Financial Report for the Third Quarter ending March 2024, Major Q And As■ Overall performance
Q1: Please explain this quarter’s performance (October to December) in comparison withthe plan.
A1: EBIT for the third quarter was 37.7 billion yen. Compared to the plan, EBIT was about+11.0 billion yen (above the plan), revenue was about +4.0 billion yen, and expenses
were about ▽7.0 billion yen (decrease in expenses). For revenue, +4.0 billion yen wasfrom domestic passenger revenue, for expenses ▽4.0 billion yen was from fuel costs(decrease in expenses), and the remainder is a decrease in aircraft depreciation andexternal service expenses.
■ Full-Year Performance Forecast
Q2: With factors such as the accident of JL516 resulting in an operating loss of 15 billion
yen, and international passengers underperforming, please tell us about yourcountermeasures to achieve the annual EBIT forecast of 130 billion yen.
A2: We believe that achieving 130 billion yen in EBIT is fully possible. Passenger demandfor international passengers did not recover as expected in December. In particular, wecould not fully capture transit demand from overseas passengers connecting to Japan, so
we have revised our strategy for February and March. We also expect to be able tomaintain the current level of revenue per passenger. Passenger demand for domestic
passengers in January seems weaker than expected, but this is due to reduced flights
following the closure of Runway C at Haneda Airport, and the impact is temporary.
Q3: Is the insurance payment for the accident on JL516 included in the full-year EBIT
forecast of 130 billion yen.
A3: Insurance for the accident of JL516 is not included in the full-year forecast as the timingof payment is currently unknown. Therefore, if the loss of 15 billion yen due to the total
loss of the aircraft is not taken into account, EBIT for the full year would be 145 billion
yen.
■ International and Domestic Passengers
Q4: Although revenue per passenger for international passengers is favorable, please tell us
if there are any concerns that revenue per passenger will decline going forward.
A4: We expect to be able to maintain the same level of revenue per passenger in the fourth
quarter as in the third quarter. In the long run, there may be a gradual decline, but webelieve that the current high level can be maintained at least until the second quarter ofthe next fiscal year.
Q5: Growth in demand from Japan for international passengers is trending lower than
expected. What are your prospects for recovery?
A5. Tourism demand from Japan is still low and there are limited signs of recovery as ofnow. However, rapid recovery is seen during peak periods such as the New Yearholidays and the long holiday in May especially for business class and those who had
been traveling overseas prior to the COVID-19 pandemic. Our task is to attract
younger passengers who did not have the opportunity to travel overseas due to thepandemic. We are working to meet the needs of younger passengers and stimulate
demand for overseas travel by launching measures such as the 70th anniversary
campaign and a campaign for free in-flight Wi-Fi.
Q6: Regarding international passengers, there is a possibility that the supply-demandbalance on North American routes will loosen due to factors such as the return of flightsby U.S.-based carriers. What is your view of the North American market going forward?
A6. For international routes, North American and Southeast Asian routes are particularly
strong in demand and profitable. Total market supply in the North American market
has returned to pre-pandemic levels, but both JAL and ZIPAIR have been able toincrease their market shares and will continue to strengthen their initiatives. As for
European routes, JAL will begin service to Doha on March 31. This is our first entry
into the Middle East area, but our partner Qatar Airways also flies many routes, and weexpect to generate revenue through this route as a southbound connecting flight toEurope.
Q7: The revenue per passenger for domestic flights continues to be high. Please tell us
whether you expect this level to remain high going forward.
A7. The increase in revenue per passenger for standard fares and flex fares, for which wehave raised prices, will be maintained. Other factors contributing to higher revenue perpassenger include changes in the composition of individual and group passengers andthe effects of revenue management, which will also be maintained.
■ LCCsQ8. EBIT for the third quarter was a loss of 1.4 billion. Please explain the reason for the loss
amidst the growth of ZIPAIR.
A8. The LCCs consist of ZIPAIR, Spring Japan, and Jetstar Japan (Jetstar Japan is anaffiliated company accounted for by the equity-method). ZIPAIR is continuing toperform strongly. On the other hand, Spring Japan is struggling due to the slow
recovery of demand from China. Jetstar Japan is recovering from the previous year, but
demand has not fully returned to the pre-pandemic levels. The combination of thesefactors resulted in a loss for the LCC business domain in the third quarter.
■ Outlook for the next fiscal year.
Q9: Please give details on your outlook for the next fiscal year.
A9: We believe that we will be able to increase both revenue and profit next year.
For international passengers, we expect a recovery in demand from Japan, and we willcontinue to capture strong business demand. For China routes, conditions are currently
difficult, but there is potential for recovery in the second half of the next fiscal year. ForLCCs, ZIPAIR will expand its routes.
For domestic passengers, demand has already recovered to pre-pandemic levels.
Therefore, we will steadily improve revenue per passenger to improve earnings.
For Cargo/Mail, a new freighter business will be launched.
For Mileage, Lifestyle and Infrastructure, revenue from mileage declined this fiscal year
due to a decrease in expiry rates, but the number of issued mileage points is growing
steadily, and we forecast this growth will continue.
We will provide more details in the "JAL Group Medium-Term Management Plan
Rolling Plan 2024" which is scheduled to be announced on March 21.