6.3～）（2020.3.29～）

 Narita＝San Francisco Route（2020.3.29～）

Increasing codeshare flights withthe existing partner airlines as well

Sustainable Aviation Fuel・Invested in a world-leading SAF developer, Fulcrum,and plans to use on scheduled flights from FY21
・Aims to make SAF available at more overseas
airports

ESG

A350・787 LaunchMore fuel-efficient aircraft
・A350 reduces about 25％ of CO2
compared with 777
・Actively introduces environmentallyfriendly aircraft with less noise and more fuelefficiency that also reduces operating cost

Plastic Waste Reduction
・Plastic straws and stir sticks are replaced withother material ones

• Haneda＝Itami(2019.10.27～）• Haneda＝Fukuoka(2019.12.20～）

Accessibility Improvement
・FTE Accessibility Leadership Award for
JAL’s effort to provide stress freeservices for its passengers
・Improved accessibility through“smart airport” including Narita and Haneda
for smooth airport procedures, together withenhanced JAL Special AssistanceCounter

Regional Airline LLP
・To make islands or similar regional lifeline
routes sustainable, 5 airlines fromdifferent groups cooperate to form a LLP

4

Dividends and Share Repurchases
Share Repurchases
Total 20 Billion Share Repurchases and its Cancellation
Considering the Current Share Price Level
 Aims for fair valuation on the equity capital market

Resolution Date
Duration
Number of Stocks
Amounts

All Cancellation

April 26, 2019

October 31, 2019

May 7, 2019 to September 20, 2019

November 1, 2019 to February 28, 2020

5,818,100

Up to 8,000,000

20 Billion Yen

Up to 20 Billion Yen

Resolved on October 23, 2019

Resolved on October 31, 2019

Dividend
No change in Dividend Forecast with 55 Yen of Interim Dividend Dividend Forecast for FY2019 is 110 Yen per share and Payout Ratio (1) will be 33.1%

Interim Dividend：55 yen per share Year-end Dividend：55 yen per share（No change from the previous forecast)

Total Return Ratio(2)・Total Shareholder Return on Equity Ratio(3)Total Return Ratio will be 50.6% andTotal Shareholder Return on Equity Ratio will be 4.9% for FY2019(1) Dividend payout ratio=Total dividends/Base profit for dividends calculation(4)(2) Total return ratio=（Total amount of dividends + Amount of share repurchase）/
Base profit for dividends calculation (4)(3) Total return on equity ratio ＝ (Total dividends + Share repurchase ）/ Average shareholders’ equity at beginning and end of a fiscal year
(4) Base profit for dividends calculation = (Net profit attributable to owners of the parent + income tax deferred) （*From FY2019, income tax
deferred is no longer excluded)5

INTENTIONALLY LEFT BLANK

6Consolidated Financial Results
1st Half
Mar/19Operating Revenue

750.1

759.8

+9.6

+1.3%

404.1

▲3.9

▲1.0％

269.2

266.0

▲3.1

▲1.2%

138.1

▲6.2

▲4.3％

268.1

276.8

+8.7

+3.3%

152.8

+2.0

+1.3％

49.7

45.1

▲4.6

▲9.3%

22.4

▲3.1

▲12.3％

163.0

＋8.7
+25.1
(+19.9)+2.3+22.8(+17.5)▲15.5(▲10.3)▲2.2pt(▲1.5pt)
▲11.7

+5.4%
3.9%
(+3.1%)+1.9%+4.3%(+3.3%)▲16.0％(▲10.6%)+3.3+7.6(+5.8)▲0.9+8.5(+6.7)▲11.6(▲9.7)▲2.7pt(▲2.3pt)
▲9.9

+3.8％
+2.3％
(+1.7％)▲1.4％+3.2％(+2.5％)▲16.2％(▲13.6％)▲12.5％

90.6
343.8(341.9)64.0
279.7(277.9)60.2(62.1)
14.9％(15.4％)
61.2

International
Passenger
Domestic
Passenger
Cargo / Mail
Other

1st Half
Mar/20

2nd Quarter（JPY Bn）

Diff.

y/y

(Jul-Sep)(6)

Diff.

y/y

Ordinary Profit

94.2

171.7
678.5
(673.3)127.7
550.7(545.5)
81.3(86.5)
10.7%(11.4%)
82.5

Net Profit(2)

73.3

51.2

▲22.1

▲30.2％

39.2

▲16.5

▲29.6％ASK (MN seat km)

45,47646,459

+983

+2.2%

23,545

+537

+2.3％

RPK (MN passenger km)

35,60936,377

+768

+2.2%

18,748

+273

+1.5％

EBITDA Margin (%) (3)

21.2％

19.6％

▲1.5pt-23.2％▲2.1pt-EBITDAR Margin (%) (4)

22.5％

21.0％
10.5
(10.4)▲1.5pt+0.2(+0.1)+2.1%(+1.0%)

24.5％
10.5(10.4)▲2.0pt+0.1(+0.0)+1.2%(+0.5%)

Operating Expense (1)

653.3

Fuel

125.3

Excluding Fuel (1)527.9Operating Profit (1)Operating Profit Margin(1)(%)

Unit Cost (JPY) (1) (5)

96.8
12.9％

10.3

-

(1) Figures in( ) do not include the depreciation method change (2) Net profit attributable to owners of the parent(3) EBITDA Margin = EBITDA / Operating Revenue EBITDA=Operating Profit + Depreciation and Amortization(4) EBITDAR Margin = EBITDAR / Operating Revenue EBITDAR=Operating Profit + Depreciation+ Aircraft Leases(5) Unit Cost = Air Transportation Segment Operating Cost (excluding fuel cost) / ASK(6) The results for 2Q (July to September) are calculated by deducting the results of 1Q (April to June) from 1H (April to September)▲13.9％

7

Changes in Operating Profit（ Revenues ／ Expenses ）1st Half Mar/20＋ stands for profit increase (revenue increase, cost decrease)▲ stands for profit decrease (revenue decrease, cost increase)（JPY Bn）

ASK y/y ： ＋2.2%
RPK y/y ： ＋2.2％▲10.3 Bn(▲10.6%)
Other
Revenues
Cargo & Mail

Domestic
Passenger
Int’lPassenger

▲3.1
▲1.2%

＋8.7
▲4.6

＋8.7

▲15.5 Bn(▲16.0%)Fuel▲2.3 Maintenance▲1.9%▲3.2 Aircraft
▲1.7
▲8.9%

Personnel

▲9.3%

＋5.4%

“Other Revenues”
includeLoyalty program or
Ground Handling

＋3.3%

Other
Expenses

▲3.6

▲3.1%

“Aircraft” includes
Aircraft
Depreciation,
Aircraft Leases andAviation Insurance
Premium

▲2.4%

▲9.0

the impact​of the change ofthe depreciation
method​

▲3.2%

96.8

FSC* ＋3.0
FX▲1.0(TTL) ＋2.0

FSC* ▲0.6
FX▲0.6(TTL) ▲1.2

*FSC=Fuel Surcharge

1st Half
Mar/19

Revenues ＋9.6 Bn

FSC*
FX
▲0.1
(TTL) ▲0.1

FSC*TTL ＋2.5
FX TTL▲1.7(Total)+0.7Services▲0.7

Expenses of travel
agencyLanding andnavigations fees

▲0.2

Sales commissions▲0.0

Other than those
above

▲7.6

▲5.2

86.5

81.3

▲0.2

Total ▲9.0

Expenses ▲19.9 Bn

1st Half
Mar/20(excluding the depreciation
method change)

1st Half
Mar/208Changes in Operating Profit（ Market ／ Others ）1st Half Mar/20(JPY Bn）＋ stands for profit increase (revenue increase, cost decrease)▲ stands for profit decrease (revenue decrease, cost increase)

Impact From
Currency Market ▲0.0 Bn
Revenues
Expenses
Fuel
Ex. Fuel▲1.7 Bn+1.6 Bn+0.6 Bn+1.1 Bn

FX excl.
Fuel

▲0.6

▲15.5 Bn(▲16.0%)▲10.3 Bn(▲10.6%)

Fuel(excl.Hedging)

FSC*

Fuel Volume(Excl. Market Impact)
Revenue
Increase

Hedging

Cost
Increase

+2.5

▲9.2

+6.6

+8.9

▲18.5

Maintenance
Services
Aircraft

Personnel
Other thanthose above

+0,1
▲3.4
▲0.9
▲1.7
▲3.8
▲8.7

Total ▲18.5
the impact​of the change ofthe depreciation
method​96.8▲5.2
Revenues

▲1.7

Cost
excl. Fuel

+1.1

Int’l
+3.0
Passenger
Int’l Cargo ▲0.6
Total +2.5

Total ▲0.6

FX
+0.6
Market+6.0
Total +6.6

1st Half
Mar/19Market Impact ▲0.7 Bn*FSC=Fuel Surcharge

96.1

Int’l
Passenger▲5.1

Domestic
Passenger+8.7

Cargo/Mail

▲3.3

Other

+8.8
+8.9

Total

86.5

Others ▲9.5 Bn

1st Half
Mar/20(excluding the depreciation
method change)

81.3

1st Half
Mar/209International Passenger Operations
International Passenger
1st Half
Mar/19Passenger
Revenue(JPY Bn)

Passengers

269.2

1st Half
Mar/20

266.0

y/y

▲1.2%

Change in Revenue

2ndQuarter(Jul-Sep)(4)138.1（JPY Bn）
y/y

▲4.3%

The Passenger Service
System Effects Included

269.2(’000)

4,605

4,582

▲0.5%

2,319

▲1.4%

(MN seat km)

27,39928,072+2.5%

14,180

+2.1%

ASK

L/F
(%)

Revenue per
Passenger(1)(JPY)

Yield(2)(JPY)

Unit Revenue(3)
(JPY)

266.0
▲1.7

・Fuel Surcharge(+)
・Net Unit Price (▲)

RPK(MN passengerkm)▲3.1 Bn(▲1.2%)

22,572

22,768+0.9%

11,627

+0.3%

82.4％

81.1％

▲1.3pt82.0％▲1.4pt

1st Half
Mar/1958,45958,061▲0.7%

59,565▲2.9%

Factors of changes in Revenue
per Passenger (estimate)

11.9

11.7

▲2.0%

11.9

▲4.6%

9.8

9.5

▲3.5%

9.7

▲6.2%

Revenue per
Passenger

▲0%

▲1.4
・OutboundBusiness
Demand(▲)

Number of
Passengers▲2%

1st Half
Mar/20▲1%＋1%DemandMix (▲)

Route Effect (+)

FuelFX, etc.
(1) Revenue per Passenger = Passenger Revenue / Passengers
Net Unit
Total
Surcharge
Price(2) Yield = Passenger Revenue / RPK(3) Unit Revenue= Passenger Revenue / ASK(4) The results for 2Q (July to September) is calculated by deducting the results of 1Q(April to June) from 1H (April to September)

10

Domestic Passenger Operations
Domestic Passenger

Passenger
Revenue(JPY Bn)

Passengers

Change in Revenue

1st Half
Mar/19

1st Half
Mar/20y/y

2ndQuarter(Jul-Sep)(4)

y/y

268.1

276.8

+3.3%

152.8

+1.3%

(’000)

17,40818,006

+3.4%

9,351

+2.6%

(MN seat km)

18,076

18,387

+1.7%

9,365

+2.7%

ASK
RPK
(MN passenger
km)

L/F
(%)

Revenue per
Passenger(1)(JPY)

Yield(2)(JPY)

Unit Revenue(3)(JPY)

13,037

13,609

+4.4%

7,120

+3.4%

72.1％

74.0％

+1.9pt76.0％+0.5pt（JPY Bn）＋8.7 Bn(＋3.3%)The Passenger
Service
System Effects
Included

268.1

・ Demand Rise during
the Long Holidays(＋)
・ Increase in Individual
Passengers(＋)

276.8
+9.2

▲0.5

・Increased in
Promotional Fares Sales (▲)

15,403

15,375▲0.2%

16,345

▲1.3%

20.6

20.3

▲1.1%

21.5

▲2.0%

14.8

15.1

+1.5%

16.3

▲1.4%

1st Half
Mar/19

Revenue per
Passenger

Number of
Passengers(1) Revenue per Passenger = Passenger Revenue / Passengers(2) Yield = Passenger Revenue / RPK(3) Unit Revenue= Passenger Revenue / ASK(4) The results for 2Q (July to September) is calculated by deducting the results of 1Q(April to June) from 1H (April to September)

1st Half
Mar/2011

Major Operating Expense Items
Operating Expenses（JPY Bn）
Fuel

1st Half
Mar/19

1st Half
Mar/20Diff.

y/y

2nd Quarter(Jul-Sep)(4)

Diff.

y/y

125.3

127.7

+2.3

+1.9%

64.0

▲0.9

▲1.4％

Landing andnavigation fees

43.2

43.5

+0.2

+0.6%

22.0

+0.1

+0.7％

Maintenance

36.7

39.9

+3.2

+8.9%

20.7

+2.5

+14.3％

9.4

9.5

+0.0

+0.5%

4.8

+0.1

+3.1％

Aircraft (1)(2)

55.6

62.5
(57.3)+6.9(+1.7)+12.4%(+3.1％)

31.0(29.1)+2.8(+1.0)+10.2％(+3.6％)

Services (3)

22.6

23.4

+0.7

+3.5%

12.1

+0.3

+2.9％

Personnel

150.3

153.9

+3.6

+2.4%

76.4

▲0.1

▲0.1％

45.7

46.0

+0.2

+0.6%

25.6

▲0.8

▲3.3％

Other

164.1

171.8

+7.6

+4.7%

86.8

+3.4

+4.2％

Total Operating
Expenses (2)

653.3

678.5
+25.1
(673.3) (+19.9)+3.9%(+3.1%)

343.8(341.9)+7.6(+5.8)+2.3％(+1.7％)

Sales commissions(Air Transport)

Expenses oftravel agency

ASK y/y：+2.2%(1) Aircraft＝ Aircraft Depreciation+ Aircraft Leases+ Aviation Insurance Premium, etc.
(2) Figures in( ) do not include the depreciation method change(3) Services＝ Expenses regarding inflight services, airport lounges, cargo equipment, etc.
(4) The results for 2Q (July to September) is calculated by deducting the results of 1Q (April to June) from 1H (April to September)12

Impact of Fuel and FX Markets
Hedge Ratio(As of End of Sep/2019)

Fuel Cost Breakdown by Factors(JPY Bn)
140
Market

125.3

▲6.0

Volumeincrease/
Hedging
FX

+9.0

100%

127.7

▲0.6

40%

90

Approx. Approx.
40%
40%
Approx. Approx.
20%
20%

20%

(＋1.9%)

FX

80%
60%

＋2.3BnFuelApprox. Approx.
5%
5%

0%
1st Half
Mar/19FY2019

1st Half
Mar/20

Profit Impact by Fuel and FX Markets From
FY2019 3rd Quarter (Inc. Hedging, Fuel Surcharge)
Singapore Kerosene(USD/bbl)
FX(JPY/USD)

USD 70

USD 75

USD 80

USD 85

JPY 115+0.5Bn▲2.0Bn▲3.5Bn▲6.0BnForecast

JPY 110+2.0Bn0.0Bn▲2.0Bn▲3.5BnJPY 105+4.5Bn+2.0Bn+1.0Bn▲1.5Bn※Sensitivity for Fuel Costs (hedging excluded）
Crude Oil (Change in 1 USD/bbl
about JPY 2.7 Bn Per Year
FX (Change in 1 JPY/USD)
about JPY 1.9 Bn Per YearFY2020

FY2021

Preconditions/International Passenger Fuel Surcharge
October 1, 2019
~ January 31, 2020

February 1,2020~ March 31, 2020

OutboundZone JPY 8,000

Zone JPY 8,000

InboundZone USD 70

Zone USD 70

Remarks

Already Determined

Depends on the market
conditions of Oct. to Nov.

If fuel price and exchange rate remain at “USD 75 per barrel of Singapore
kerosene and JPY 110 per USD” level, we expect fuel surcharge to be at“outbound Zone JPY 8,000 and inbound Zone USD 70”.

13

Major Balance Sheet Items and Cash Flow Items
Consolidated Balance Sheet（JPY Bn）

End of
Mar/19Total Assets

2,030.3

End of 1st Half
Mar/201,928.8▲101.4

Cash and Deposits

522.0

395.9

▲126.0

Balance of Interest-bearing Debt

142.3

133.9

▲8.4

Future Rental Expenses under Operating
Leases

81.1

74.9

▲6.2

1,165.1
57.4%

1,172.3
60.8%+7.2+3.4pt0.1x

0.1x

Shareholders’ Equity

Shareholders’ Equity Ratio (%)
D/E Ratio (x)Remarks

Diff.

Certificate of Deposits etc. included
Including cash out of 82.7 bil. yen to Corporate Pension
Fund in September

On-balance sheet Interest-bearing Debt / Shareholders'▲0.0x Equity

Consolidated Cash Flow
（JPY Bn）

End of
Mar/19

1st Half
Mar/20Remarks

Diff.

Including one time cash out of 82.7 bil. yen to Corporate

Cash Flow from Operating Activities

150.2

28.7

Depreciation and Amortization

61.8▲118.0▲128.467.8▲106.4▲109.9

32.2

▲77.7

▲109.9 Investing Activities

▲30.5

▲48.4

▲17.9

1.7

▲126.2▲127.9 Investing Activities+ Cash Flow from Financing Activities

158.6
168.4

149.1
159.4

Cash Flow from Investing Activities

Capital Investment
Free Cash Flow
Cash Flow from Financing Activities
Total Cash Flow
EBITDAEBITDAR▲121.5 Pension Fund in September
+6.0
+11.5
+18.5

Cash Flow from Operating Activities +Cash Flow from

Cash flow from Operating Activities + Cash Flow from

▲9.4
▲9.0

14

FY2019 Earnings Forecast
Only revenue forecast has been revised
Future economic trends and air transport demand will be closely monitored
under the recent unforeseeable circumstancesMarket assumption has been revised
Actual results up to Q2, full-year ASK, and the recent trend of passenger and cargo demand have been reflected

Revenue & Expense Forecast Revised(JPY Bn)
Operating Revenue
International
Passenger
Domestic
Passenger

FY2018FY2019FY2019Previous
Forecast(3)New
Forecast

Diff.

Fuel/FX Market and ASK/Operational
Preconditions Revised
FY2018y/yFuel/FX Markets

1,487.2

1,563.0

1,516.0

+28.7

▲47.0

530.6

575.0

524.0

▲6.6

▲51.0

528.0

539.0

547.0

+18.9

+8.0

Cargo / Mail

100.0

106.0

96.0

▲4.0

▲10.0

Other

328.4

343.0

349.0

+20.5

+6.0

1,393.0
1,311.1(1,383.0)

1,346.0(1,336.0)+34.8(+24.8)

▲47.0

251.2

284.0

251.0

▲0.2

1,059.8

1,109.0(1,099.0)

1,095.0(1,085.0)

Operating Profit (1)

176.1

170.0
(180.0)Ordinary Profit

165.3

Net Profit(2)150.8Operating Expense(1)Fuel
Excluding Fuel (1)Result

FY2019Previous
Forecast(3)New
Forecast

Singapore Kerosene(USD/bbl)

83.9

90.0

76.8
(2nd half 75.0)

Dubai Crude Oil(USD/bbl)

69.0

70.0

62.1
(2nd half 59.0)

110.5

115.0 (2nd half 110.0)

FX Rate(JPY/USD)

109.6

FY2019 (y/y)
Previous
Forecast(3)New
Forecast

Int’l

+2.5%

+2.0%

▲33.0

Doms.

+2.6%

+2.3%

+35.1
(+25.1)

▲14.0

Total

+2.5%

+2.1%

170.0
(180.0)▲6.1(+3.8)

Int’l

+4.3%

+1.8%

-

Doms.

+1.3%

+3.6%

171.0

171.0

+5.6

-

Total

+3.2%

+2.5%

114.0

114.0

▲36.8

-

ASK

RPK

(1) Figures in( ) do not include the depreciation method change (2) Net profit attributable to owners of the parent (3) Disclosed on April 26, 201915

《 Reference 》

FY2019 Earnings Forecast
Consolidated Balance Sheet
End of
FY2019End of
FY2018（JPY Bn）

Results

Total Assets

Previous(1)
Forecast

Diff.

New
Forecast(1) Disclosed on April 26, 2019

2,030.3

2,040.0

2,010.0

▲30.0

142.3

167.0

171.0

+4.0

Shareholders’ Equity

1,165.1

1,192.0

1,174.0▲18.0

Shareholders’ Equity Ratio (%)

57.4%

ROIC (%) (2)(3)

9.5%

ROE (%) (4)

13.6%

58.4%
8.6%
(9.1%)
9.7%
8.4%(8.8%)

58.4%
8.6%(9.1%)
9.7%
8.4%(8.9%)▲0.0pt+0.0pt(+0.0pt)+0.1pt+0.1pt(+0.1pt)

Balance of Interest-bearing
debts

ROA (%)(3) (5)9.1%(2) NOPAT/Average Fixed Asset (incl. Future Rental Expenses under
Operating Leases) at beginning and end of a fiscal year
(3) Figures in ( ) do not include the depreciation method change(4) (Net profit attributable to owners of the parent) / (Average ofshareholder’s equity at beginning and end of a fiscal year)(5) (Operating profit) / (Average of total assets at beginning and endof a fiscal year)

Investment

Consolidated Cash Flow
FY2018（JPY Bn）

Results

FY2019Previous(1)
Forecast

FY2019FY2018

New
Forecast

Diff.

（JPY Bn）

Results

Previous
Forecast(1)New
Forecast

Diff.

Cash Flow from Operating Activities(6)

296.7

219.0

204.0

▲15.0

Fleet

175.4

189.0

185.0

▲4.0

Cash Flow from Investing Activities▲186.3▲259.0▲234.0+25.0

Ground・IT, etc

50.8

75.0

73.0

▲2.0

Free Cash Flow (6) (7)

110.3

▲40.0

▲30.0

+10.0

Total

226.2

264.0

258.0

▲6.0

Cash Flow from Financing Activities

▲37.0

▲47.0

▲50.0

▲3.0

EBITDA

300.2

309.0

307.0

▲2.0

EBITDAR

320.1

327.0

328.0

+1.0

GrowthInvestment (8)Replacement
investment (9)(6) Including cash out to Corporate Pension Fund (JPY 80.0 bil. in Previous Forecast, JPY 82.7 bil. (result) in New Forecast)(7) Cash Flow from Operating Activities ＋Cash Flow from Investing Activities(8) Growth investments＝i.e., Introduction of aircraft that will contribute route expansion, flight frequency increase,or operational efficiency improvement, improvement of quality, service or efficiency, or Development of new business domains.
(9) Replacement investments＝i.e., Replacement of old regional prop aircraft or aircraft parts, replacement of existing old facilities,
or for compliance to laws and regulations.

192.0
66.0

16

《 Reference 》

FY2019 Earnings Forecast (Air transportation Segment)International Passenger
Operations

y/y（%）FY2018FY2019Full-year（Forecast）

1st Half（Result）

2nd Half(Forecast)

Passenger Revenue (JPY Bn)

530.6

524.0

▲1.3％

▲1.2％

▲1.4％

Passengers (’000)

9,128

9,165

+0.4％

▲0.5％

+1.3％

ASK

(MN seat km)

54,92556,027

+2.0％

+2.5％

+1.6％

RPK (MN passenger km)

44,65945,449

+1.8％

+0.9％

+2.7％

L/F (%)

81.3％

81.1％

81.1％

81.1％

81.1％

Revenue per Passenger(1) (JPY)58,13657,166

▲1.7％

▲0.7％

▲2.7％

Yield(2) (JPY)

11.9

11.5

▲3.0％

▲2.0％

▲3.9％

Unit Revenue(3) (JPY)

9.7

9.4

▲3.2％

▲3.5％

▲2.9％

Domestic Passenger
Operations

y/y（%）FY2018FY2019Full-year（Forecast）

1st Half（Result）

2nd Half(Forecast)

Passenger Revenue (JPY Bn)

528.0

547.0

+3.6％

+3.3％

+3.9％

Passengers (’000)

34,85936,031

+3.4％

+3.4％

+3.3％

ASK

(MN seat km)

36,11636,959

+2.3％

+1.7％

+3.0％

RPK (MN passenger km)

26,19527,145

+3.6％

+4.4％

+2.9％

L/F (%)

72.5％

73.4％

73.4％

74.0％

72.9％

Revenue per Passenger(1) (JPY)

15,14915,179

+0.2％

▲0.2％

+0.6％

Yield(2) (JPY)

20.2

20.1

▲0.1％

▲1.1％

+1.0％

Unit Revenue(3) (JPY)

14.6

14.8

+1.2％

+1.5％

+0.9％

(1) Revenue per Passenger = Passenger Revenue / Passengers (2) Yield = Passenger Revenue / RPK(3) Unit Revenue=Passenger Revenue / ASK

17

《 Reference 》

Revenue of International Routes by Geographic Segment
Passenger Revenue(%)

1st Halfy/y

2nd Quartery/yAmerica

+9.8%

+4.0%

Europe

▲5.7%
▲2.7%
▲2.1%
▲11.3%
▲1.2%

▲8.1%
▲4.2%
▲6.5%
▲11.9%▲4.3%

Asia/Oceania

China
Hawaii/Guam
Total

Proportion of whole Int’l
Mar/19
1st Half

Mar/20
1st Half

26%
18%
30%
12%
14%
100%

2nd Quarter

29%
17%
30%
11%
13%
100%

28%
18%
29%
11%
14%
100%

Revenue Passengers Carried

ASK(MN seat km)

America
EuropeAsia/Oceania
China

Hawaii/GuamTotal

1st Half
Mar/19Mar/20

2nd Quartery/y

Mar/20(‘000)

y/y7,779 8,564 +10.1% 4,342 +10.8%
4,004 4,128 +3.1% 2,115 +2.0%
9,558 9,822 +2.8% 4,924 +2.2%
1,711 1,815 +6.1%
902 +5.1%
4,345 3,740 ▲13.9% 1,895 ▲14.6%
27,399 28,072 +2.5% 14,180 +2.1%

America
EuropeAsia/Oceania
China
Hawaii/Guam

Total

America
EuropeAsia/Oceania
China
Hawaii/GuamTotal

1st Half
Mar/19Mar/20

2nd QuarterMar/19Mar/20

y/y

678
386
2,102
810
626
4,605

750 +10.7%
388 +0.3%
2,106 +0.2%
809 ▲0.1%
526 ▲15.9%
4,582 ▲0.5%

Mar/20y/y

382 +10.3%
203 ▲0.7%
1,052 ▲0.5%
403 ▲3.2%277 ▲15.2%
2,319 ▲1.4%

Load Factor for Revenue Passengers

RPK(MN passenger km)

1st Half

2nd Quartery/y

Mar/20(%)

y/y6,471 7,078 +9.4% 3,613 +9.1%
3,456 3,420 ▲1.0% 1,788 ▲1.6%
7,691 7,738 +0.6% 3,894 +0.2%
1,497 1,512 +1.0%
754 ▲2.3%
3,455 3,018 ▲12.6% 1,578 ▲12.4%
22,572 22,768 +0.9% 11,627 +0.3%

America
EuropeAsia/Oceania
China
Hawaii/GuamTotal

1st Half

2nd QuarterMar/19Mar/20y/yMar/20

y/y

83.2%
86.3%
80.5%
87.5%
79.5%
82.4%

82.6％
82.9％
78.8％
83.3％
80.7％
81.1％

▲0.5pt▲3.5pt▲1.7pt▲4.2pt+1.2pt▲1.3pt

83.2％
84.5％
79.1％
83.6％
83.3％
82.0％

▲1.3pt▲3.1pt▲1.5pt▲6.3pt+2.1pt▲1.4pt18

《 Reference 》

Number of AircraftEnd of Mar/19(March 31, 2019)
Owned
LeasedTotal

Airbus A350-900
Boeing 777-200
Boeing 777-200ER
Boeing 777-300
Boeing 777-300ER
Large-sized Total
Boeing 787-8
Boeing 787-9
Boeing 767-300
Boeing 767-300ER
Middle-sized Total
Boeing 737-400
Boeing 737-800
Small-sized Total
Embraer 170
Embraer 190
Bombardier D8-400
Bombardier D8-400CC
SAAB340B
ATR42-600
ATR72-600
Regional Total
Total

End of 1st Half Mar/20(September 30, 2019)
Owned
Leased
Total

0
12
11
4
13
40
25
14
6
29
74
3
42
45
18
14
1
5
8
5
1
52

0
0
0
0
0
0
0
3
0
0
3
0
20
20
0
0
0
0
0
1
0
1

0
12
11
4
13
40
25
17
6
29
77
3
62
65
18
14
1
5
8
6
1
53

211

24

235

3
12
11
4
13
43
25
14
6
29
74
0
43
43
18
14
0
5
6
5
2
50
210

0
0
0
0
0
0
0
3
0
0
3
0
19
19
0
0
0
0
0
1
0
1
23

3
12
11
4
13
43
25
17
6
29
77
0
62
62
18
14
0
5
6
6
2
51
233

Diff.
+3
+3
▲3
▲3
▲1
▲2
+1
▲2
▲2
19

INTENTIONALLY LEFT BLANK

20

《Reference》

ESG Management towards achievement of SDGs
※Originally disclosed on February 25,2019

In this Medium Term Management Plan,
we look to identify priority issues from the viewpoint of ESG management.
And strive to solve social issues through to achieve SDGs *1 in 2030.

2030
FieldsEnvironmental

Grand Design
SocialCustomer &Region2020
Medium Term
Management
Plan

View of ESG
Management

Priority Issues• Reduce greenhouse gas• Reduce wastes• Lower noise• Lead safe operation in aviation industry• Provide Air travel for all customers• Promote initiatives to increase inboundvisitors as a tourism nation• Revitalize all regions in Japan• Products and services trusted bycustomers

SocialHuman Rights
D&I*2• Diversity & Inclusion, health management• Develop female leaders• Establish healthy*3 supply chains

Governance• Obey compliance• Disclose information positively andkeep accountability• Robust risk management*1 Aiming to realize a sustainable society, SDGs consist of 17 targets that the international community should be solved by 2030.
*2 To take advantage of different experiences and perspectives, accepting the difference, and create new things.
*3 Condition which realize close attention to environment, fair business process, respect of human right etc.

21

《Reference》

ESG Contribute to achieve SDGs, through our business activities, toward the realization of asustainable society and corporate value increase Established The JAL Group Code of Conduct “Commitment to Society”

Environmental

・Low-Carbon Initiatives:
Introduce fuel-efficient aircraft andaim for eco-friendly operation
・Promote usage of Biofuel：Invested in Fulcrum BioEnergy, Inc.
a Biofuel manufacturer【CO2 Emissions】
110%
CO2/RTK(2005年比）
CO2/RTK(comparison
with FY2005)
100%

FY18

90%

Social・Diversity promotion initiatives
・Build a sustainable supply chain
・Contribute to regional revitalization
through tourism and promote
inbound tourism【Diversity promotion initiatives】- Reemployment support for women
Implemented the ”Work Again Program”- Awarded a second prize in the Advanced
Category at the J-Win Diversity Award’s
Corporate Awards Division

80.6%

80%

77.0%

70%
2005

2010

2015

2020

Steadily striving toward the goal of the CO2
emissions reduction by 23% from the FY2005
emission level

FuelEfficient
AircraftApplicable Aircraft： A350,787,777,737-800,E170/190~2018 : Result, 2019~: Plan

・High transparency and strict
management oversight：-3 Independent External Directors withextensive management experience-3 Independent External Auditors withlegal and accounting expertise-Voluntarily set up various committees,in which the majority of members ofeach committee are External Directors-The members are publicly disclosed-Chairpersons are all External Directors
excluding the Personnel Committee,
which supervises personnel affairs of
Executive Officers【Building a Sustainable Supply Chain】- Joined to “Global membership” of Sedex
Board of Directors- Formulate a JAL Group Supplier Code of Conduct
3 External Directors out of- Comply to the Tokyo 2020 Olympic andten Directors(30％）
Paralympic Games Sustainable Sourcing CodeRecommendation- Conduct CSR audit to suppliers

Establishment of Various Committees【Share of “Fuel-Efficient Aircraft”】
OthersGovernanceCorporate Governance Committee【Contribute to Regional
Revitalization through Tourism
and Promote Inbound Tourism】- Invested in ALL JAPAN Tourism Oriented
Country Fund
- Named as Japan’s best airline for the third
consecutive year in the 2019 TripAdvisor®
Travelers’ Choice™
awards for Airlines

Nominating Committee

Compensation Committee
Personnel Committee
Officers Disciplinary Committee

22

《Reference》

Financial Strategy and Capital policy① ※Originally disclosed on February 25,2019
Capital investments will be made within cash flow from operating activities.
Approximately 2/3 of the total investment will be actively used for growth investment
to increase corporate value.

Aircraft investments will be accelerated with the additional 40 bn yen for further growth.
FY2018～2020

Total

Replacement
investments

220bn yen

700bn yen (vs previous ＋40
plan

vs previous plan40)

Growthinvestments

Generate
new cashflow

480bn yen

Investments
to achieve
extraordinary
growthStrategic growthinvestment line

50bn yen

Aircraft

490bn yen(vs previous
plan

＋40 )

Under
consideration

International capacity expansion＋30
Change introduction schedule, etc.＋10

FY2018FY2019～20

179 bn yen
311 bn yen (planned)

Ground・IT, etc.

Medium- and long-haul LCC

210bn yen

23～bn yen

Smart airports, improved
revenue management, etc.
Aircraft

Ground・IT, etc.

Growth investments：

Aircraft introduction for new routes, flight frequency
increase or improved operational efficiency
FY201859 bn yen
Replacement investments：Replace old regional prop aircraft, aircraft parts, or etc.
FY2019～20
151 bn yen (planned)
Growth investments：
Improve quality, service or efficiency. Develop new
business domains,, etc.
Replacement Investment: Replacement of existing old facilities or for compliance to laws and regulations or etc.

23

《Reference》

Financial Strategy and Capital policy② ※Originally disclosed on February 25,2019
We will strategically allocate capital to increase corporate value, while maintaining
a firm financial structure with high capital efficiency.
Improve asset efficiency
and capital efficiency• Due to investments and preparatory
costs for “development at Haneda andNarita” in FY2020, together withtemporary supply-demand imbalance,
ROE and ROIC will decline temporarily.
However we aim to maintain or increase
ROE from 10% and further increase ROIC
through sustainable profit growth.

158

Further increase
shareholder returns

Capital allocation• We will maintain approximately 2.6 months’
worth of revenue as cash on hand required
for stable management and allocate theadditional capital strategically.
• Growth investment is actively promoted withinterest-bearing debt. Also, the 50-billion yen
strategic growth investment line will beeffectively utilized.
• By the first half of FY2019, approximately 80
billion yen will be injected to the Corporate
Pension Fund for strengthening its financialbase and reducing debts relating to JAL
retirement benefits .

Strengthen financialbase of Corporate
Pension Fund
▲80

330

Injectionplanned in
FY2019H1

Strategic growthinvestment line
▲50

Free cash flow*2
・Debt utilization,etc.

• We will raise the dividend payout ratio
from FY2019 to maintain the current levelof dividend per share, after the effective
tax rate increase, in order to stabilize
dividends while referring to Dividend on
Equity Ratio (DOE) .
• Combining stable dividends and flexible
share repurchases, we will implement
shareholder return measures , taking into
account a total return ratio *1.

Shareholder
returns

Capital allocation

2.6 months’
worth ofrevenue(Unit：JPY bn)

Cash & deposits
projection at the endof FY2018*1（ Total amount of dividend + Amount of share repurchase) / net profit
attributable to owners of the parent*2 Cash flow from operating activities＋cash flow from investing activities

Cash & deposits
Projection at the endof FY202024

《Reference》

25,2019
Financial Strategy and Capital policy③ ※Originally disclosed on February（Partial update ）Stable financial structure with high capital efficiency
Enhancement of shareholder return and capital allocation for corporate value increases
Capital efficiency

Financial structure
Shareholders’equity ratio
 Equity ratio reached approx.
60%. Having built strong
financial structure, we will
work to maintain the current
level

Credit rating Aim to achieve andmaintain “A flat” or above
credit rating by improving
cash flows and securing
fruits from our growthstrategies

Shareholders return

Decrease cost of capital
Utilize debt
 Decrease cost of equity
through comprehensive
information disclosure, IR, etc.
 Utilize debt with discipline
based on adequate debt
repaying capacity with
sufficient cash flow fromoperating activities Based on our current scale ofbusiness operations, standard
liquidity on hand is set atapproximately 2.6 months’
worth of revenue (currently
approx. 330 bn yen) for
sufficient event risk tolerance
as well as return on assets(ROA)

Total Shareholder Return History（FY2012～FY2019）※Updated Dividends with focuses on continuity, stability andpredictability
・Approximately 35% is a benchmark for payout ratio.
・Income tax deferred is no longer excluded from 2019, except an
extraordinary case.
 Total return will be focused
・Return will be made through the combination ofdividends and share repurchase, aiming for a range ofapproximately 35% to 50% of total return ratio

Liquidity※Updated（JPY Bn）

250.0

60%
47.7%

200.0

44.5%
171.6

174.4

166.2
149.0

150.0

164.1

50%

150.8

40%

135.4
25.1%

100.0

(1) Amount of share repurchases include those whose resolutions were passed
50.0
before the closing of accounts for the current fiscal year(2) Dividend payout ratio=Total dividends/Base profit for dividends calculation (4)(3) Total return ratio=（Total amount of dividend + Amount of share repurchase）/
0.0
Base profit for dividends calculation(4)(4) Base profit for dividend calculation = (Net profit attributable to owners of the parent +income tax deferred) （From FY2019, income tax deferred is no longer excluded)(5) In the FY2019 total dividends, the payout ratio and Total Return Ratio calculation, thenumber of shares issued at the end of the 1st half of FY2019, excluding treasury stock,is used.

49.2%

50.6%

18.9%

25.0%

25.1%

29.4%

30%

20.0%

29.0

37.7

32.3%

33.1%

30.0

20.0

20.0

20.0

33.2

38.7

38.3

37.7

43.5
32.3

114.0

20%
10%

FY2012 FY2013 FY2014 FY2015 FY2016 FY2017 FY2018 FY2019(5)（Forecast）

Net Profit
Attributable toowners of theparent

Total
Dividends

Share
Repurchase(1)

Payout
Ratio
(2)

Total
Return
Ratio
(3)

25

Fly into tomorrow.

Finance & Investor Relations, Japan Airlines©Japan Airlines, ALL rights reserved.

26

ZIPAIR Presentation
for Investors Meeting

ZIPAIR Tokyo Inc.
2019/10/31

27©ZIPAIR Tokyo Inc.

Progress of Preparation for Launching
RoutesNarita = Bangkok May 14, 2020 (Plan)
Narita = Seoul July 1, 2020(Plan)

Aircraft

787-8 (290 Seats)
The first two aircrafts are ones used by JAL
Newly painted aircraft arrived at Narita on 27 October

IT System

LCC-specialized Passenger Service System (PSS, different from
JAL’s one) will be introduced
Other system is under development (on schedule)

Air Crew

The first set of air crew recruiting has been completed
Flight crew and Cabin crew are on training

Designators

28

IATA 2-Letter Designator: ZG
ICAO 3-Letter Designator: TZP
Call Sign: “Zippy”©ZIPAIR Tokyo Inc.

Profit making structure = Basic Structure =ToplineCost
Structure

Toward destinations where there is no LCC competitors (ex.
Transpacific)⇒ Superior competitive position (no competing LCC)
⇒ Demand capturing with low fares

High Productivity

Minimized Indirect Cost

Productivity will be doubled(vs. JAL)
Seat Number
Aircraft
TurnoverEfficient Operation
・Lean Back-office・High-Technology
・JAL Assets

The Economy of Scale by JAL Group

Long-haul Flight Operation
Know-How (787)(Maintenance andOperation Support)
29

Cost Reduction through Joint
Procurement(Aircraft・Fuel・Insurance)©ZIPAIR Tokyo Inc.

Revenue/Cost Structure (Conceptual Image)① Airfare Revenue (Fare multiplied by Passenger Number) covers operating cost
②Ancillary Revenue brings profits
Cost
Conceptual Image
CASK

JAL
CASK

Seat
Improved Lean
Number Turnover BackIncrease
OfficeZIPAIR
CASK

Revenue
Conceptual ImageRASKZIPAIR Airfare Ancillary
CASK Revenue Revenue
30©ZIPAIR Tokyo Inc.

RASKCASK Comparison (EBIT used, ZIPAIR Fifth year forecast, fuel cost included)
ZIPAIR will be at competitive level with other LCCs
Japanese Yen

Air Asia

3.9

Wizz Air

3.9

Noweigean

ZIPAIR
Vueling
Easyjet5.2
approx. 5.5
6.8

7.3

southwest

7.8※Source: Each Airlines’ Annual Report 2018 FX/ GBP-JPY: 140.05, USD-JPY:108.64, EUR-JPY: 120.90, NOK-JPY: 11.92, MYR-JPY25.96

31©ZIPAIR Tokyo Inc.

(Reference) 787 Operators
ZIPAIR will use JAL’s Know-how for 787 long-haul flight operations such as
maintenance and flight operation

787 Operators
Delivered Aircrafts

894

ANA

74

United

46

JAL

42

American42

Air Canada

37

Ranking

32※ Source: The Boeing Company; as of SEP 2019

©ZIPAIR Tokyo Inc.

Disclaimer

This content contains descriptions of the future expectations, outlooks, objectives and plans etc. ofJapan Airlines Co., Ltd. (hereafter "the company") and related Group companies (hereafter "the Group").
These are based on information available at the time when these materials were created by the company(or as otherwise specified), and are created based on the forecasts at such time. These statements werecreated based on certain assumptions. These statements and assumptions include the subjective
projections and judgments of our management, and due to various risks and uncertainties, these may befound to be inaccurate or unrealized in the future. Therefore, the actual results, earnings and financial
conditions, etc. of the Group may differ from the projections of the company. These risks and uncertainties
include, but are not limited to, the economic and social conditions of Japan and other countries andregions, soaring fuel costs, changes in the exchange rates between the yen and the dollar or othercurrencies, terrorist attacks or wars, infectious disease outbreaks, and various other risks related to theaviation business. Statements on this content regarding future information are, as mentioned above, valid
at the time of creation (or as otherwise specified), and our company has no obligation to ensure that thisinformation is updated with the latest available information. The information contained in this content is for
informational purposes only, and is not intended as a recommendation, solicitation or request for thepurchase of or trade in any securities or financial products. Although every effort has been made to ensurethat the information posted on this content regarding the Group is correct, it includes unaudited financial
information for which we provide no guarantee of its accuracy, completeness, fairness or reliability. The
Company does not have any responsibility for any damages resulting from the use of this content. It
should be noted that all rights with this content and other copyright of this material belongs to Japan
Airlines Co., Ltd.