J A L

R E P O R T

2 0 1 4

English Version

Gazing up the blue
Pointing at an airplane
Our hearts’ desires stirred
In our longing to soar the skies
Dreams made true by our passions,determination, and appreciation
All hearts skyward together

Fly into Tomorrow

JAL REPORT 201401

Cast in dawn’s early glow
An airplane awaits in silence
Then engines awaken the morning air

02

JAL REPORT 2014

Contents

JAL Group Corporate Policy
The JAL Group will:
Pursue the material and intellectual growth of all
our employees;
Deliver unparalleled service to our customers; andIncrease corporate value and contribute to thebetterment of society.

04

Highlights

06

President’s Message

16

Review of Operations

		

Air Transport Segment / Others

21

Each of Us Making JAL What It Is

22 utting Ourselves in the Customer’s
P
Position26
		Employee Dialog
 Uniting Our Hearts as We Move Forward—

30T aking Customer Satisfaction to a Class
Above

31	JAL Group’s Corporate Social
Responsibility
33

F our Key Areas of the JAL Group’s CSR
Activities

34

Safety and Security

40

The Environment

44

Bridging Japan and the World

46

Nurturing the Next Generation

48

Relationship with Our Employees

51

Partnership with Business Associates

52

Third-Party Opinion

53

Governance54

Corporate Governance57

Executive Officers

59

Financial Section

89

Consolidated Subsidiaries

90

JAL Group Route Network

93

Shareholder Information

Editorial Policy

JAL Report 2014 was compiled using various
referential guidelines as an integrated report on
financial information and CSR activities, and isintended to promote understanding of thecorporate value and growth prospects of the
JAL Group.

Period Covered by
the Report

In principle, the report covers activities for theperiod from April 2013 to March 2014 (FY2013).

Scope of the Report

JAL Group companies

Date of Publication

July 2014

JAL REPORT 201403

Highlights
Major Financial Items
Japan Airlines Co., Ltd. Consolidated performance
FY2013 (Accounting date: March 31, 2014), FY2012 and FY2011(Millions of yen)

FY2011FY2012FY2013Operating Revenue

1,204,813

1,238,839

1,309,343

Operating Expense

999,890

1,043,596

1,142,550

Operating Profit

204,922

195,242

166,792

Ordinary Income

197,688

185,863

157,634Net Income

186,616

171,672

166,251

Net Income Per Share (Yen)

1,029.03

946.71916.90Interest-bearing Debt

208,460

160,145

134,282

Shareholders’ Equity

388,523

565,048

690,288

Net Assets

413,861

583,189

711,064

Total Assets

1,087,627

1,216,612

1,340,168

181,352

181,352

181,352

Shares Issued (Thousand shares)

Traffic Results
Japan Airlines Co., Ltd. Consolidated performance
FY2013 (Accounting date: March 31, 2014), FY2012 and FY2011

Revenue passengers carried(number of passengers)

Revenue passenger km(1,000 passenger-km)

Revenue passenger-loadfactor (%)

Available seat-km(1,000 seat-km)

Revenue cargo ton-km(1,000 ton-km)

04

JAL REPORT 2014

FY2011FY2012FY2013

Domestic

28,965,514

30,020,440

31,218,734

International

6,844,772

7,525,038

7,723,293

Total

35,810,286

37,545,478

38,942,027

Domestic

22,264,394

23,012,898

23,745,163

International

30,313,789

34,036,119

35,390,384

Total

52,578,184

57,049,018

59,135,548

Domestic

62.7

63.1

64.0

International

70.4

76.1

76.5

Total

66.9

70.3

71.0

Domestic

35,523,214

36,443,994

37,084,260

International

43,036,984

44,745,317

46,235,058

Total

78,560,199

81,189,311

83,319,319

Domestic

355,909360,176

366,989

International

1,314,295

1,378,282

1,512,142

Total

1,670,205

1,738,458

1,879,132

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

Operating Revenue(JPY Bn)

1,500

250

1,200

Governance1,309.3

(%)
25

204.9

195.2

200

900

166.7
17.0

150

20
15

12.7

15.8
600

100

10

300

50

5

0

2011

2012

0

2013 (FY)

2012

2011

2013 (FY)(JPY Bn)(JPY Bn)

186.6

171.6

0

EBITDA*1 / EBITDA Margin*2

Net Income

200

300

(%)

286.1

166.2

276.2

240

160

23.8

30

249.5
24

22.3

120

180

19.1 18

80

120

12

40

60

6

0

2011

2012

0

2013 (FY)2011

Net Income Per Share
(Yen)

(%)
60

1,029.03
946.71 916.90

40

600

30

300

20

2011

2012

10

2013 (FY)Interest-bearing Debt / D/E Ratio(JPY Bn)

2013 (FY)

0

51.5
46.4

50

900

0

2012

Equity Ratio

1,500
1,200

Financial Section

Operating Profit / Operating Profit Margin(JPY Bn)

1,204.8 1,238.8

CSR

35.7

2011

30,8821.0

35,0000.8

28,0000.6

21,0000.4

14,000

0.2

7,000

208.4
200

2013 (FY)

Number of Employees (Consolidated)(Times)250

2012

31,47230,875

160.1
134.2

150

0.5
100

0.3
0.2

50
0

2011

2012

2013 (FY)

0

0

2011

2012

2013 (FY)*1 EBITDA: Operating Profit + Depreciation*2 EBITDA Margin: EBITDA ÷ Operating Revenue

JAL REPORT 201405

P resident’s M essage

06

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Working Together with Our Employees
to Become the Most Preferred Airline
in the WorldWe announced the JAL Group Medium Term Management Plan for Fiscal Years 2012–2016 two years
ago as the first plan formulated independently by the current management team, set up after the corporate bankruptcy in 2010. Development of the plan involved about six months of in-depth discussions
on the direction JAL should take to establish a high-profit structure aimed at fully regaining stakeholder
confidence, continue providing the best service for customers and serve reliably as a company that
contributes significantly to society.
Our primary objective was to create a plan that every employee could understand and act upon.
Maintaining safe operations and providing the best service for our customers require the completealignment of all employees toward the same goal as we “pass the baton,” regardless of their individual
worksites. We began by studying the JAL Philosophy and bringing in the divisional profitability management system to unite all 32,000 Group employees as one team so that we could quickly, effectively andaccurately respond to the changing business environment and any challenges that may arise.
Since the plan’s announcement, our business environment has in fact been subject to significant
change, including a further weakening of the yen, rising fuel prices and escalating competition due toan increase in the number of departure and arrival slots in the Tokyo metropolitan area. Nevertheless,thanks to the patronage of our many customers as well as public support, we were able to build on ourefforts with employees and enter into the third year of the plan without having to change our three management targets: maintaining the highest standard of safety, Customer Satisfaction No. 1, and operating
profit margin of 10% or more and equity ratio of 50% or more in FY2016.
Our projections for the current fiscal year anticipate lower earnings on higher revenues for the third
consecutive year, reflecting severe operating conditions. This year will be a time of preparation forachieving higher earnings on higher revenues starting with next fiscal year, and we intend to face eachchallenge, united with our employees as a single team. We look forward to your continued patronage
and support as we advance toward our goal of becoming the most preferred airline in the world.

Yoshiharu Ueki
Representative Director, President
Japan Airlines Co., Ltd.

JAL REPORT 201407

Looking Back on FY2013

Market Outlook

During the consolidated fiscal year ended March

Momentarily restrained by a higher consumption

31, 2014, consolidated operating revenue in-tax rate, the Japanese economy is expected tocreased 5.7% year-on-year to 1,309.3 billion

continue showing gradual growth. The global

yen, operating profit declined 14.6% year-on-

economy is also expected to remain on a path ofyear to 166.7 billion yen and net income fell 3.2%

recovery, alongside risk factors such as the slow-

year-on-year to 166.2 billion yen. Operating profit

down in economic growth among both newly

margin declined by 3.0 percentage points year-

emerging markets and resource-rich countries

on-year but was maintained at a high level ofand further developments in the European sov-

12.7%, thereby achieving the management tar-ereign debt issue. Due to the continued recovery

get of 10% or more set by the JAL Group Me-

in domestic and global economies and demand

dium Term Management Plan for Fiscal Years

generated by low-cost carriers (LCCs), we expect

2012–2016 (hereafter “Medium Term Manage-

passenger demand for both international andment Plan”).

domestic flights to continue rising. In our cargo

We are steadily accumulating capital. Our equity ratio was 51.5% at the end of March 2014business, where a rapid upturn is unlikely, we
also expect steady demand to continue.

compared to 46.4% a year ago. We are press-

From the perspective of airline industry supply,ing ahead, confidently approaching the target

we expect significant increases due to the greaterof achieving an equity ratio of at least 50% in

number of departure and arrival slots for interna-

FY2016 as set out in our Medium Term Manage-

tional flights in the Tokyo metropolitan area andment Plan.

the introduction of large aircraft by domestic competitors, further expansion of LCCs and development of the Shinkansen (bullet train) network.

Overview of FY2013 Results
Operating Revenue

Operating Profit(JPY Bn)

1,204.8 1,238.8

1,309.3(JPY Bn, %)

204.9

195.2
166.7

17.0

As a result, supply will exceed demand, further
intensifying an already competitive environment,
while rising fuel costs caused by the weaker yen
are expected to affect the profitability of Japanese airline companies.

15.8
12.7

2011

EquityRatio (%)

20122013 (FY)

2011

2012

2013 (FY)FY2011FY2012FY2013Year-on-Year
Change

35.7%

46.4%

51.5%

+5.1 pt

Formulation of the Rolling Plan 2014
for the JAL Group Medium Term
Management Plan for Fiscal Years
2012–2016
The JAL Group did its utmost to provide customers with unparalleled service with a focus on
maintaining safe operations, and heightened the
profit consciousness of employees under thepractice of the JAL Philosophy and a divisional
profitability management system that promoted
autonomous management and increased management efficiency.
We believe it is important to sufficiently review
the progress and achievements of the Medium
Term Management Plan, analyze and review theresults, identify measures that need to be improved, and explain the status of this process
and future concerns to our staff, customers,
shareholders and all other stakeholders.
To initiate the third year of the Medium Term

08

JAL REPORT 2014

Highlights“

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Let us boldly embrace the challenges
facing us, especially in these difficult
times, to make FY2014 the turning
point for achieving higher earnings onhigher revenues.

”

Management Plan, we humbly reviewed the pastsame, toward achieving the following objectives:

two years, reconfirmed the policy to make sure• to enable JAL Group staff to reaffirm the direc-

we can accomplish our target in the remaining

tion we are heading for, and to understand ourthree years, and formulated the “JAL Group Me-

current positioning; anddium Term Management Plan for Fiscal Years• to present our customers, shareholders and all

2012–2016 Rolling Plan 2014” (hereafter “Medi-other stakeholders with the status and progressum Term Management Plan Rolling Plan 2014”)of the plan and future concerns

on March 26, 2014. On the basis of the current

By steadily implementing the Medium Term

operating environment, we have confirmed thatManagement Plan Rolling Plan 2014 and achiev-

the management targets as stated in our Me-

ing our management targets, we aim to realize

dium Term Management Plan will remain thethe JAL Group Corporate Policy.

period that our ability to execute the Medium Term
2012– FY2013 AManagement
Plan was tested

FY

Drawing on lessons learned in the past that we created plans without full execution of the measures we had
decided to take, and without ample analysis, all JAL Group staff worked to demonstrate that the JAL Group haschanged and has become a company that keeps its promises to its stakeholders.

2014

FY

A period for achieving management targets steadily
and preparing for new growth

We have faced a more severe business environment caused by rising fuel costs due to the weaker yen, negative
effects to traffic demand caused by the consumption tax hike, and intensifying competition at Tokyo metropolitan
airports as a result of the dramatic increase of international flight slots at Haneda Airport.
In future, as a unique challenge of the JAL Group, we must survive the competition under the condition thatfewer than expected international slots at Haneda Airport were allocated to the JAL Group. We will take on thechallenge of providing the finest products and services to deliver a passenger experience that is satisfying andrefreshing on Narita routes, where we compete head on with other airline routes departing from Haneda, in addition to maintaining revenue from our existing routes. FY2014 will therefore be a year of establishing a firm businessfoundation to achieve FY2015 growth based on improvements in revenue and profit.

2015– FY2016FY

A period for achieving management targets in theMedium Term Management Plan and starting new growth

Although we expect a severe business environment ahead, we are not only pursuing business expansion; we arealso working to differentiate ourselves in order to survive the competition based on the keywords “Autonomy,”“Challenge” and “Speed.” We will survive the competition through strengthening our cost competitiveness andincreasing convenience by enhancing the JAL Brand and improving products and services for the many customers who choose the JAL Group over other airlines. In doing so, we will accomplish growth in terms of revenue
and profit improvement.

JAL REPORT 201409

Differentiating JAL to Survive Future
Competition

secutive year, and indices in internal and external

As various changes in the competitive environ-and we will continuously strive to establish thement are foreseen during the period covered by

JAL Brand as a full service carrier to clearly dis-the Medium Term Management Plan, we aim

tinguish it from low-cost carriers (LCCs).

customer satisfaction surveys rose. Nevertheless, we feel there is still room for improvement,

to clearly differentiate JAL from other competing airlines in the three areas of “Enhancement

Route Network, Products and Servicesof the JAL Brand,” “Route Network, Products

Taking advantage of the additionally released

and Services” and “Cost Competitiveness,” toflight slots at Tokyo metropolitan airports (Hane-

become the customers’ most preferred airline

da and Narita) as a business opportunity, we willgroup in Japan and around the world by deliver-not merely pursue scale expansion but seek to be

ing a passenger experience that is satisfying andchosen by more customers by quickly enhancing

refreshing on every journey.

our route network, products and services.
In international passenger operations, weEnhancement of the JAL Brand

launched the Helsinki route, increased theWe will maintain flight safety and enhance ournumber of aircraft equipped with new seatsproducts and services, including those offered(full-flat business class seats and “Shinkankaku”

by personnel in direct customer contact, in ordereconomy class seats with a wider pitch) and in-to provide customers with the finest service. In

flight Internet service. We will continue to pool

FY2013, our efforts gradually came to fruition;

our resources for mid- to long-haul routes.

for example, our safety indicators improved, we

In domestic passenger operations, where

received an award for having the world’s best

supply and demand are gradually being eased,

on-time arrival performance for the second con-

we will focus on improving our route network to

Outline of the Medium Term Management Plan FY2012–2016

Surviving Future Competition (Three Differentiates)
Enhancement of the JAL Brand
We will maintain safety and provide customers
with unparalleled services to enhance the JAL
Group as a full service carrier.

Route Network, Products andServices

Cost CompetitivenessWe will build a highly convenient route networkand provide products and services ahead of ourcompetitors to become the customers’ most
preferred airline group.

We will continuously strive to improve cost efficiency, maintain and improve cost competitiveness to strengthen our resilience to risks
and build a business foundation for sustainablegrowth.

Key Initiatives (Five Areas)
Safety Initiatives

Route Network

Products andServices

Group Management

Human Resources
Management

Management Targets (Three Targets)
JAL recognizes that ensuring safety in flight
operations is the basis of the existence of
the JAL Group and our social responsibility. As a leading company in safety in thetransportation sector, JAL will maintain thehighest standards of safety.

JAL will provide unparalleled services tocontinuously deliver a fresh and enjoyable
travel experience for customers. We aim toachieve “Customer Satisfaction No. 1”* by
FY2016.

JAL aims to establish sufficient levels of
profitability and financial stability to absorb
the impact of economic fluctuations andrisk events by achieving an operating profit
margin of 10% or more for five consecutive
years and an equity ratio of 50% or more
in FY2016.

* In terms of the repeat intention rate and recommendation intention rate on the Japanese Customer Satisfaction Index (JCSI) announced by the Japan Productivity Center,
Service Productivity & Innovation for Growth.

10

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

become more competitive. Starting from May

cost, which we define as consolidated operating

2014, we will renew passenger seats on all of our

expenses related to air transport per ASK (the777, 767 and 737-800 fleets. From July, we will

cost to carry one seat for one kilometer, hereaf-

introduce in-flight Internet service, a first for theter unit cost), as an indicator for setting targets

Japanese domestic airline market.

and monitoring achievement progress to man-Governance

Financial Section

age group-wide costs.
• Improving Unit Revenue

Under the Medium Term Management Plan,

Since FY2013 we have adopted passenger rev-

ASK for FY2013 was projected to be 104.0%;

enue per ASK (passenger revenue earned per

however, due to the grounding of 787s and otheravailable-seat-kilometer, hereafter unit revenue)

issues, ASK was 102.6% compared to FY2012.

as a revenue benchmark so that all employees

Despite our best efforts to restrain costs by im-can clearly understand the improvement rate ofproving productivity and pursuing the divisional

unit revenue resulting from our measures. With

profitability management system, operating ex-

respect to unit revenue for international passen-penses in FY2013 were 109.5% compared toger operations for FY2013, we strove to improve

FY2012 due to cost-increasing elements such as

yields (passenger revenue per revenue-pas-rising costs on a foreign currency basis and ex-

senger-kilometer) and our load factor throughpenditures for service improvement measures.

revenue management, and consequently, unit

Consequently, unit cost for FY2013 was 12.2

revenue reached 104.1% compared to FY2012,

yen on a total cost basis, or 8.8 yen excluding

primarily on routes where new products were

fuel costs.

launched. In domestic passenger operations,

While we will revise our unit cost target (ex-while additional domestic slots at Haneda andcluding fuel costs) for the end of FY2016 to 8.3

Itami airports were provided, we expanded theyen due to higher costs on a foreign currency

scale of our operations for competitive routes.

basis and costs related to measures for en-

We also offered attractive fares to boost demand

hancing services, we remain committed to ourand flexibly complied with demand and supply

group-wide effort to further improve cost com-

for stiffer competition with Shinkansen (bul-petitiveness.

let trains). As a result, the load factor increased
whereas yields declined, and consequently, unit

• Productivity Improvement

revenue in FY2013 was 98.7% compared to

We are striving to increase labor productivity

FY2012.

in all our departments through actions such as

We will continue to improve unit revenue by

minimizing increases in back office staff, raising

introducing new products and pricing policy andthe utilization rate, reducing training periods byimplementing revenue management.

improving the efficacy of curriculums for cabin
training, strengthening the capability of staff to

Cost Competitivenessmulti-task at airports and bolstering aircraft qual-

Although we had to face the pressure of rising

ity through preventive maintenance and shorter

costs resulting from the weaker yen and invest-

maintenance cycles.

ments we made to improve our products andWe also sought to more efficiently use our re-services, we worked hard to reduce costs bysources by improving the aircraft utilization rate

improving cost efficiency.

by 3.0% as well as consolidating facilities andToward FY2016, we will maintain our advan-

optimizing our spare parts inventory.

tage in cost competitiveness by further pen-

In addition, we responded to the changing

etrating the divisional profitability managementbusiness environment by setting up a projectsystem and innovative ingenuity of all staff.

team for fuel conservation and revamping fundamental IT systems. We intend to achieve greater• Unit Cost Reduction

productivity on all fronts.

In terms of unit cost reduction, JAL uses unit

JAL REPORT 201411

Key Initiatives

three initiatives as a leading company in the

We are pursuing key initiatives in the five areas

safety management system for proactive riskof safety initiatives, route network, products andmanagement, in which every staff member has

services, Group management and human re-

the required knowledge and a high degree ofsources development in order to realize the threeawareness when responding to risks.

transportation sector to establish an advanced

differentiates.
Group Management
Safety Initiatives

By instilling the JAL Philosophy and introducing

To ensure flight safety, the foundation of the JAL

the divisional profitability management system

Group, and continuously accumulate our safety

widely throughout the JAL Group, we will pro-layers, we will focus on three areas to maintainmote “management by all” and establish autono-

safety: developing human resources, evolving

mous and sound management by each Groupsystems and creating a corporate culture to pro-company to attain higher levels of productivity

tect safety.

and profit.

JAL Group Safety Education was launched in

As we did in FY2012, we continuously con-the latter half of 2012 to develop human resourc-

ducted JAL Philosophy Sessions to instill thees for maintaining safety. A total of 23,300 em-

JAL Philosophy in the minds and souls of every

ployees, about 70% of all JAL Group staff, haveGroup staff member. At the pace of one theme

participated as of the end of FY2013.

every three months, all Group staff attended

We started the same program for 3,200 staff

courses and studied four themes during theof entrusted companies (JAL Brand partners)

year. In the Tokyo area, 67,700 staff participatedhandling major domestic airports in Japan.

in total (from April 2013 to March 2014). In otherAs for evolving systems to protect safety, ourregions in Japan and overseas, teaching mate-safety database, in which safety-related informa-rials as well as instructors were sent to embedtion is electronically stored, has been upgraded

the JAL Philosophy in every employee. In otherand used to implement countermeasures to pre-efforts, we introduced the divisional profitability

vent incidents.

management system to 9 companies in FY2013;

In creating a corporate culture to protect safe-

a total of 19 companies currently have it in place.

ty, we addressed the Safety Advisory Group’s

We plan to introduce the system to 35 major

recommendation to “develop a culture to polishconsolidated subsidiaries by the end of FY2015.

manuals” and revised our manuals to make themeasier to use.
We intend to deepen our efforts in these

Human Resources Development
In FY2013 we established the Human Resources
Department by consolidating departments dealing with human resources including work philos-

At the JAL Group initiation ceremony

ophy reform and human resources development
to implement a series of measures for the recruitment, training and assignment process.
We also held the first joint training for new employees of all Group companies. Five hundred
new JAL Group employees were assembled tomainly learn about the JAL Philosophy, safety
and service.

“ Our strength lies in our employees”
12

JAL REPORT 2014

Highlights

President’s Message

We will continue to recruit employees requiredby the company in appropriate numbers andconduct training from a long-term perspective
plan in order to educate our staff to become pro-

Review of Operations

2

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

JAL will provide unparalleled services to continuously deliver a fresh andenjoyable travel experience for customers. We aim to achieve “Customer Satisfaction No. 1” by FY2016.

fessionals, advance the careers of our diverse
human resources, including women, and promote efforts to improve quality and productivity
being undertaken by each division. This will en-

By introducing new products, and with every

able us to maintain the headcount at around theemployee working hard to improve our services,

32,000 level (consolidated number of employ-

we have made cross-departmental efforts toees for the Group), as targeted by the Medium

raise the quality of our services, which resulted inTerm Management Plan, even as we expand theour achieving the top ranking for on-time arrival

scope of our business.

performance in the world. Our efforts have alsoenabled us to achieve the top ranking for customer loyalty (a measure of customer intention to

Progress of Management Targets

1

use a service again) on international flights, andalso narrowed the gap with competing airlines inother rankings as well.

JAL recognizes that ensuring safety in flight operations is the basis of
the existence of the JAL Group andour social responsibility. As a leading company in safety in the transportation sector, JAL will maintainthe highest standards of safety.

We will analyze our results in FY2013, and willcontinuously and quickly expand to develop newservices in order to accomplish our targets by
FY2016.

International Routes– Repeat Intention Rate
ANA
SQ
JAL

In the JAL Group’s safety targets, we aimed forzero aircraft accidents and zero serious inci-

75

dents, but with much regret, we recorded one
serious incident in FY2013.

International Routes– Recommendation Intention
ANA
SQ
JAL

75

1st
70

70

We sincerely apologize to the passengers andpersons affected for causing substantial distress

Source: JCSI Survey

JCSI (Japanese Customer Satisfaction Index)

3rd
65

2nd
65

3rd

3rd

2nd

and inconvenience. We take this incident seriously and will investigate the cause and imple-

60

ment countermeasures.

60

3rd

55

55

2010

FY2013 Management Indicators and Results
Indicators

Results

OutlineAircraftaccidents0—

1

May 6, 2013
JAL2362 (Oita-Itami)Fire erupts in right engine whiletaxiing after landing at Itami
Airport.*

Seriousincidents* The Japan Transport Safety Board is investigating the causeof the incident. JAL has conducted repeated inspections todetermine the cause and establish countermeasures.

3rd

2011

2012

2013

2010

2011

2012

(FY)

Domestic Routes– Repeat Intention Rate

(FY)

Domestic Routes– Recommendation Intention

ANA
Star Flyer
JAL

75

2013

ANA
Star Flyer
JAL

75

70

70

6th

65

5th

65

2nd

6th

60

3rd

60

5th
55

3rd

4th

2010

2011

55

2010

2011

2012

2013
(FY)

2012

JAL REPORT 2014

2013
(FY)

13

3

JAL aims to establish sufficientlevels of profitability and financial
stability to absorb the impact of
economic fluctuations and risk
events by achieving an operating profit margin of 10% or above
for five consecutive years and an
equity ratio of 50% or above in
FY2016.

CSR Activities
To express our appreciation to customers, shareholders and business associates who have kindly
supported us, we have decided to promote CSR
activities that only the JAL Group can do.
Among the problems Japanese society is facing, we chose to continue supporting recovery
from the Great East Japan Earthquake, as weare confident we can contribute to some solu-

In FY2013 we achieved an operating profit oftions for the affected region. Concretely, we

166.7 billion yen and an operating profit margin

set up the JAL Tohoku Support Project “Visitof 12.7% as a result of an increase in revenue,

Tohoku!” in response to thoughts shared by allparticularly from international passengers, andcommunities in affected areas regardless of thecost reductions through productivity improve-

resulting condition or amount of reconstruction

ment. As a result, equity was 690.2 billion yen

in progress, including “Don’t forget the affected

and the equity ratio was 51.5% as of the end ofareas” and “Please come, see, consume and

FY2013.

take part in the recovery.” We implemented thisproject from the two perspectives of promoting

Dividend Policy

local industries and supporting people in the af-

Passing benefits to shareholders is one of the

support to promote industry in Tohoku in FY2014

most important management goals of the com-and beyond.

fected areas. We will continue to offer our unitedpany. It is our basic policy to distribute benefits toour shareholders in the form of dividends, while
executing capital expenditures to respond to future business growth and changes in businessconditions, and maintaining internal reserves forbuilding a strong financial structure.
With respect to dividends for FY2013, we havedecided to maintain a ratio of approximately 20%
of consolidated net income after adjusting fortaxes to result in a dividend per share of 160 yen.
Dividend Policy
FY2013 Results

14

JAL REPORT 2014

Net Income

166.2 JPY Bn

Shares Issued

181,352,000

Dividend Per Share160.00 JPY

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Toward a New Growth Stage

ing markets in order to establish a new businessWith an overarching commitment to ensuringconditions.

Governance

Financial Section

portfolio that is resilient against highly volatilesafe operations, we introduced the JAL Philoso-Ever grateful for the support of our customers,

phy and the divisional profitability management

shareholders and stakeholders, we will strive

system to increase the profit consciousness of

to further enhance our business performance

every Group staff member.

by maintaining safe operations and providing

Changes in the business environment impact

comfortable services based on the key con-the airline business faster and deeper than othercepts of intentionally developing autonomous

industries, which is evident from the number ofmanagement that is consistently aware of risks,

airline companies, including JAL, that have en-boldly embracing the challenge of new tasks,

tered bankruptcy. Therefore, while we will main-and quickly responding to new and unforeseentain our efforts to forecast the future by evaluating

situations. We also intend to pass on benefits

current conditions, we will also fully consider all

to shareholders through ongoing dividend pay-

the means for maximizing the strengths of thements. We thank you in advance for your contin-

JAL Group and develop our strategies in grow-ued patronage and support.

Representative Director, President
Japan Airlines Co., Ltd.

JAL REPORT 201415

Review of Operations
Air Transport Segment

International Operations

International Passenger BusinessWe stepped up measures to improve profitability, products andservices in order to become the world’s most preferred airline
group by customers.
In our route operations, as Boeing 787 operations resumedin June 2013, after being suspended in January of the same
year, we consequently increased flights on the Narita-San Diego route and launched a new Narita-Helsinki route. We alsofine-tuned supply to balance with demand. For example, flightfrequency was temporarily reduced on the Narita-Beijing route,while the Boeing 767 was progressively replaced by the larger
Boeing 777-200ER for the Narita-Honolulu, Chubu/Kansai-Honolulu and Haneda-Bangkok routes.

With respect to alliances, Finnair was included in our joint
business with British Airways on European routes, and joint
operations began in April 2014. We also started codesharing
with fellow oneworld alliance member Qatar Airways startingin December 2013. As for collaboration with the oneworld alliance, which continues to induct new partners, we intend tofurther improve customer convenience by making full use of
the networks of member airlines.
Alliances and Business Strategy
Implemented

Scheduled

Finnair participated in joint business with British Airways on European
routesStarted codesharing with Qatar Airways
Maintained a strong alliance with American Airlines on Pacific routes

Route Network
Implemented

Scheduled

Launched route between Narita-Helsinki

Further develop joint business to improve customer convenience andincrease the efficiency of our businessContinue to make maximum use of the oneworld alliance network
including our new partners*

Increased flights between Narita-San Diego
Decreased flights between Kansai-Seoul
Haneda: Respond to demand for overseas and domestic routes as a
hub connecting domestic and international flights
Narita: Respond to demand for North America-Asia routes as a hubconnecting international flights* US Airways (joined March 2014), TAM Airlines (joined March 2014), SriLankan
Airlines (joined May 2014)

Member Airlines of the oneworld Alliance (as of July 1, 2014)

Flight Operations Using Boeing 787s (as of July 1, 2014)

Helsinki
Paris

MoscowTokyo

San Francisco
Honolulu

16

JAL REPORT 2014

Vancouver

Boston
New York

San
Diego

On the product side, we introduced JAL SKY SUITE 777, which
offers sweeping upgrades in spaciousness, comfort and functionality in every class, and the in-flight Internet service, “JALSKY Wi-Fi,” to aircraft for the Europe, North America and Jakarta routes.
We also introduced the JAL SKY SUITE 767, equipped withfull-flat business class seats for more direct access to the aisle,
and the new SKY WIDER economy class seat, offering passengers an additional 10 centimeters of legroom compared toits predecessor, on routes between Narita and Kuala Lumpur,
Singapore (some flights), Hanoi and Dalian.
In addition, we have been developing new menus for in-flightmeals on an ongoing basis as part of our efforts to continuallyenhance our products and services.

Highlights

President’s Message

Review of Operations

Enhancing the JAL Brand (High quality, full service)
Implemented

Scheduled

JAL SKY SUITE 777 service expanded to routes between Narita andLondon, New York, Paris, Los Angeles, Chicago, Frankfurt and Jakarta
JAL SKY SUITE 767 introduced to routes between Narita and Kuala
Lumpur, Singapore (some flights), Hanoi and Dalian routes
JAL SKY Wi-Fi service expanded to seven routes between Narita and
New York, Chicago, Los Angeles, London, Paris, Frankfurt and Jakarta
New menu added to in-flight meals served in JAL BEDD-SKY
AUBERGE under the concept of JAL’s “exclusive restaurant in the sky”
in first class and business class on Europe and North America routes
New menu developed for popular AIR Series served in economy class

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

As a result, international supply for FY2013 increased by 3.3%
year-on-year measured by available-seat-kilometer (ASK), demand in terms of revenue-passenger-kilometer (RPK) increased
by 4.0%, load-factor (L/F) increased by 0.5 points to 76.5%,
and international passenger revenue increased by 7.6% to437.5 billion yen.
Operating Revenue(JPY Bn)

385.2

406.6

437.5

Revenue-Passenger-Kilometer (RPK) /Available-Seat-Kilometer (ASK)(Mn passenger-km, Mn seat-km)

43,036

Renovated the international lounge at Haneda Airport for enhanced
comfort and convenience

30,31344,74534,036

46,23535,390Install full-flat business class seats on 787 aircraft
Progressively expand JAL SKY Wi-Fi service
2011

2012

2013

(FY)

2011

2012
RPK

Revenue Passengers Carried

2013

Load-Factor(Thousand passengers)

6,844

JAL BEDD-SKY AUBERGE – First classin-flight menu (part of it) for flights from
Paris

7,525

(%)

7,723

AIR KUMAMON from the popular AIR
Series in-flight meal (limited time offer)

(FY)

ASK

76.1

76.5

2012

2013

70.4
2011

2012

2013

(FY)

2011

(FY)

International Cargo
Due to low growth prospects for total inbound and outbounddemand in Japan, we sought to maximize revenue by securing
volume by, for example, aggressively capturing transit cargo. In
sales, we continued to improve performance by expanding customized transportation. As a result, demand was considerably
higher compared to last year, and the volume of internationalcargo increased 9.7% year-on-year on a revenue-cargo-tonkilometer basis (RCTK) and revenue increased by 7.4% to 54.2
billion yen.

Renovated international lounge at Haneda Airport, which embodies the heart ofJapan and Japanese hospitality

JAL REPORT 201417

Air Transport Segment

Domestic Operations
Domestic Passenger BusinessWe strove to improve profitability by taking action to stimulate
demand and adjusting capacity to fit demand.
We increased the number of Haneda flights and launched
services between Haneda and Chubu to improve connectivity
to international flights. At Itami, we resumed scheduled flights
to Matsuyama, Hakodate and Misawa, and added a total of 18
flights on 16 routes.
Joint operations with Hokkaido Air System were launched for
greater customer convenience and to contribute to the regionaland economic development of Hokkaido.

In sales, we offered more affordable fares through the new
Tokubin Discount 21. We increased the number of flights featuring Sakitoku and Super Sakitoku discount fares during the New
Year holidays to serve greater demand by customers returninghome or taking other trips.
We also began selling JAL Jalan Pack, a Dynamic Package product, through a partnership with one of Japan’s largest
accommodation booking sites. Furthermore, to improve smartphone services and better serve the diversifying needs ofcustomers, new functions were added and upgraded in various apps, such as JAL Countdown, JAL Sakitoku Calendar and
JAL Schedule.

Route Network
Implemented

Scheduled

Launched the Haneda-Chubu route
Launched (resumed) Itami routes to Matsuyama, Hakodate and Misawa
Increased flight frequencies for Itami routes to Sapporo, Hanamaki,
Sendai, Niigata, Fukuoka, Oita and Miyazaki
Launch (resume) Itami routes to Matsumoto and Memanbetsu,
Sapporo routes to Izumo and Tokushima, and Chubu routes to
Kushiro and Obihiro ajor New (and Resumed) Routes and Additional Flights for Routes
M
in FY2013

JAL Countdown
This useful app provides customers with timely information
about domestic flights, including flight status andboarding gate details, as well as boarding procedures andnotifications at the airport.

JAL Sakitoku Calendar
The Sakitoku Calendar helps customers find the best
bargains by showing them the lowest available prices ina user-friendly graph and enables them to directly makereservations.

JAL Schedule
SapporoHakodate
MisawaHanamakiSendaiThis app shows information on reservations for customer
convenience while displaying regularly updated
photographs of JAL aircraft, cabin attendants andsplendid scenery. Information on events around Japan
recommended by JAL staff is also made available.

Niigata
Izumo

Chubu
Itami

Fukuoka

Oita Matsuyama
Miyazaki18

JAL REPORT 2014

HanedaIn terms of products and services, we have been progressively
introducing the new JAL SKY NEXT aircraft featuring an updated cabin interior under the theme of “Pioneering Standard”
since May 2014 and the JAL SKY Wi-Fi in-flight Internet service
since July 2014.

Highlights

President’s Message

Review of Operations

Enhancing the JAL Brand: Convenience and Simplicity
Implemented

Scheduled

Renovated airport lounges for greater comfort and convenience at
Itami, Kansai, Hiroshima, Matsuyama, Kumamoto and Kagoshima
Started introducing JAL SKY NEXT on the Haneda-Fukuoka route
Started introducing JAL SKY Wi-Fi on domestic routes

JAL SKY NEXT, featuring high quality genuine leather seats in all classes

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

As a result, domestic supply for FY2013 increased by 1.8%
year-on-year when measured in available-seat-kilometer (ASK),
demand in terms of revenue-passenger-kilometer (RPK) increased by 3.2%, load-factor (L/F) increased by 0.9 points to
64.0%, and domestic passenger revenue increased by 0.5% to487.4 billion yen.
Operating Revenue(JPY Bn)

481.1

485.2

487.4

Revenue-Passenger-Kilometer (RPK) /Available-Seat-Kilometer (ASK)(Mn passenger-km, Mn seat-km)

35,523
22,264

2011

2012

2013

(FY)

2011

36,44323,012

23,7452012
RPK

37,084

2013

(FY)

ASK

JAL First Class Seats

Revenue Passengers Carried

Load-Factor(Thousand passengers)

28,96530,020(%)

31,218

64.0
62.7

2011

Class J Seats

2012

2013

(FY)

2011

63.1

2012

2013

(FY)

Domestic Cargo
In spite of sluggish demand for farm products due to unseasonable weather and a shift to transporting goods by overland
freight, we have endeavored to maximize our revenue by capturing home delivery parcels. As a result, the volume of domestic cargo increased by 1.9% year-on-year on an RCTK basis,and revenue increased by 1.5% to 25.4 billion yen.

Economy Class Seats

JAL REPORT 201419

Air Transport Segment

Others

Aircraft Investment and Fleet

We plan to invest approximately 443.0 billion yen between
FY2014 and FY2016.
By the end of FY2016, the JAL Group’s fleet will consist of
222 aircraft (82 international and 140 domestic aircraft), in linewith the original Medium Term Management Plan.
Aircraft Investment and Fleet
Amount Invested in Aircraft (JAL Group)(JPY Bn)
200

160.0

148.0

135.0

150

We strove to maximize the JAL Group’s corporate value andimprove our profit margin. The financial results of two major
companies in this segment were as follows.
JALPAK Co., Ltd. rolled out timely products, handled morecustomers for its growing JAL Dynamic Package offerings to
maximize revenue and effectively managed expenses. The number of overseas travelers handled by JALPAK reached 302,000,
down 6.5% from the previous year, while the number of domestic travelers was 2,142,000, up 8.6% year-on-year. As a result,operating revenue (prior to intercompany transaction elimination) increased by 4.0% from last year to 168.0 billion yen.

100
50
0

2014

2015

2016

(FY)

Changes in the Number of Aircraft (JAL Group)(Number of aircraft)
250

220

220

222

222

2013

2014

2015

2016

Large
Medium
Small
RJ

200
150
100
50
0

(FY)

Figures are as of the end of the fiscal year. Large: 777, Medium: 787/767, Small:
737, RJ (regional jet or smaller): ERJ/CRJ/Q100–Q400/SAAB
Implemented

Scheduled

Invest 443.0 billion yen by FY2016, introduce 33 787 aircraft by theend of FY2016
Start introducing 787-9 aircraft in FY2015

20

JAL REPORT 2014

JALCARD, Inc. proactively conducted activities to increase
membership through efforts such as a membership promotion
campaign in commemoration of the 30th anniversary of issuing JAL cards and brought in an additional 156,000 members
as of March 31, 2014 from the previous year for a total of 2.92
million members. It sought to enhance its products by offering
improved services for JAL CARD navi, a credit card for students,
and adding the new JAL CLUB EST, a high value-added card formembers in their 20s. Companies catering to daily needs wereadded as special “double-mile partners” to encourage the useof JAL Cards by cardholders, and JALCARD, Inc. consequently
reported record high sales. As a result of these efforts, operating revenue (prior to intercompany transaction elimination)
increased by 6.7% from the previous year to 18.5 billion yen.

Each of Us Making JAL What It Is
JAL REPORT 2014

Travelers mixing and flowing into the lobby
Voices filled with anticipation for journeys
Our eyes greet many approaching smiles

JAL REPORT 201421

Putting Ourselves in the Customer’s Position
Our sensitivity, values, decisions and actions are all rooted in the JAL Philosophy as we put ourselves in theposition of our customers.

SystemHigh Quality Services Made
Possible by IT
PHILOSOPHY

Today Should Be Better Than Yesterday; Tomorrow
Better Than Today

Yoshinori Tanino
 assenger Systems, International,P

Customer Service LineWe interact with our customers every day throughour service system, reservations over the phone andcheck-in operations at airports, and always adhere
to our goal of providing ever-refreshing, unparalleledservices for the people we serve.

Japan Airlines Co., Ltd.

I am in charge of the airport check-in system for international
flights. JAL’s reliable reservation and check-in system ensures thatmaking reservations, checking in at the airport and boarding allproceed smoothly for customers. We are continually improving oursystems by using the most advanced technologies, which enables
us to provide services of ever higher quality so that our customers
can comfortably depart from any airport in the world, arrive on timeand, above all, enjoy the world’s No. 1 flight experience.

Network

Building Networks that Offer
New Value
PHILOSOPHY

Flight Operation Line
Unseen by customers, we provide backstage
support for our flight and business operations in
the areas of aircraft procurement and maintenance,
piloting, sales and cargo handling. We strive toensure safety and security by putting ourselvesin the customer’s position.

22

JAL REPORT 2014

Conceive Optimistically, Plan Pessimistically, andExecute Optimistically

Tatsuro Asami
International Network Planning,
Japan Airlines Co., Ltd.

My job is to planinternational routes
and the number offlights. The mostenjoyable aspect of
my work is developing the image of a
new route network,
based not only on
data, but also on the
many requests we receive from customers. Then I conduct extensive research on the feasibility of these routes to make sure they
can be recommended with confidence, since opening routes thatprove to be unprofitable and short-lived is a disservice to customers. I intend to continue creating valuable new options that people
will appreciate.

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Mileage

Products

Making it Easier to Save and Use
Mileage Points

Developing Top Quality Seats

PHILOSOPHYPut Yourself in the Customer’s Position

PHILOSOPHY

Financial Section

Face Challenges with Courage

Sayaka Sugiyama
 oyalty Marketing,L

Junta Nishigaki roduct & Service Strategy Development,P

I’m responsible for developing mileage alliances with other airline
companies. By flying with a partner airline, travelers have a wider
choice of destinations they canchoose from. Their journeys
become even more enjoyableand exciting when they are able
to save and use mileage points.
In seeking new partners, or whileplanning privileges and campaigns, I always keep in mind
we’re offering a service thatpeople can feel is easy to use
and convenient for saving points
and redeeming them.

My role at JAL is todevelop passenger
seats. To provide
ever-refreshing services, we apply theprinciple “Designed
to evoke a ‘oneclass higher’ feel”
for seats of allclasses on our JAL
SKY SUITE 777 and JAL SKY SUITE 767 for international routes.
We have achieved an unparalleled level of comfort and functionality by addressing customer needs and breaking away from theconstraints of conventional thinking. We will continue to take on
the challenge of creating new products to deliver traveling experiences that exceed customer expectations.

Procurement

Cargo

Procuring the World’s Most
Preferred Aircraft

Guaranteeing Consistent
Operations

Japan Airlines Co., Ltd.

PHILOSOPHY

Think Through to Visualize the Results

Japan Airlines Co., Ltd.

PHILOSOPHY

Strive for Perfection

Yusuke Hatakeda
 urchasing Fleet Transactions,P

Shuko Nakagawa
 eservation Coordination Group, First Sales Division,
R

I work in aircraft procurement, where we strive to procure theworld’s most preferred aircraft. A lot of consideration goes into the
procurement of an airplane; however, our most important objective
is to obtain aircraft that simultaneously satisfy the needs for safety,
comfort and economy. Customer
feedback, as well as negotiations
and discussions with aircraft andengine manufacturers and related
internal departments, have led
me to believe we can ultimately
find aircraft that offer an optimalbalance by thinking through all
the options and visualizing theresults.

In my job I deal with reservations, arrangement of cargo spaceand cargo transport. Reliable work by a number of staff members
is required in determining whether to accept certain cargo andensuring its safe delivery. Focused attention and verbal confirmation are vital; and if you are paying attention only 90% of thetime, you may lose track of what is happening. Working together
as one team, we
strive for perfection
on a daily basis sothat our operations
can always ensure
the secure deliveryof our customers’
valuable cargo andearn their trust.

Japan Airlines Co., Ltd.

Japan Area Cargo Sales Branch, Japan Airlines Co., Ltd.

JAL REPORT 201423

Call Center

AirportConveying Our Gratitude with a“Smile” in Our Voices

Face Challenges with a Can-do
Attitude

PHILOSOPHY

Be Thankful

PHILOSOPHY

Face Challenges with Courage

Rina Ishikawa
 omestic Division First Group,
D

Parker Daran I handle reservations and ticketing over the phone and offer guidance in response to various queries. I always try to provide assistance that’s easy to understand, and to respond appropriately toeach customer’s tone of voice and manner of speaking. Since
the call center is the first point of contact between JAL and its
customers, we must be sincere and, with a “smile” in our voices,
express our gratitude
to them for choosing JAL. I intend tocontinue making aneffort to provide everrefreshing services forour customers with asmile in my voice.

Heathrow is one of the busiest
airports in the world, operating
at 98% capacity, and therefore
vulnerable to disruption under theslightest adverse weather or situation. We strive at London to deliver
the best customer service. Thisis only possible through effective
teamwork, effort and creativity inour desire to improve and includes
building strong relationships withall airport stakeholders. Our customers expect JAL to provide a great product and services, with bothpassenger and baggage arriving on time, every time. When we facechallenges, having the desire and a can-do attitude, we prove thatwhat seems at first to be impossible becomes possible.

JAL Navia Co., Ltd.

Passenger Traffic Section, London Airport Office,Japan Airlines Co., Ltd.

Sales

Maintenance

Winning the Competition by Setting
Our Sights One Step Ahead

Ensuring Safety and Security for
Customers through Quiet Dedication

PHILOSOPHY

Decide and Act with Speed

PHILOSOPHY

Accumulate Tedious Efforts

Takuji Oharu 

Tatsuhiro Yasui First Sales Group, International Sales Department, Head Office,
JAL Sales Co., Ltd.

#1 Team, Line Maintenance Office #5 Section, Line Maintenance Department,
Aircraft Maintenance Center, Narita, JAL Engineering Co., Ltd.

Through various travel agencies,
I sell overseas package tours andgroup tours including tickets forinternational flights. I’m involvedin a broad range of business,
including sales for chartered
flights and joint sales with member airlines of the same alliance, in
addition to selling tickets for regular flights featuring new products
such as the JAL SKY SUITE 777.
In the fast-paced tourism market,
quick decision-making and action
is important to make full use of these attractive products, so mygoal is to keep our customers satisfied with JAL by consistently
looking ahead in our sales activities.

I undertake maintenance work to make sure that our operations
remain safe. An aircraft combines cutting-edge technology thatinvolves a massive accumulation of information. Mechanics mustgo through various training to receive the best information about
repairing aircraft. In addition to expanding their knowledge, they
have to develop skills for applying their knowledge on the job while
also accumulating years of experience. This is why we are all working
hard to build up
our expertise. I’mconvinced this is
the only way wecan ensure customer safety andsecurity.

24

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Cabin

Customer Center

Creating Services that Stand Outfrom the Competition

Acting as a Company Representativefrom the Customer’s Standpoint

PHILOSOPHY“Workfloor” Management

PHILOSOPHY

Possess Opposing Extremes

Natsuko Saito perations Group, Cabin Quality Planning Department,O

Asuka Nakamaru My job is to improve the in-flight service provided by our cabin
attendants to satisfy customers in response to their feedback andrequests. To ensure that customers select us over the many otherairlines, we must thoroughly understand their changing needs aswell as trends while staying ahead of the curve to offer services
that set us apart from the competition. While respecting our tradition, we must also
be flexible in our
thinking at all times
as we strive to create ever-refreshing
services toward ourgoal of becoming
the world’s No. 1
airline.

In my role I communicate
with customers over thephone and by email. Occasionally, a customer willcall to complain about aparticular flight. Although
it is extremely important tounderstand how they feeland defer to their desired
course of action, there aretimes when we must denya request due to safety
reasons. I make sure not
to draw any biased conclusions, and I always seek to maintain
opposing views while aiming to strike a proper balance that will
satisfy customers as far as possible.

Ground Handling

Cockpit

Offering Our Customers theHighest Quality

Providing the Best Service
through the Best Teamwork

Japan Airlines Co., Ltd.

PHILOSOPHYWork with Voluntary Attention

Customer Support,
Japan Airlines Co., Ltd.

PHILOSOPHYPut Yourself in the Customer’s Position

Yusuke Hayashi
 2 Team, #3 Cabin Group, Maintenance Service No. 2 Division,#

Masayuki Nakahashi
 77 Flight Crew,
7

When cleaning a cabin,
I pay attention to every
seat so that customers
will experience absolute comfort during
their flight. Once I’ve
finished cleaning an
area, I sit down in aseat to double check
my surroundings fromthe customer’s perspective. To create a finer sense of luxury, I meticulously arrange
the in-flight magazines and seat amenities. I always think about
ways to make our customers happy by reading their feedback andrequests to better understand their expectations for cleanliness.

Pilots are seldom in direct contact with customers, so we always
imagine our families, friends and ourselves among the passengers
each time we operate a flight, while also placing top priority on
safety with due consideration to
on-time performance and comfort. Ultimately responsible forthe flight, I make sure to demonstrate good teamwork withthe cabin attendants and airport
ground staff, who are in directcontact with customers. This
creates an environment where
staff members in every position
are able to perform as top professionals.

Narita Branch Office, JAL Ground Service Tokyo Co., Ltd.

Japan Airlines Co., Ltd.

JAL REPORT 201425

Employee Dialog

Uniting Our Hearts as We Move Forward
How did the JAL Philosophy take root and how is it being applied throughout the company? Front-line
operations staff shared their reflections with students who have chosen to research CSR and who
represent the future leaders of Japan.

Overcoming objections to becomea trusted source of guidanceStudent
We study CSR and corporate ethics at university, but we aren’t
so familiar with the practical aspectsof business. Sometimes we wonder
whether corporate ethics and philosophy are nothing more than academic
theories. Has the JAL Philosophy truly
taken root?
Nogami (Route Marketing)
Every employee carries a JAL Philosophy pocketbook and we’re all encouraged to readit carefully and decide what it means to
us. Whenever we’re in doubt, we turn tothese booklets for guidance.
Saito (Cabin) In our cabin operations,
we choose a theme from the JAL Philosophy for each flight so we can work
as a team toward the same goal.
Horiguchi (Airport) During our end-ofday evaluation meetings at Nagasaki
Airport, we set aside time to discuss

26

JAL REPORT 2014

our favorite passage from the JAL Philosophy and explain why it’s important
to us. Whenever I encounter a situation
mentioned in the principles, or whena problem arises with a customer, theJAL Philosophy immediately springs to
mind.
Student How did the JAL Philosophy
take root in your minds?
Fukushima (Maintenance)
Actually,
objections were initially raised on thework floor at some distance from management. Some of us doubted thevalue of investing in the pocketbook
during a time of crisis. Then, throughparticipation in many JAL Philosophy
Sessions and workshops, and byreading the pocketbook over and overagain, I eventually gained a firm understanding of its content. I also saw mysupervisor turn to the pocketbook when
difficult decisions had to be made, so I
began doing the same.
Katayama (Pilot) During four years of“ Watching my supervisor,using the pocketbook
became naturalfor me. ”

Atsushi Fukushima (Maintenance)

JAL Philosophy Sessions, it became
clear to us that putting the principles
into action led to results that benefit
both the company and society at large.
From the front lines to top management,
we share an unwavering commitment toHighlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

The students toured the corporate facilities to gain adeeper understanding of JAL.

Dialog participants: Students studying CSR at Reitaku University

From left: Tatsuya Fujiwara, Risa Totani, Atsushi Shimada,Maiko Kitano and Yuichi Otsuka

placing the JAL Philosophy at the center of all our operations.
Saito (Cabin) When I first received thepocketbook, I wondered why we had
to once again review the fundamentals.
Then I realized we hadn’t really been on
the same page, even for the most basic
issues. I said to myself, I’ve got to readthis and learn how to apply it mentallyand in my actions. Nowadays we holdmeetings in which younger cabin attendants are able to speak freely. The atmosphere is casual and our discussions
naturally turn to the JAL Philosophy.
Although it wasn’t easy to get people
to participate at first, more and more
people have been attending.
Nogami (Route Marketing)In our Monday morning assembly, we read aloudthe JAL Group Corporate Policy, andmy supervisor often tells us that when
we’re in doubt, we should refer to thepocketbook.
Student
Is that how the Philosophy

spread?
Nogami (Route Marketing) Yes, for me it
took root as a natural result of repeating that experience. In my workplace,
employees voluntarily take part in aworkshop called the “Group for Making
the Best Use of the JAL Philosophy.” Infact, we just met yesterday. About 50
out of 60 employees at the site cometogether after work to discuss the JAL
Philosophy, and other departments
hold these meetings too.

together to talk at the same table has
enabled us to overcome departmental
divides.
Suppose, for example, that a departure time is approaching and a passenger will be arriving late. We want to wait
as long as possible for that customer,
but at the same time we must ensure“ Mutual understanding
has deepened acrossdepartments. ”

Putting the JAL Philosophy into
practice in the workplace
Student
What are some of the advantages of the sharing of thoughts
that’s encouraged through the JAL Philosophy Sessions and workshops aswell as the JAL Philosophy itself?
Saito (Cabin)
We participate in four
JAL Philosophy Sessions a year. Having
employees in various positions comeKana Saito (Cabin Attendant)

JAL REPORT 201427

Employee Dialog

on-time performance for the hundredsof other people who have alreadyboarded. In the past, conflicting opinions and standpoints may have had alasting effect in this type of situation.
Now, we see it as being the result of
us all practicing the JAL Philosophy of“Put Yourself in the Customer’s Position,” and this has deepened our mutual understanding. As you encountereveryday situations that bring the JAL
Philosophy to mind, you realize that
this is indeed where you can turn for
guidance.

“ I relay information

like a baton in
the most effective
way possible.”

Rina Horiguchi (Airport Passenger Service)

Horiguchi (Airport) I remember a customer with a leg injury arriving while
I was at the check-in counter. When I
informed the cabin attendant, she immediately asked whether it was the leftor right leg. I wondered why that was
important. Then I realized that if theperson were to be seated on the aisle
side, the cart could run into the leg during in-flight service. That’s why having
information beforehand is so important;it allows us to provide customers withthe best care.
Student So the “Make the Best Baton Pass” aspect of the JAL Philosophy
is realized when employees think wellahead of their actions?
Horiguchi (Airport)
That’s right, andafter the experience I mentioned, relaying as much information as possible became a regular part of my job.

28

JAL REPORT 2014

Katayama (Pilot) In my work I always
try to keep in mind the JAL Philosophy
of “The Result of Life and Work = Attitude × Effort × Ability.”
Student Could you elaborate on that?
Katayama (Pilot)
Having a negativemindset can only lead to negative consequences in all that we do, even for pilots with a high degree of ability and lotsof passion. When I realized this, I felt as
though I had really seen the light! Now
I’m naturally aware that making negative comments to a younger pilot could
bring bad results, and this has significantly changed my approach to work.
Pilot training takes a lot of time. Passing on the knowledge and experience ofour predecessors to the next generation
through training is crucial. It also makes
pilots fully aware of the “Put Yourself in
the Customer’s Position” principle. For
training sessions on the most challenging situations, I advise pilots to take theright course of action based on what
would be best for our customers.
Nogami (Route Marketing)Since I deal
with figures related to passenger traffic
data and revenue performance, I adhere
to the phrase: “Maximize Revenues andMinimize Expenses.” The Boeing 777
aircraft has 500 seats, so 200 reservedseats would leave 300 vacancies. And
larger aircraft have higher costs for fueland so forth. However, if we can change
a particular flight to a 260-seat Boeing
767, we can carry the same number ofpassengers while reducing the number of vacant seats and thus minimize
expenses. Incidentally, this is why JAL
makes last-minute changes in the assigning of aircraft by size.
Fukushima (Maintenance)
Ensuring
safety remains the overarching commitment on the maintenance work floor, but
we now also have a keen awareness of

costs, and that leads to practicing theidea: “Put Yourself in the Customer’s
Position.” Suppose we discover a malfunction in a component. Our policy
had been to shorten times for fixing amalfunction, and we therefore tended toreplace all related components without
considering the costs.
Student That sounds like a good approach to ensure safety.
Fukushima (Maintenance) However, therepetition of that approach was one reason our expenses mushroomed into a
massive debt that led to the company’s
collapse and caused great concern forso many people, including our customers. Now, we strive to get to the rootof the malfunction and follow the manuals to replace components with greater
precision, thereby reducing redundant
stock and man-hours. While safety remains our overarching commitment,using cash at hand generated by cutting costs has allowed us to make investments while putting ourselves in thecustomer’s position, such as by offeringbusiness class seats styled like individual compartments and economy classseats with more space.
Saying “I love JAL” with pride
together with colleagues
Student What do you like most about
JAL, and what do you hope to accomplish with the company?
Katayama (Pilot) I appreciate the way“ Lead by example by passing
on my skills and ways ofthinking to younger
colleagues. ”

Takashi Katayama (Pilot)

Highlights

President’s Message

JAL provides us with opportunities togrow and allows us to take the initiativein advancing our careers. I have gained
a lot of experience in the more thantwenty years I’ve been with the company. Yet, I still seek new challenges
and intend to continue growing without
becoming complacent. I like to lead byexample by passing on my skills andways of thinking to younger colleagues.
Horiguchi (Airport)
I like JAL’s commitment to the “Put Yourself in the
Customer’s Position” principle. My
senior colleagues are always considering how we can better serve customers, and I learn from them on the job.
Although I’m only in my second year
at JAL, I’m already involved in training new employees. I want to hone
my knowledge of operations and growthrough teaching others, so that I canbe a good role model.

Saito (Cabin)
What I like most about
JAL are my colleagues. Our goal is tobecome the world’s most preferredand valued airline group, and every department and individual is working toachieve this goal.
Student
What were your initialthoughts on the challenge of becoming
the world’s No. 1 airline?
Saito (Cabin) At first I thought we had
a long way to go to make it to the top.

Review of Operations

Each of Us Making JAL What It Is

But now I think that with these colleagues, becoming No. 1 in the world
may be more than a dream after all. I
have reached the year of my career inwhich I can take on a supervisory position and lead the cabin attendants.
I’d like to become a leader who canclearly express what must be done tobecome the world’s most preferredand valued airline.
Fukushima (Maintenance) I like my colleagues best, too. We have overcome
hard times together and are now united
in striving toward our new goal.
The JAL Philosophy includes a section on “Workfloor” Management. Sincejoining the company, I’ve really enjoyeddoing hands-on tasks on the work floor.
So, I got certified for Boeing 737 maintenance first, and now I’m trying to do
the same for the 777. I intend to absorb the skills of my superiors so I candevelop my career as a specialist, andmy personal aim is to consider management from the standpoint of a work
floor specialist.
Nogami (Route Marketing)“Discuss
Frankly” is another key aspect of the
JAL Philosophy. I can approach mysupervisors and honestly say what’s on
my mind. I also appreciate the fact thatI’m granted a certain level of discretion
to do what I think is best. What’s more,
I feel fortunate that I’m able to take on
new opportunities. In the future, I’d liketo enhance the accuracy of our numerical analysis and make improvements.
I think I would feel a great sense ofaccomplishment if my efforts were reflected in JAL’s results.
I work in a back-office division, where

CSR

Governance

Financial Section“ What I most like about
JAL is being able tospeak frankly withsupervisors. ”

Satoshi Nogami (Route Marketing)I have few opportunities to interact withcustomers. The company holds a “JAL
Nikko Day” on the 25th of each month,during which we present handwritten
cards of gratitude to customers on thestreet. I will continue to participate in thisevent since it’s a valuable opportunity to
express my gratitude to customers.
Student While you’ve been explaining the JAL Philosophy, we’ve noticed
how worn the pocketbooks have become, which indicates your principles
are indeed being embraced throughout your operations. And each of you
seemed to light up when you spoke
about what you like most at JAL, proving the extent of your appreciation forthe company. You are a group of individuals who all love JAL in your own
way, and that seems to portend abright future.

JAL REPORT 201429

Taking Customer Satisfaction to a Class Above
Our efforts to deliver an ever-refreshing experience for customers have led to solid results.

The World’s Most Punctual Airline
We Promise On-time Operations Now and into the Future
Major International Airlines
JAL On-time performance rate: 88.94%

World’s No. 1 for a second year running
Asia-Pacific Major Airlines
JAL On-time performance rate: 88.94%

Asia-Pacific’s No. 1
Major Airline Networks
JAL Group On-time performance rate: 89.75%

World’s No. 1
By achieving an on-time performance rate of 88.94% for domestic and international flights from January through December
2013, JAL was recognized as the best of 31 major airlines in the
Major International Airlines category for the second consecutive
year by FlightStats, Inc., a company that analyzes on-time performance and other data.
The JAL Group also won No. 1 recognition in the Major Airline

Network category created in 2013 to evaluate the punctualityof airline groups, by achieving an on-time performance rate of
89.75% for domestic and international flights flown under the
JAL name by JAL Group companies (JAL, JAL Express and
J-AIR).

JAL Honored with the “Best Business Class Airline Seat” Award
JAL SKY SUITE for the World’s Best Traveling Space
In 2013, JAL became the first Japanese
airline to receive the Best Business Class
Airline Seat award in the World Airline
Awards, hosted by the British services research company SKYTRAX. JAL won for its
new business class seat, “JAL SKY SUITE,”
which took the top honor among businessclass seats offered by airlines around theworld for its customer privacy and seatwidth in the fully reclined flat-bed position.
JAL will strive for even higher quality todeliver ever-refreshing experiences to its
customers through products and services
under the JAL NEW SKY PROJECT.

Relaxed position

30

JAL REPORT 2014

Stress-free, all-aisle access seats

JAL SKY SUITE 777
Business Class

Bed position (full-flat)

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

JAL Group’s
Corporate Social Responsibility
JAL REPORT 2014

Focus channeled through fingertips“It’s ready to fly!” soon follows
Eyes raised, deep azure appears behind an aircraft

JAL REPORT 201431

JAL Group’s Corporate Social Responsibility
The JAL Group promotes CSR activities so that we may pass on a better society to future generations.

JAL Group’s CSR Activities
Basic CSR Policy of the JAL GroupThe JAL Group will strive to meet the expectations ofsociety, address social issues, and pass on a better
society to future generations through its core air transportbusiness.

The JAL Group will carry out corporate social responsibility activities that embody its code of conduct, the JAL Philosophy,
which is closely aligned with our Corporate Policy.

Activities to Present New Value to Society that Only
JAL Can Perform
We will strive to address and alleviate social issues throughour core air transport business, and present new value that
only JAL can deliver.

JAL Group Corporate
PolicyJAL Philosophy
CSR
CreateValue
Increase Value
Build Trust

The CSR Promotion Structure
The JAL Group convenes a meeting of its CSR Committee
every six months to deliberate on various CSR-related issues.
Chaired by the President of Japan Airlines Co., Ltd., its members include the Executive Officers of each department correlating with the 7 Core Subjects defined by ISO26000, as well as
the Executive Officers of departments responsible for front-line
operations. The committee discusses all areas and issues to

Activities that Meet Society’s Expectations of theAirline BusinessWe will increase corporate value through activities that meetsociety’s expectations of the airline business, such as by improving our network, tourism promotion and social contribution activities.
Activities that Form the Foundation of the Company
as a Member of Society
Referring to ISO26000 Guidance on Social Responsibility, theJAL Group will fulfill its responsibility as a corporate citizen
by incorporating a CSR approach to activities that create thebasis of the company in order to build a relationship of trustwith society.

which companies are required to respond as part of their social
responsibility, and seeks to ascertain the current state of theGroup, identify problems and consider appropriate measures
to be taken while regularly implementing an effective plan-docheck-act cycle with the aim of building on and promoting theGroup’s CSR activities.

Participation in the UN Global Compact
Since December 2004, the JAL Group has been participating in the Global Compact, advocated by the United Nations.
On January 31, 1999, then UN Secretary-General Kofi Annan called on business leaders to join an international initiative, the Global Compact, to support nine (now ten) principles in areas including human rights, labor, the environment and anti-corruption. The Global Compact’s
operational phase was launched at the UN headquarters in New York on July26, 2000.
The JAL Group will support and implement the ten principles of the UN
Global Compact in all its business activities, and will act as a bridge to bringpeople, their cultures and their hearts closer together through its air transportbusiness, and thus contribute to world peace and prosperity.

32

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Four Key Areas of the JAL Group’s CSR Activities
The JAL Group will carry out a wide range of CSR activities in various fields in accordance with ISO26000 Guidance on Social
Responsibility, especially in four areas that correspond to the features of our business.

1

Flight safety is the very foundation and social responsibility of the
JAL Group. We will maintain thesafe operation of every flight, provide support at times of disaster inways that only JAL is capable of,
eliminate all kinds of barriers, andprovide customers with pleasant,enjoyable travel experiences. Ensuring safety and security is mostimportant to us.

32

Safety and Security

Page

34

Bridging Japan and the World

JAL was founded and developedin Japan. Returning to the pioneer
spirit of our former colleagues at
the time of the company’s founding, we will bridge Japan and theworld as the “Wings of Japan,”promote human, economic andcultural exchanges, and contribute to economic growth and world
peace as a network carrier.

The JAL Group is aware of the
impact its business activities haveon the environment and has been
exploring ways to reduce its environmental footprint in every area of
its operations. We will also conduct
ecological activities unique to JAL,
such as tropospheric observations
by aircraft to ensure that our planet,as seen from the sky, remains
beautiful for future generations.

4

Page

44

The Environment

Page

40

Page

46

Nurturing the Next Generation

The JAL Group wants to pass on apromising future to the next generation and therefore strongly hopesthat children will have dreams
to pursue for the future. We will
support the futures of children ofdiverse ages through employee
participation programs.

ColumnJAL Charity Miles
With the cooperation of our customers, we operate the JAL Charity Mile program year round as a CSR activity that only an airline
can deliver. JAL supports NPOs in their environmental conservation and other social impact activities by assisting with air transportand publicity campaigns. We also encourage JAL Mileage Bank members to donate their mileage and then donate the equivalentamount in cash, in an effort to provide other forms of support for these initiatives.
Track Record for FY2013
Total donated miles
April 16 to May 31: “Mileage Donation for Amakuro Charity”

1,428,000 miles

Recipient of donation
The Association of National Trusts in Japan

July 1 to September 30: “Let’s Deliver Water Filters to Schools in Indonesia!” Charity Miles

6,324,000 miles

Kopernik Solutions (NPO)

October 15 to November 30: “Pink Ribbon” Charity Miles

1,160,000 miles

Breast Cancer Network Japan Akebono Kai (NPO),
Breast Cancer Research Foundation (U.S. NPO)

November 14 to December 15: “Typhoon Haiyan Relief Effort Miles for Children”

7,140,000 miles

Japan Committee for UNICEF

December 24 to March 16: “Sky Baton Tohoku Support Mileage Donation-Kikkake
Bus 47 Project”

3,666,000 miles

Tasukeai Japan (NPO)JAL REPORT 201433

Four Key Areas of the JAL Group’s CSR Activities

Safety and Security – About Safety

1

Many professionals are involved in ensuring the safety and comfort of passengers during flight.

Protecting Safety throughan All-Hands Effort
Nobuhiro Sato
(General Manager of Safety)
Representative Director, Vice President, Japan Airlines Co., Ltd.

Flight safety is the very foundation and social responsibility of the
JAL Group. We are firmly committed to providing a safe and comfortable travel experience for our customers while putting safety firstin any situation. To accomplish this, every staff member engaged inbusiness operations will strive to thicken our safety layers by taking concrete actions as safety professionals with an awareness thatsafety can never be compromised.

Safety Initiatives in the JAL Group Medium Term
Management Plan FY2012–2016 Rolling Plan 2014
To firmly maintain the safety of flights, which is the very foundation of the JAL Group, we have been seeking to achieve ourmanagement target as the leading company in safety in thetransportation sector. We are doing this mainly by developing
human resources to protect safety, evolving systems to protect
safety and cultivating a culture to protect safety.
With a focus on preventive measures, we will further strengthen our proactive risk management by adopting the mostadvanced and outstanding systems in the airline industry andcombining them with our original initiatives. This will enable us
to create a safety management system of the highest standard.

Safety Initiatives
Safety Awareness Education

CultureA culture of polishing manuals
A culture of reporting

Human
Resources

Improve skills and knowledge ofeach staff member

Initiatives uniqueto the JAL
Group

Safety Leaders
SMS Education (Safety Knowledge Training)
Normal Operations Monitoring

Systems

Expansion of Risk Assessment

Initiatives basedon global
standards

Safety Performance Monitoring

Here we introduce our efforts to improve the skills and knowledge of each staff member as a part of our safety initiatives.
The following system took us almost seven years to establish
through research, development and installation tests, whichwere led by members of our flight crews.
We established our original quality management system,
which integrated training appropriate for each flight crew’s abilities and IT so that a database could be used to visualize and34

JAL REPORT 2014

manage the crews’ abilities and their work, which have not beenclearly seen in the past.

The Flight Operations Department introduced CB-CT(Competency-Based Check and Training) in 2013. Thisquality management system effectively utilizes a database JAL developed to raise the competency level offlight crews and the quality of flight operations.
Conventional training and reviews focus on acquiring and maintaining qualifications, which only confirm
a pilot’s ability to perform specific procedures, such as
one-engine-inoperative takeoffs.
In adopting CB-CT, we sorted piloting and other operations into categories and drew up evaluation criteria
for each group. This would help in creating an objective
evaluation, which evaluators would use to assess the
skills of flight crew members, the knowledge required
for flight operations, and staff attitudes, and the results
would be entered into the database. By analyzing thedata stored there, we can identify the strengths andweaknesses of individual pilots as well as the entire
group, thereby enabling us to make improvements.
We plan to develop a system similar to CB-CT for otherjobs as well so that we can gain a more objective understanding of the strengths and weaknesses of individual
staff members.

Highlights

President’s Message

Review of Operations

Safety Troubles and Measures in FY2013
The JAL Group proactively discloses safety-related information
so that passengers can board our flights with peace of mind.
One serious incident occurred in FY2013. We again deeply
apologize to the people involved for the inconvenience and theirconcerns.
Serious Incident (one)On May 6, 2013, a fire occurred in the right engine of JAL2362(CRJ200) during taxi after landing at Itami (Osaka) Airport. The
JAL Group is fully cooperating with the Japan Transport Safety
Board, which is investigating the cause of the incident.
As a preventive measure, the Company is conducting multiple inspections of the part of the aircraft presumed to havecaused the incident.
JAL Group Safety Report contains safety-related problems
and measures.

Each of Us Making JAL What It Is

CSRChildren Safety Cards

In brackets: number of incidents per 1,000 flights
FY2013

Type of Incident

0 (0.000)

FY20121 (0.003)

Financial Section

In fiscal 2013, we used our website and inflight magazines to provide customers with practical informationsuch as what posture they should take to avoid injury in
the event of unexpected turbulence when they are awayfrom their seats.
In addition, we strived to take preventive measuresby reviewing and investigating past accidents. For instance, in one case a child’s finger was pinched whenmoving an armrest, so now cabin crew members handout information cards to parents
and guardians warning them about
the danger. By using these types ofcards to alert people, injuries areless likely to occur.
We intend to continue
our multilateral efforts
to provide security forour customers.

Number of Safety-Related Incidents

Aircraft Accident*1

Governance

FY2011

Customer Injuries*

1 (0.003)(No. of incidents)

Serious Incident*2

1 (0.003)

4 (0.011)

1 (0.003)

40

Irregular Operation*3

75 (0.209)

69 (0.194)

58 (0.166)

30

Safety-Related Issue*

226 (0.630)

276 (0.776)

258 (0.740)

20

Total Annual Flights

358,629355,489

348,815

10

32

4

26

23
* Incidents of customer
injury during a flight orat the airport requiring
treatment at a medical
facility. (Company
statistics)

11

0

*1 F
 atal or serious injury of a person as a result of the operation of an aircraft,or an aircraft crash, collision, fire or damage to an aircraft during flight (thatrequires major repairs), as classified by the Japanese Ministry of Land,
Infrastructure, Transport and Tourism (MLIT).
*2 Incident involving circumstances that indicate there was a high probabilityof an accident, such as overrunning, emergency evacuation, fire or smoke
inside the cabin and abnormal depressurization, as a result of encountering
abnormal weather conditions, etc., as classified by MLIT.
*3 Incidents resulting in a flight schedule change, such as a change of the flight
destination. When a malfunction occurs in part of the multiple systems of anaircraft, the aircraft is turned back to ensure maximum safety after the flightcrew has completed actions in accordance with the flight manual. In general,these incidents do not pose any immediate risk to flight safety.
*4 Legally mandated incident reports to the MLIT under regulations that went
into effect on October 1, 2006 (Civil Aeronautics Act, Article 111-4; and theOrdinance for Enforcement of the Civil Aeronautics Act, Article 221-2 (3) and(4)). Such incidents include aircraft damage caused by lightning or bird strike,and situations in which the TCAS (Traffic Collision Avoidance System) is
activated and appropriate avoidance maneuvers are subsequently undertaken.
In general, these incidents do not immediately result in an aircraft accident.

We define “aircraft accidents” in some cases as occurrences inwhich passengers or a member of a flight crew suffers a serious
injury, such as a bone fracture caused by unexpected bumping
during a flight. To ensure safe and comfortable flights, we are
not only taking measures to avoid aircraft accidents, but also
working to prevent injuries at airports and on aircraft.

2010

2011

2012

2013
(FY)

Disclosure of the JAL Group Safety
ReportInformation about the safety-related initiatives of the Group’s six air transportcompanies is disclosed every year in the
JAL Group Safety Report in accordancewith the rules of Article 111-6 “Release of
Safety Report by Domestic Air Carrier” of
the Civil Aeronautics Act. The JAL report
simply and concisely explains the safety
initiatives of these companies.
The JAL Group Safety Report (in Japanese) is available for download from:http://www.jal.com/ja/flight/safety/report/

JAL REPORT 201435

Four Key Areas of the JAL Group’s CSR Activities

Safety and Security – About Safety
The JAL Group will carry forward its rigorous safety culture with advice
from the Safety Advisory Group and never forget past accidents.

Safety Advisory GroupThe JAL Group established its Safety Advisory Group on August 3, 2005 to receive advice with a third-party perspective
and because of repeated occurrences of safety-related problems even after the Japanese Ministry of Land, Infrastructure,
Transport and Tourism (MLIT) issued a Business Improvement
Order to JAL on March 17, 2005.
The Safety Advisory Group is a panel of five experts fromoutside the JAL Group who have extensive knowledge and experience in such areas as human factors, analysis of failure andimperfection, organizational operation and culture, and safety.
The group is chaired by Mr. Kunio Yanagida, a nonfiction writerand critic.
Meetings are held with JAL management twice a year, where
the members check the progress of the JAL Group’s safety activities and offer recommendations and advice.
The JAL Group will reflect the feedback and advice offeredby the Safety Advisory Group in group management and safety
operations.
Safety Promotion CenterIn the wake of the catastrophic JAL Flight 123 crash, in which
520 passengers perished, and the subsequent pain and griefof the bereaved families and public distrust in airline safety, we
pledged we would never again allow such a tragic accident
to occur.
We opened the Safety Promotion Center on April 24, 2006
to reconfirm the importance of flight safety and to embed in
our minds the lessons learned from this accident. In December
2013, the center was relocated to the Haneda Shin-Seibijo areawith a bigger exhibition space equipped with larger monitors,
allowing a more effective presentation of debris from the planecrash. A newly added library also made the center more usefulto learn about safety in depth.
All of us in the JAL Group utilize the Safety Promotion Center as a “Fortress of Safety” and the starting point of safe andreliable operations. Every group staff member is reminded thatvaluable lives and property are entrusted to us in our work. As of
March 31, 2014, the center has received about 141,467 visitorsfrom inside and outside the Group.

36

JAL REPORT 2014

JAL Group Safety Education
Since October 2012, JAL Group Safety Education has been
conducted for all JAL Group employees to cultivate “safety professionals.” It is designed to raise awareness of safety in daily
operations by having participants observe wreckage from Flight
123 and watch videos of interviews with people who were involved. Through these activities, participants learn about the accident and are encouraged to reflect on and form an emotional
attachment to the event so that they more deeply consider
what must be done in the context of maintaining safe operations. They also compose their own safety pledges to ensure
their commitment to safety in daily operations, and share theirpledges with their colleagues.
A total of 23,786 employees, about 70% of all Group employees, have completed the training since the start of the programin October 2012 up to March 31, 2014. We intend to complete
the education for all Group employees by March 31, 2015.

Mr. Yotaro Hatamura
Safety Advisory Group
Professor at Kogakuin University,
Professor Emeritus of the Universityof Tokyo

The Safety Promotion Center represents an unprecedented initiative that honors the memory of a dark moment
in JAL’s corporate history and provides a vital source oflearning how to secure a safer future. I hope employees
will visit the center often so they can fully understand thesignificance of safety and the tragic reality of the Flight
123 accident.
As a means of getting to the core of a matter, I havebeen advocating the “three gen approach” of “genchi(actual place),” “genbutsu (actual object)” and “gennin(actual person).” With respect to the accident, I think it ispossible to understand the significance of safety for an
airline company by climbing Mount Osutaka (genchi) in
a commemorative visit, seeing aircraft debris (genbutsu)
displayed at the Safety Promotion Center, and listening topeople who were involved in the accident (gennin).
JAL Group safety education has also been developed to incorporate the “three gen approach.” I hope to
see JAL become the “leading company in safety in thetransportation sector,” as promised in its Medium Term
Management Plan.

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section“My Safety Pledge” of JAL Group Employees
All JAL Group employees who have participated in the JAL Group safety education program have made a “My Safety Pledge.” These are
written down on “Safety Charter Cards” and carried by staff at all times. Employees strive to ensure operations remain safe by regularly
reviewing their actions while referring to the Safety Charter, and reaffirming that safe operations is our very foundation.

AirportGround Handling

Don’t leave it to others, doyour own inspection and act
responsibly.
Masayasu Ogata

Maintenance

Negligence is thefirst evil’s blow.

Always stick to the basics.

Raphael Bauman
Passenger Section, Paris Airport,
Japan Airlines Co., Ltd.

#1 Marshalling Division, #1 Maintenance Service
Department, JAL Ground Service Tokyo Co., Ltd.

Koji Mihara
Airframe Inspection Maintenance
Department, Aircraft Maintenance Center,
Haneda, JAL Engineering Co., Ltd.

JAL Group Employees
Unites to Protect Safety

SystemReservations

Safety Charter
Safety in flight operations is the very foundation and social responsibility of
the JAL Group.
To carry out our mission of assuring safety, the management will exert its
strong resolve and the employees will bear an awareness of their individual
roles and responsibilities, and together we will combine our utmost knowledge and capabilities to ensure the safety and reliable operation of eachand every flight.

I will work as an essential
thread in the fabric ofsafety.
Reina Ozaki#2 Maintenance Group, JAL Information
Technology Co., Ltd.

In order to carry out our mission, we will conduct;• Perform our duties in compliance with regulations, faithfully following thebasics.
• Be sure to make checks, without relying on assumptions.
• Relay information thoroughly, promptly and accurately, and ensuretransparency.
• Respond to problems and issues quickly and precisely.
• Maintain a constant awareness of issues, and make necessary reforms
without hesitation.

Operations

Always remember ourwork is connected toprecious lives.
Yuko Miyachi#1 Group, Reservation, JAL Navia Co., Ltd.

Flight Crew
Cabin Crew

When in doubt,
choose safety.
Chihiro Oyama
Flight Operations 3rd Division,
JAL SKY Co., Ltd.

I will safely deliver precious
lives for their futures.
Hitomi Hayama

I value second-to-third
person perspectives andefficient communication.
Susumu Saito#1 Route Office, Flight Crew,
Japan Transocean Air Co., Ltd.

Cabin Crew, J-Air Co., Ltd.

JAL REPORT 201437

Four Key Areas of the JAL Group’s CSR Activities

Safety and Security – About Security
Here are some of our programs designed to ensure that all our customers can comfortably enjoy their flights.

Becoming a JAL that is Friendly to Everyone
We aspire to provide products and services that ensure a safe
and comfortable flight for every passenger on JAL Group flights,
from small children to elderly customers and customers who require special assistance, by fulfilling the “Friendly JAL = Universal
Design”* initiative. We offer universal design extensively from ourDomestic Class J Seats and desks at the JAL Smile Support
Counters for customers requiring assistance, to our broad rangeof special in-flight meal options for passengers with allergies orhealth conditions. Furthermore, we strive to deliver a “universal design for the heart” that is born in the hearts and actionsof each employee,
which is demonstrated through the hospitality they provide
and learned throughan experience-based
program.
* A concept for the development of “design that is easy for everyone,” regardless ofage, physical capability or environmental conditions.

Priority Guest Support
The JAL Group refers to customers with reduced mobility or
who are sick or injured as “Priority Guests,” serving them withprecedence over other customers.
In 1994 we launched the Priority Guest Center as the first of
its kind in the airline business in Japan, and it has subsequently
handled a wide range of situations. The center’s experienced
staff members are on standby to respond with care to customer needs.

•	Transport support for para-sports organizations in events
such as the Paralympic Games•	Medical transportation using stretchers for patients, including people traveling for overseas heart transplant operations•	Joint Priority Guest operations with American Airlines andBritish Airways•	Activities to raise public awareness through events forpeople with disabilities•	Cooperation with flight experience programs for children
with developmental disorders

Passengers with walking disabilities

38

JAL REPORT 2014

Physically challenged passengers
requiring an assistance dog

Supporting the Sochi Paralympic Games
During the Sochi Winter Olympics and Paralympic Games in
February and March 2014, JAL transported a delegation of
about 190 people – including about 80 Olympians and 20 Paralympic athletes – as an official partner of the Japanese Olympic
Committee and the Japanese Paralympic Committee.
JAL has been providing support for Paralympic delegations
since 2005 as the only official airline in Japan. To make surethat Japanese athletes reach their destinations comfortably,
JAL departments including Sales, Priority Guest Center, Airport
Passenger Handling, Cargo and Cabin collaborate in preparations and share information from the earliest stage. On the dayof departure, all the arrangements are made so that the athletes
can use their own wheelchairs up to the point of boarding theaircraft, where our highly capable cargo staff then handles thewheelchairs with the utmost care.
Our staff all share the idea that “From the first moment, werecognize they’re just great athletes, with nothing particularly
special.” We support Paralympic athletes with our collective
experience, expertise and timely service under a strong passion to make their trips as stress-free as possible, regardless ofwhether they have a disability.

Preparing a wheelchairfor storage near thedoor of the aircraft

Check-in proceduresat Moscow
Domodedovo Airport

Highlights

President’s Message

Review of Operations

Tour for Children with Food Allergies
With a growing number of children experiencing allergic reactions to specific foods such as eggs, milk, soybeans, flourand peanuts, the JAL Group has created an environment inwhich these children and their families can comfortably enjoy
their trips.
In March 2014, JALPAK collaborated with the Parents’ Association for Food Allergy Patients, NH Foods Ltd. and Hilton
Niseko Village to organize a three-day skiing tour in Niseko, Hokkaido, with due consideration to food allergies throughout theentire trip. Ten families participated, sharing comments such as:“We were very happy to see the delight in our children’s eyes as
they could eat whatever they wanted from the buffet and enjoyedtouring Hokkaido
and skiing for the
first time” and “We
had given up on
traveling but felt atease on this tour.
We hope JAL organizes more likethis.”JAL Smile Support (Domestic Flight)
The JAL Group has a dedicated support
desk for customers requiring assistanceon our domestic flights. We provide various
types of assistance to ensure comfortable
trips for as many customers as possible,
including pregnant women, children, the elderly and passengers requiring the use of awheelchair.

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

VOICE

We are Working to Provide
Optimal Support from theCustomer’s Perspective.
Priority guest group, JAL Navia Co., Ltd.

Chika Ogura
The Priority Guest Center serves passengers who requireassistance when traveling by air and also coordinatestransportation for the Paralympic delegations and foodallergy tours. Support for Sochi Paralympic delegations
involved a broad range of activities, such as checking
wheelchair size, securing space for baggage and confirming the routes to be taken in the airport. We took extra
care during handovers so that athletes can relax during
long flights.
On the day of their departure, I provided them with assistance at the airport, and I felt that all my colleagues shared
this same commitment. I will never forget how grateful I waswhen athletes smiled and said “Thank you for your support” upon departure. We will continue working together toensure that everyone boards our flights in comfort.

Baby Travel Support Service
Assisting passengers traveling withbabies or infants

Kids Travel Support Service
Assisting children traveling on
their own

Expectant Mother Travel
Support Service
Assisting pregnant passengers totravel in comfort

Senior Citizen Travel
SupportAssisting elderly passengers

Mother and Baby Travel
Support Guide

ColumnEmergency Aid for the Central Philippines Affected by Typhoon Haiyan
As an airline company that bridges Japan with the world as well as the various
regions of Japan, JAL extends emergency aid that only an airline can provide attimes of major disaster.
In November 2013, Typhoon Haiyan caused catastrophic damage to the central
Philippines. Following the Japanese government’s decision to dispatch a disaster
relief team from the Japan International Cooperation Agency, JAL operated an
emergency charter flight within 23 hours of the request. At Manila Airport, Filipino
staff hoping to serve at a time of national calamity helped the Japanese relief teamunload and load their relief supplies so that the group could quickly transfer to an
aircraft bound for the affected area of the country. Our staff also raised a bannerinside the airport expressing our sympathy and support as well as encouragement for the people whose lives had been affected.
JAL cooperated with the Japan Platform, an NGO network, by offering free air transport for eight NGO staff members participatingin the relief effort and 11 tons of relief goods and supplies. We also provided support through a JAL Charity Mileage campaign andmade a donation from the Group as well as individual contributions from employees.

JAL REPORT 201439

Four Key Areas of the JAL Group’s CSR Activities

The Environment

2

JAL Group promotes “Sky Eco” for a Greener Tomorrow.

Our Eco-First Commitment
In 2010, the JAL Group made an“Eco-First” commitment to renew
its efforts for preserving the global
environment and received certification
as an “Eco-First Company” from the
Ministry of the Environment of Japan.

Environmental Guidelines
As an airline transportation company that is an importantsocial infrastructure, we are conscious of the fact that wehave a responsibility to the global environment, and assuch, the JAL Group has placed the control of our environmental impact and the protection of the environment
as core themes in our business operations, as we continue
to implement “Sky Eco,” so we will be able to pass this richearth on to the next generation and they will always be able
to see the beautiful earth from the sky.

CO2 Emissions by JAL Group AircraftIn FY2013, CO2 emissions by JAL Group aircraft per unittransport volume (revenue-ton-kilometer) were reduced by
10.4% compared to the FY2005 level. CO2 emissions per unittransport volume were slightly higher because our introductionof new aircraft, such as the Boeing 787, improvements to flight
operations efficiency, and regular engine cleaning for more
efficient fuel consumption did not do enough to offset the loss
in efficiency from equipping aircraft with fewer seats on longdistance flights to enhance passenger comfort.
Total CO2 emissions increased by 330,000 tons from the previous fiscal year as a result of expanded operations.
CO2 Emissions(10,000 tons)
2,500
2,000
1,500

100

1,687

96

CO2 Emissions
CO2 per Revenue-Ton-Kilometer (comparison with FY2005)
(%)

99
94

1,578 1,502

93

1,393

100

89

89

90

90

77
1,191
928

1,000

89

734

787

70

820

500
0

60

2005 2006 2007 2008 2009 2010 2011 2012 20132020 (FY)
TargetAirports, Offices,
Maintenance Centers(Japan)Airports, Offices,
Maintenance Centers(Japan)Heat Use (crude oil equivalent)

49,633

Industrial Waste

3,720
tons

Airports, Offices,
Maintenance Centers(Japan)Electricity Use

129

million kWh

40

JAL REPORT 201480

kiloliters

50

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

CONTRAIL Atmospheric Greenhouse Gases
Observation Project by Passenger Aircraft
The JAL Group has been participating in the “CONTRAIL Atmospheric Greenhouse Gases Observation Project by Passenger
Aircraft” as an environmental effort that can only be implemented by airline companies. This joint project with Japan’s
National Institute for Environmental Studies, the MeteorologicalResearch Institute, JAMCO Corporation and the JAL Foundation, marked its 20th anniversary in 2013. Eight Boeing 777200ER aircraft in our fleet, two of which bear the CONTRAIL
project logo, have been modified to allow for the installation of
air sampling equipment (ASE and CME) that can measure atmospheric CO2 and other greenhouse gases and are now being used for atmospheric observations. The project has been
widely recognized as a pioneering collaboration between industry, government and academia, and received the “Environment
Minister’s Award” and "Environmental Excellence Award” underthe 40th Environmental Awards for FY2013, sponsored by the
Hitachi Environment Foundation, as well as the “Japan-South
Korea International Environment Award,” sponsored by The
Mainichi Newspapers Co., Ltd. and other organizations.

Financial Section

VOICE

Enjoying the Challenge ofParticipating in a Global
Project
Yuki Nakajima
Mechanical System Group
Technology Department
JAL Engineering Co., Ltd.

With respect to the CONTRAIL project, the Technology
Department makes plans and adjustments every month,
based on requests from researchers and flight schedules,
as it determines the optimal routes and installation timing
for observation equipment on aircraft. We provide technical support for modifying airframes to enable installation ofobservation equipment and support for obtaining approval
from airline authorities in the U.S. and Japan, and duringservicing operations, while also handling any problems
that arise during the modification process. We work underconsiderable pressure, since the entire process must be
carried out within a limited period, which makes it all themore satisfying when the work is completed without a hitch.
As an airline engineer, participating in the globally acclaimed CONTRAIL project is very rewarding. I hope tomake the best use of my skills on this and other projects
as my contribution to environmental efforts that can only
be accomplished by an airline company.

The CONTRAIL project logo is painted on
JA707J aircraft carrying the observationequipment.

Airports, Offices,
Maintenance Centers(Japan)Water Use452

thousand m3

Aircraft in Flight(Japan, International)

CO2 Emissions

8.2

million tons

JAL REPORT 201441

Four Key Areas of the JAL Group’s CSR Activities

Action Plan
We have placed the control of our environmental impact and the protection of the environment as core themes in our business operations, and create action plans for these areas. Our philosophy and dedication toward them are set out in the “Action Plan.”

Action Plan 1 We actively conduct initiatives to prevent global warming.
Commitment

StatusWe are working to reduce CO2 emissions per revenue-tonkilometer from JAL Group aircraft by 23 percent in 2020 ascompared to 2005 level.

• CO2 emissions per revenue-ton-kilometer for FY2013 declined by 10.4 percent from FY2005 level.
• We did not achieve our target of 1.5 percent average annual improvement (average figure for FY2005 to FY2013),
falling short by 0.2%, since aircraft modifications to enhance passenger comfort by installing fewer seats reduced
efficiency.

We are upgrading our fleet to lower fuel consumption and low
noise aircraft (e.g., Boeing 787, 737-800 and Embraer 170).

• We introduced 12 aircraft with reduced fuel consumption (787-8, 737-800 and E170) and retired four aircraft (767-300
and 737-400).
• We implemented a series of performance improvement modifications on 777-200ER aircraft and finished attaching
winglets (small drag-reducing attachments at the tip of a plane’s wing) on six 767-300ER aircraft.

We are conducting “Eco Flights.”• We achieved annual reductions in CO2 emissions of approximately 45,000 tons, mainly through implementing 5 “EcoFlight” activities: engine out taxi, idle reverse, reduced flap, delayed flap and delayed gear.

We are endeavoring to reduce weight.

• We started using 480 of the world’s most advanced cargo containers, which are approximately 40% lighter thanconventional units.

We are cutting CO2 emissions by washing engines and pursuingother methods of CO2 reduction.

• We implemented engine water washing at intervals of 190 days to 270 days for the 777 aircraft, 767 aircraft and 737800 aircraft. Result: Annual CO2 emissions were reduced by approximately 22,000 tons.
• Reduction in APU (auxiliary power unit) usage time for 777 aircraft and 737-800 aircraft was nearly equal to lastyear’s reduction.

We work together with the associated ministries and aviation
authorities such as air traffic control in various countries tointroduce leading methods for fuel efficient aviation, and will
actively continue to do so in the future.

• We obtained certification for reduced environmental impact for the flight operations methods adopted on our
Haneda-San Francisco route. Estimated reduction in CO2 emissions: around 660 tons per year (see page 43).
• We have been implementing CDO (continuous descent operations) at San Francisco International Airport and KansaiInternational Airport.
• We have been operating UPR (user preferred route) on flights to Hawaii, Australia, the West Coast of North America(Los Angeles, San Francisco and Vancouver) and Palau.
• Efficient selection of alternative airports (alternatives for HEL and DEL)
• Estimated annual reduction in CO2 emissions as a result of the above efforts: around 5,000 tons.

• We conducted a biofuel demonstration flight in January 2009 and have been exploring the feasibility of using biofuelon commercial flights by exchanging information with the ICAO, IATA, related authorities, manufacturers, research
We are collaborating in the research and development of aviation
institutions and universities. We are participating as a leading member of the Initiative for Next-Generation Aviation
biofuel made from inedible plants.
Fuels (INAF) to create a roadmap for developing biofuel processed in Japan.
• We are planning an aggressive effort as part of an all-Japan team of industry, government and academia to realize
the full-scale introduction of biofuel by around 2020 (the year of the Tokyo Olympics) at major airports.
We promote energy saving activities in our ground facilities(offices, factories, etc.).

• We continued to consolidate maintenance facilities, conducting various energy-saving activities and upgrading toelectricity-saving lighting in our offices.

Action Plan 2 We actively promote social and environmental activities and environmental awareness activities.
Commitment

Status

By continuing to conduct environmental and social activities, we areable to contribute to long-term conservation of the environment, andwe strive to improve the environmental awareness of children who
will lead the next generation, as well as all of society and our own
employees.

• Our flight crew took the initiative to derive and put into practice organizational solutions for environmental
problems in the area of flight operations. Initiatives include Sky Eco Project activities and environmental
awareness seminars (Sky Eco classes) offered by captains for children (32 times in FY2013).
• We contributed to reducing CO2 emissions with cooperation from passengers by implementing the “Shades
Closed Exercise” and improving on-time performance (currently the world’s top).

We will continue to participate in the atmosphere observation project
and the forest fire reporting project using our aircraft.

• We have been participating in the “CONTRAIL Atmospheric Greenhouse Gases Observation Project byPassenger Aircraft” (see page 41).
• We have been participating in the “Siberian Forest Fire Reporting Project.” Since 2003, pilots have beenreporting any fires detected during summer flights over Siberia to a research team led by Hokkaido University
in a cooperative research effort on early fire detection by satellites (199 fires were reported in 2013).

Action Plan 3 We work toward the realization of a recycling-based society and for the preservation of the environment.
Commitment

StatusUltimately we are aiming for a disposal rate of less than 2% forindustrial waste from domestic worksites.

• Despite increased waste emissions related to facility reorganization and aircraft seat modifications, total waste
volume in FY2013 was reduced by 14% from FY2012. The final disposal rate was 1.2%, achieving our target ofless than 2%.

We work to reduce water usage.

• Water use was reduced through facility reorganization and reuse of wastewater.

We work to reduce the amount of emissions of chemicals (governedby the PRTR Act).

• While little room remained for further reductions, as we had already introduced maintenance materials withless impact on the human body and the environment, use of trichloroethylene increased significantly in line withincreased maintenance operations. As a result, the total volume of PRTR substances handled in FY2013 (462chemicals) increased 7% year-on-year to 66 tons. (Total volume of PRTR substances except for trichloroethylene(461 chemicals) decreased 15% year-on-year to 29 tons.)

We work to recycle uniforms and items used in aircraft cabins suchas in-flight magazines, newspapers, aluminum cans, plastic bottles
and cargo packing materials.

• We actively recycled beverage cans, newspapers, in-flight magazines and plastic bottles. We are promoting
comprehensive efforts to dispose of in-flight waste in collaboration with IATA and airport companies.
• Total amount of recycled waste in FY2013: 2,540 tons including 180 tons of recycled fiber as a result of updating
the design of uniforms.

42

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Action Plan 4 We work to conserve the environment around airports.
Commitment

StatusWe actively introduce low-noise aircraft and noise abatement
operational procedures, and respond to other airport noise issues.

• We actively practice “Reduction of Noise at Source” and “Noise Abatement Operational Procedures” asresponsibilities of airlines under the “Balanced Approach” recommended by the ICAO. All JAL aircraft arecompliant with ICAO Chapter 4, the most stringent standard for noise.
• Under the “Noise Abatement Operational Procedures,” we practice noise abatement procedures at takeoffand operate under more stringent rules when taking off from Tokyo International Airport (Haneda) and Osaka
International Airport (Itami).
• As for noise abatement procedures upon landing, we practice reduced flap, delayed flap and idle reverse. At
San Francisco International Airport and Kansai International Airport, we conduct CDO (continuous descentoperations) to significantly reduce both noise and CO2 emissions.

We work to reduce NOx emissions from aircraft, automobiles, etc. (NOx,HC, CO and other aircraft engine emissions are strictly regulated by the ICAO.
Similar restrictions have been established under Japan’s Civil Aeronautics Act.
NOx emission restrictions are particularly stringent.)• A ll JAL aircraft engines are compatible with the ICAO’s CAEP6 and CAEP8 standards (the applicable standard
differs depending on when a plane’s Certificate of Airworthiness was issued).

Action Plan 5 We give due consideration to biodiversity.
Commitment

Status

We convey to customers and society at large the importance of
biodiversity and follow the “JAL Group Policy on Biodiversity” in ourbusiness operations.

• We formulated the “Biodiversity Policy of the JAL Group” in recognition of the fact that the JAL Group’s airtransport business may indirectly impact biodiversity.

We take part in the “United Nations Decade of Biodiversity” initiative.
In addition, we promote activities that convey the importance ofprotecting the natural beauty of Japan, including cranes, etc.

• We painted the “United Nations Decade of Biodiversity” logo on our aircraft, sponsored a photo contest on thetheme of the Japanese red-crowned crane, contributed to the JAL Endemic Rabbit’s Forest and served certified
coffee on our flights in consideration of biodiversity.

Activities for Preserving Biodiversity
Recognizing that biodiversity is a major environmental issue,
the JAL Group formulated the “Biodiversity Policy of the JAL
Group” and implemented actions to raise public awareness andencourage the preservation of biodiversity. In 2013, we cooperated with the Endemic Rabbit Trust campaign to preserveand sustain the forest of Amami Oshima, which provides the
habitat for an endangered species of rabbit designated as aSpecial Natural Treasure of Japan. We supported the campaign
through donations, Charity Miles and public service announcements for passengers on our Amami flights. We also sponsoreda second photo contest on
the theme of the Japanese
red-crowned crane as asymbol of the importance ofpreserving Japan’s natural
beauty.

JAL San Francisco Route Obtains Certification for
Reduced Environmental Impact
Our San Francisco route became the first from Japan to obtaincertification from ASPIRE (Asia and Pacific Initiative to Reduce
Emissions), an international environmental protection initiative in
the Asia-Pacific region, for adopting operation methods that reduce environmental impact. We introduced three fuel-efficient,environmentally friendly operation methods (UPR, 30-mile air
traffic control intervals, and CDO), which allow us to select efficient altitudes and routes based on the latest weather forecasts
and to reduce fuel consumption and noise by conducting more efficient descents.
These efforts are expected
to reduce CO2 emissions by
660 tons per year.

Environmental Data
FY2011FY2012FY2013

Unit

Environment
CO2 Emissions

734

787

820

10,000 tons

CO2 Emissions/RTK (comparison with FY2005)

88.8

88.8

89.6

%

NOx (LTO cycle)

5.66

6.08

6.26

1,000 tons

CO (LTO cycle)

3.51

3.76

4.39

1,000 tons

HC (LTO cycle)

0.63

0.64

0.72

1,000 tons

Electricity Use
Heat Use (crude oil equivalent)
Water Use
Industrial Waste
Ratio of Final Disposal

140

134

129

Million kWh

53,20950,997

49,6331,000 liters

—

—

452

2,944

4,327

3,720

Tons

1.9

0.9

1.2

%

1,000 m3

JAL REPORT 201443

Four Key Areas of the JAL Group’s CSR Activities

Bridging Japan and the World3

We will bridge Japan and the world as the “Wings of Japan” and as a network carrier that contributes to the revitalization ofJapanese industry and the regional economy while enhancing mutual understanding in the international community.

JAL Tohoku Support Project “VISIT TOHOKU!”
In June 2013, more than two years after the Great East Japan Earthquake, we launched the JAL Tohoku Support Project“VISIT TOHOKU!” as our response to the current needs andhopes of residents in the affected areas. They feared being forgotten and hoped more people would visit, take in the sights
and spend money to support for revitalization. We are seeking
to facilitate regional development and encourage people there
through our air transport business.

 acilitating Regional Development 1: Employee Training
F
Course in Affected Areas
In September 2013, we began holding training programs for
JAL directors and other employees in the affected areas in aneffort to expand our onsite activities. As of March 2014, about
350 employees have visited the towns of Minami-Sanriku andOnagawa, where they listened to storytelling guides and participated in voluntary activities. They also contributed to the local
economy by staying at local hotels, dining out and purchasing
souvenirs.

Facilitating Regional Development• Bringing more customers to Tohoku by expanding international charter flights and organized tours• Holding employee training courses in the affected areas toencourage our staff to visit Tohoku• Working in collaboration with local governments in the Tohoku
region to assist in the sales of local products, and selecting
products from the area as items to offer during flights and in
the airport lounge, or to be obtained by redeeming mileage• Stimulating interest in Tohoku by flying specially painted aircraft and providing information to customers
Encouraging People in the Affected Region• Supporting visits by student volunteers to the affected areas
through the JAL Charity Miles program• Offering trips to families affected by the earthquake to provide
some joy

VOICE

Getting More Employees
to Visit the Affected Areas
Kenji Furukawa
Domestic Route Marketing
Japan Airlines Co., Ltd.

Prior to launching this project, employees from various
departments got together to discuss what we could do tosupport the Tohoku region. It was my first time to visit the affected areas. Although I already had some idea of the local
situation from the media, when I got there I realized there aremany things you can only understand when you experience
them for yourself. I started planning the training programwith the hope that it would trigger the interest of a lot ofcolleagues, encourage them to discover what it’s like now in
Tohoku, and get them thinking about how to help out. At firstI was concerned about imposing ourselves upon the people
there, but these worries vanished when locals told us theywanted people to visit and enjoy themselves. Encouragedby their expressions of gratitude for our being there, I will
strive to get more people involved in a greater circle of support to spread some happiness for the people of Tohoku.

Specially painted
aircraft

ColumnJAL × Kopernik: “Connecting People to People, Bridging Japan and the World” Project
Kopernik is a non-profit organization that delivers innovative technologies to developing countries toward addressing various social issues such as improving thequality of life and eradicating poverty. JAL endorses their work through various
assistance and collaboration activities. In fiscal 2013, we participated in delivering
water filters to schools in Indonesia. We asked customers to donate their mileage
points to JAL Charity Miles, and by extending the equivalent value in cash, wewere able to deliver 800 water filters to 160 schools. We also selected two university students from those who had applied to take part in our initiatives through the
JAL Facebook page and sent them to Indonesia to report on how the water filters
were improving the children’s lives. As part of our partnership with Kopernik, wewill also visit technology companies and universities around Japan in search of
new advances that meet the needs of people living in developing countries.

44

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

 acilitating Regional Development 2: Helping Sales ofFSpecialty Goods from Tohoku

 ncouraging People in the Affected Region 2: Gifts ofE
Smiles project

Since June 2013, we have been collaborating with the local
governments of the Tohoku region to stimulate tourism demand by distributing brochures, and helping to sell specialty
goods as part of our activities for JAL Nikko Day, which takes
place around the 25th of every month. In March 2014, we held
the Tohoku Market @ Tennozu Building at our head office.
Many employees purchased specialty products to show theirsupport for the region.

JAL launched the Gifts of Smiles project in the summer of 2013
to assist children suffering from stress caused by the Great East
Japan Earthquake by helping them go on family trips and getaway from everyday reminders of the disaster. We help themmake a new start through refreshing, encouraging experiences.
The cost of this project is covered by donations from JAL Group
employees matched by JAL. Employees volunteer to accompany the families. In our first tour, we invited 52 people representing 20 families from the
Tohoku area to a four-day
trip to Okinawa. We observed delighted smiles on
the faces of the participants
while they enjoyed the brilliant sunshine and blue sea.

Encouraging People in the Affected Region 1: SKY BATON
The JAL Group launched the
SKY BATON project to pass
the “revitalization baton” fromworking adults to younger
generations in an effort both tohelp foster future generations
and support the areas affectedby the earthquake-tsunami disaster. Under this project, working adults will provide financial
support (i.e., “pass the baton”) to university students who will be
responsible for building the future of Tohoku and Japan. Sending students to participate in local visits and volunteer activities
will provide them with the opportunity to better understand theissues faced by the disaster-affected areas, help enable themto think for themselves and translate those ideas into action(i.e., foster future generations), and encourage them to develop
deeper ongoing interest and involvement in the disaster-affectedareas over the long term (i.e., support to disaster-affected areas).
As the first phase of SKY BATON, we supported the KIKKAKE BUS 47 Project* organized by the NPO “Tasukeai Japan,”by providing air transport and by donating the equivalent value
in cash for 3,666,000 miles donated through the JAL Charity
Miles program.
* Program funded by working adults to send approximately 1,800 university
students from all 47 prefectures on bus tours to the affected areas and to provide
young people with an opportunity to get involved in the revitalization effort.

 acilitating Regional Development 3: Tohoku Cotton
F
Project
The Tohoku Cotton Project began in 2011 as a reconstruction
effort for tsunami-stricken fields with the goal of reviving agriculture and creating new industries and jobs by planting andspinning cotton, developing commercial products and sellingthem in a cooperative effort between local agricultural corporations and companies mainly in the apparel industry. In addition to publicity and the voluntary participation of employees
to help with farming, the JAL Group makes original products
from the harvested cotton. We support the project by offering
these products in exchange for mileage and to passengers on
domestic and international
first class cabins. The initiative was also boosted at JAL
SKY, where employees produced a Tohoku Cotton tote
bag that employees carrywhen in uniform.

ColumnJAPAN PROJECT
Since May 2011, the JAL Group has been undertaking the JAPAN PROJECT to revitalize local communities by communicating the splendors of Japan using every tool available to us, including in-flightmagazines, onboard videos, in-flight meals and the JAL Group website. The project focuses on asingle region each month and reveals its attractive features of the area in collaboration with local
governments and companies. We have worked with 25 prefectures as of March 2014, and in January
and February 2014 we organized a special feature on Tohoku as the project’s first expanded version,
linked with JAL Tohoku Support Project “Visit Tohoku!”
The JAL Group will continue to build on the JAPAN PROJECT in order to generate demand for tourism and contribute to revitalizing
regional communities.

JAL REPORT 201445

Four Key Areas of the JAL Group’s CSR Activities

Nurturing the Next Generation

4

The JAL Group strongly hopes that children will have dreams to pursue for the future, and supports their future throughprograms for children of diverse age groups.

JAL SORAIKUThe JAL Group has been organizing and conducting “JAL SORAIKU” educational programs for nurturing the next generation.
These include the “JAL Origami Hikoki” course, in which children learn to enjoy playing together, and the “JAL Sky Eco”
course, in which changes in the global environment are displayed as seen from the sky. We have also started offering new
courses introducing jobs related to air travel.
In FY2013, we conducted a total of 160 courses for five programs at schools and public facilities around Japan as well as at
Japanese schools in other Asian countries, the U.S., Australia
and Europe. The courses were attended by about 12,000 people.

JAL Origami Hikoki: Fun
Paper-Aeroplane Activity

VOICE

Off-Duty CSR –JAL Sky Eco
Hideya Sasaki
Flight Operations Administration
Japan Airlines Co., Ltd.

I fly short-distance international routes and domestic routes
as captain of a 737 aircraft, but I also serve as a lecturer for“JAL Sora Eco” and “JAL Career Talk” courses at elementary schools and town halls as well as universities aroundthe country.
In the JAL Sora Eco course, I explain changes in theearth that pilots directly experience every day, using thelatest data and photographs taken from the air. I also introduce JAL’s efforts to prevent global warming, such as its
participation in the CONTRAIL project, reporting on forest
fires and implementing EOT (Engine-Off Taxiing: shutting
down one engine after landing).
I hope to continue these lectures in the hope they will
provide opportunities for a broad range of people, fromelementary schoolchildren to adults, to think about the
global environment, learn about JAL’s efforts, and perhaps
favor JAL even more.

JAL Sky Eco: Talks on
Environmental Issues

JAL Career Talk Eventfor Students

JAL Safety
Demonstrations by
Cabin Attendants

JAL Professionals
Interviewed byStudents

Elementary
schoolchildren (fromElementary
third grade), junior high schoolchildren (in fifth
school students,
Six years old and older
and sixth grades), juniorhigh school students,
high school students,
college students (adult- high school students
only class available)

Junior high school
students, high school
students

Junior high school
students, high school
students

JAL Origami Hikoki:
Fun Paper-Aeroplane
ActivityAge group

JAL Sky Eco: Talks on
Environmental Issues

FormatOnsite course

Onsite course

Onsite course

JAL Haneda facility

JAL Haneda facility

Time required

90 minutes

90–120 minutes

60 minutes

60 minutes

40 minutes (including
20 minutes of travel)

Number ofcourses permonth (in general)332 (arranged by job)

2

4

Number ofparticipants percourse30 to 10030 or more

30 or more

20 to 50

3 to 1546

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

JAL Career Talk Event for Students
We held the first “JAL Career Talk Event for Students” during
summer vacation in 2013 in response to requests from juniorhigh school and high school students around Japan who wanted to hear stories from people with interesting professions. JAL
Group employees, who work in various positions, including pilots, cabin attendants, ground staff and mechanics, answer students’ questions about their jobs. The event was attended byabout 50 junior high school and high school students and theirguardians, all of whom engaged in an enthusiastic dialog. We
plan to continue holding JAL Career Talk Events for Students toencourage children to create their own lifestyles associated with
their preferred jobs in the future.

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

CEF activities for protecting children’s lives, health and rights.
As a member of the Steering Committee for UNICEF’s Foreign
Coin Collection Program, we also provide support by transporting foreign coins collected on the ground in Japan to different
countries for free.
JAL Factory Tours – SKY MUSEUM
JAL has been offering tours of its aircraft maintenance centeras part of its social contribution activities since the mid-1950s,
soon after the airline’s founding. The “JAL Factory Tours – SKY
MUSEUM,” which was renovated and reopened in July 2013,provides the first public displays of various material chronicling
JAL’s history of opening up new air travel routes since its establishment in 1951. We have set up a new booth to introduce
the work of staff behind JAL Group flights and also exhibit JAL’s
new seats and services. The facility enables visitors to deepen
their knowledge about the airline industry in general through airline classes where they learn about aircraft and tour the hangar
to observe airplanes under maintenance up close. In FY2013,
the SKY MUSEUM received over 100,000 visitors.

Cooperation with UNICEF
In 1991, JAL launched the “Change for Good®” fundraising
campaign for UNICEF on its flights between Tokyo (Narita) and
New York to collect spare change in foreign coins from passengers. The campaign was
expanded in 2006 to include all international flights
operated by JAL. Coins collected through this initiative
are donated to support UNI-

ColumnWorld Children’s Haiku Contest
JAL Foundation, in partnership with JAL, has been hosting the biennial “World Children’s
Haiku Contest” since 1990 to spread the joy of composing haiku among children aroundthe world and promote international exchange. The applicants are children aged 15 years
and under, and they are asked to send in haiku with accompanying artwork.
To date we have received over 650,000 entries from about 50 countries and regions.
Prize-winning works are published in a picture book under the title Haiku By World Children. The book includes haiku printed in the native languages of the writers as well as inEnglish and Japanese, and is presented to libraries and similar institutions in Japan andabroad. The 2013-2014 contest was selected as an official project for the events commemorating the 400th anniversary of Japan-Spain relations and the 40th anniversary of
the Japan-Vietnam diplomatic relationship.

JAL REPORT 201447

Relationship with Our Employees
We actively develop human resources for the next generation that will embody the JAL Group Corporate Policy by practicing the
JAL Philosophy. Focusing on supporting the career success of our diverse workforce as one of our management strategies, we
intend to create a dynamic, energetic JAL Group together with our human resources powered by enriching experiences, strong
core values and fresh perspectives.

JAL Philosophy and Educational Training
JAL Philosophy Session
JAL Group employees continue their education through coursesthat deepen their understanding of the JAL Philosophy, which
they use as a common criterion for decision making in daily
operations. As a result, employees are united through mutual
trust in a company that contributes to the betterment of society.
Facilitators for the JAL Philosophy Session are selected fromeach worksite, including cockpit, cabin, maintenance airportand sales. They create educational materials at every quarter,and carry out the session for Tokyo as well as other regions
nationwide occasionally.

JAL Group New Employee Training
For four days starting on April 1, 2014, the JAL Group held
joint training for newly hired employees. With seven more companies compared to the previous year, a total of 572 new employees from 28 Group companies were gathered in Tokyo tolearn about the JAL Group Corporate Policy, JAL Philosophy,
and fundamental perspectives on safety and service that JAL
employees must possess.

VOICE

Conveying the Passionsof the JAL Staff to New
Members
Masamitsu Narikawa
Domestic Flights 2nd Division
JAL SKY Co., Ltd.

JAL Group Basic Education and Training System
The “JAL Group Medium Term Management Plan for Fiscal
Years 2012–2016” identifies “Human Resources Development” as a key initiative. We established a common basic education and training system for the JAL Group in fiscal 2012
aimed at developing leadership as well as safety and service
professionals. In addition to existing grade-based training, we
also expanded group-wide programs such as the “open-typechallenge training” and the “improve business management
skill training.”
Each Group company and department conducts and continually upgrades its expert training so that employees can gain
the knowledge and skills required in their respective fields.
In addition, we are addressing challenges to maximize theeffectiveness of our education and training through group-wide
program management by utilizing the JAL Education and Training Center, established in April 2012.

48

JAL REPORT 2014

I recently assumed responsibility for leading new employee
trainings and oversaw the training of 27 new employees. I
wanted them to experience four unforgettable days of getting to know about the aspirations of senior employees,
which they could apply to their jobs as well. To accomplish
that, I collaborated with 42 other facilitators from 12 JALGroup companies in preparation for the training. While thetraining was underway, I conveyed our passions to the newmembers.
I believe my role continues after training sessions end.
That’s why I am committed to providing follow-up support
beyond the boundaries of Group companies and departments.

Highlights

President’s Message

Review of Operations

Diversity in Human Resources
Group Management System
We specify the positions recognized as important for our business and management as “Group Management” and assign
highly motivated employees with strong potential to these positions regardless of which Group company they have worked
for. We therefore offer a program for all Group companies inwhich candidates for leadership roles can receive training andopportunities to enhance their abilities together and beyond theboundaries of companies. These competent, highly motivatedindividuals developed through our system have been fulfilling
their roles with a broadening range of opportunities available tothem through cross-sectional recruitment and transfers.

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

VOICE

Taking on Challenges withMy Colleagues to Overcome
National and Regional Barriers
Sze Hunn Yap
Marketing Strategy Research &Development Group, Marketing Department
Japan Airlines Co., Ltd.

I came to Japan from the Singapore branch office in 2009
and was assigned to the Public Relations Department toserve as a spokesperson for overseas media. The job was
tough, but I managed to fulfil my responsibilities with thehelp of many people both inside and outside the company.
Following my transfer to the Marketing Department in 2013,
I am currently working on overseas marketing strategy. I do
my best to contribute to the company’s future through mywork, which involves formulating a growth strategy for the
JAL Group, and I’m using this opportunity to develop mycareer. When I participated in the global training with colleagues from overseas branch offices, I felt they all had agreat love for JAL regardless of their nationality, and their
enthusiasm has emboldened me. JAL faces many challenges, and I am ready to face them, too, together with mycolleagues.

On the final day of the six-week workshop program, participants present their
proposals outlining business problem solutions to management, including thepresident.

 ecruitment of Experienced Workers
R
The rapidly changing business environment of the airline industry makes it more important than ever to hold onto competentpersonnel who are capable of taking the lead and transforming challenges into business opportunities. Japan Airlines has
therefore resumed its recruitment of experienced workers in fiscal 2013 and welcomed 59 new members to the Group. We
plan to invigorate our corporate organization by leveraging thediverse experience and expertise of our human resources.
Global HR Policy
We have formulated a Global HR Policy for developing and promoting human resources in accordance with the abilities, motivation and leadership qualities of each individual, regardless ofthe original hiring source, and have been focusing on the development of staff hired in countries or regions outside Japan. We
encourage the nurturing of competent human resources fromany nationality or place of residence through programs whereparticipants gain work experience in Japan and Japanese proficiency, as well as the global training that brings together overseas hires and staff hired in Japan.

Promoting the Career Development of Women
The JAL Group has actively supported career development for
women and created a working environment in which women
have been achieving success in various fields. As a result, 14%of managerial positions were filled by women as of the end of
fiscal 2013. However, we feel there are still opportunities for improvement. Half of all JAL Group employees are women, so it
is essential to provide them with career paths that are fulfillingand enable them to participate in developing the future of theGroup. We also believe that incorporating women’s viewpoints
into the management of our business is essential for generating
new corporate value.
Promoting the career development of women has therefore been a top management priority since March 2014, anda number of initiatives have been set in place to this end. In
future, we intend to raise corporate value and competitivenessby providing career development opportunities for diverse human resources toward our goal of becoming the most preferred
airline in the world.

JAL REPORT 201449

Concrete Actions for Promoting the Career
Development of Women ction 1: Flexible Working Styles and Work-Life BalanceA
We are introducing greater flexibility into the workplace for both
men and women so that our diverse human resources candemonstrate their abilities with high efficiency. In fiscal 2014,
we launched a program whereby employees can work at home
one day per week, primarily for the approximately 4,000 JAL
Group staff working regular shifts. We also introduced a flexible
work hour system that allows full-time employees to finish workat 4 p.m. as needed.
Action 2: Enhanced Career Development
Committed to placing the right talent in the right job, we havebeen adding more positions for women, including overseas assignments, so that they gain new experiences that can further
enrich their careers. We have also introduced an open application system for selected overseas posts. To ensure successful
long-term careers for women, we are expanding training programs aimed at further developing their abilities.
Action 3: Creation of a Corporate Culture
We conduct middle management training aimed at creatinga corporate culture where diverse human resources are cultivated. For grade-based training, we have added a session on
the value of diversity and flexibility in an effort to establish a
workplace environment and culture that supports the careers ofdiverse human resources.
 ction 4: Support for Balancing Work and FamilyA
We have established a system that supports both men andwomen in balancing the demands of work with childcare andnursing care needs. Information on programs, role models andspecific activities is provided through our corporate intranet.
•	Employees can take up to three years of childcare leave. This
program also allows for advancing or postponing the timing ofan employee’s return to work depending on specific circumstances during the leave. In fiscal 2013, 702 employees tookchildcare leave.
•	Many employees take advantage of programs available fordifferent situations, including exemption from late night duty,
shortened working hours for childcare and a flexible work hoursystem.
•	In addition to subsidies for hiring babysitters, our subsidy
system has been expanded to cover costs for temporary
childcare, monthly childcare, rented childcare items andhousekeeping services.
•	Nursing care leave and special carry-over holidays are available to support employees who are providing nursing care. In
fiscal 2013, 62 employees took nursing care leave.

50

JAL REPORT 2014

Continued “Kurumin” Mark Certification
Following its initial certification in 2008, Japan Airlines
again obtained the “Kurumin” certification mark fromthe Tokyo Labor Bureau in 2013. Companies formulate
an “Action Plan for Enterprises” (hereafter “Action Plan”)
based on the “Act on Advancement of Measures to Support Raising Next-Generation Children,” and the mark isawarded to companies that achieve the objectives set out
in their action plans.
Under the two-year action
plan that began in April 2013,
we are continuing to support
the parenting of children byincorporating the concept ofa work-life balance.

Increasing the Number of Female Managers in the JALGroup
The actions shown at left along with our merit-based appointment policy is intended to increase the number of female
managers in the JAL Group to 20% from the current 14%,and the number of female managers in organizational management posts in Japan Airlines to 15% or higher* from thecurrent level of about 10% within the next 10 years (by theend of fiscal 2023).
* In view of these objectives, the number of women in organizational management
posts has been calculated to include managerial posts for flight operations andmaintenance, which are departments primarily consisting of men.
Note: Women account for 8% of directors and 4% of executive managers at Japan
Airlines Co., Ltd., as of July 2014.

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Partnership with Business Associates
We work in concert with business associates, our valued partners who help keep JAL flying, in order to provide safe andcomfortable flights.

Recognizing that our flight operations, services and products
are made possible through the cooperation and support of ourbusiness associates, we strive to establish solid partnerships of
mutual trust, not only through fair and transparent procurement,
but by maintaining a sense of gratitude.
Fair and Transparent Procurement
When we select business associates, we take full considerationof their service and product quality, pricing and delivery times,
as well as overall reliability and ongoing CSR (corporate social
responsibility) efforts.
Since August 2010, we have been centralizing procurement
operations in the Japan Airlines Purchasing Department. We
have sought to provide excellent opportunities for business associates in Japan and abroad and to consistently maintain fair
and transparent procurement practices.
Our goal for centralized procurement also includes cost reduction and standardization as well as higher efficiency in theoperational process of procurement.

Providing Safe and Comfortable Service toPassengers
To ensure the comfort of all passengers aboard our flights, we
are working with our business associates to nurture a culture inwhich the highest priority is placed on safety while also promoting thorough quality control to offer premier hospitality.
Promoting Procurement Activities with Due
Consideration of Corporate Social Responsibility
In accordance with the Basic CSR Policy of the JAL Group, we
are working with our business associates to promote procurement activities with due consideration of CSR, including legal
compliance, protection of the global environment, respect forhuman rights, proper labor practices, fair operating practices
and consumer issues.

Social Data
FY2011FY2012FY2013Unit

30,875
23,10530,88222,85831,472
23,084

Persons
Persons

Human Resources
Consolidated Number of Employees*1
Ground Jobs
Flight Crew

2,466

2,293

2,405

Persons

Cabin Crew

5,304

5,731

5,983

Persons

Average Age*1

—
—

38.0
38.4

37.4
37.5

Years
Years

Ground Jobs
Flight Crew

—

43.1

42.1

Years

Cabin Crew

—

34.9

35.0

Years

Ratio of Men*1

56.3
43.7

53.8
46.2

53.3
46.7

%
%

General Staff*1

15.9
84.1

15.9
84.1

15.6
84.4

%
%

Ratio of Staff with Disabilities*2

1.87

1.91

2.00

%

Ratio of Female Managers*1

13.1

14.3

14.1

%

Training Period per Person
Training Cost per Person

—
—

64.5
352,35765.7
360,227

Childcare Leave ApplicantsNursing Care Leave Applicants

751
55

747
69

702
62

Persons
Persons

Ratio of Local Hires at Overseas Offices*1

90.7
57.9

92.3
64.7

92.0
62.1

%
%

409
1,698

444
1,491

915
3,144

Persons
Hours

Ratio of Women*1
Managerial Staff*1

Ratio of Locally Hired Managers at Overseas Offices*1

Hours/Person
Yen/Person

Community Contribution
Participation in Voluntary Activities
Total Hours of Voluntary Activities*1 As of the end of the fiscal year.
*2 As of June 1 of the fiscal year that follows the current fiscal year.

JAL REPORT 201451

Third-Party Opinion

Iwao Taka
Professor, Schoolof Economics andBusiness
Administration
Reitaku University

The content of this year’s JAL REPORT
reflects an even greater emphasis on
CSR than in the previous year, in which
the New JAL expressed both regret anddetermination to customers, creditorsand shareholders. This year, JAL offersa readily understandable explanationof its activities in line with the requirements of social responsibility standards
under the categories of “Safety and Security,” “Environment,” “Bridging Japanand the World” and “Nurturing the Next
Generation.” I will leave the details of theReport to stand on their own merits andcomment on three initiatives that I findparticularly significant.
The first initiative is the “Tour forChildren with Food Allergies.” Food restrictions prevent children with allergies
and their families from enjoying ordinary
package tours. In the hope of giving thema chance to create happy memories offamily trips, JAL organized a tour offering
safe food throughout the entire itinerary. I
can only imagine the joy felt by the families on their first trips, and I commend thiseffort from the bottom of my heart.
The second initiative is the Tohoku
Support Project “VISIT TOHOKU!” This
multifaceted effort supports the region
with a broad range of content, such as
expanded tour plans for regional development, local product sales, and training
programs for JAL directors and employees in the affected region. Mindful ofregional expectations and ever-changing
circumstances, JAL has consistently taken action by coming up with ingenious
ideas for applying its corporate strengths
and management resources. I highly commend this initiative as well.
The third initiative is the educational
and training program for developing diverse human resources under the “JALGroup Medium Term Management Plan
for Fiscal Years 2012–2016.” JAL has
established a JAL Philosophy Session,
grade-based training, skill enhancement
training and so on, that has already begun
to show results. One might think there isnothing new in human resource development. One prominent characteristic in
JAL’s education, and a JAL Philosophy
Session in particular, however, cannot befound in other companies.
Last year, I had the opportunity to observe a JAL Philosophy Session at work.
The theme was “Align Mental Vectors,”
and the facilitator provided an introductory explanation that was outstandingly
clear. I learned afterward that the facilitators meet beforehand to consider ways
to explain and continuously improve theprogram. During the training session,
participants from different lines of work
were divided into discussion groups ofsix or seven people. Since the topic had
been so well-defined by the facilitator, a
lively discussion ensued. I have never witnessed a training session so full of energy– this is my honest impression.
Finally, I would like to offer my views on
JAL Philosophy Sessions as an expert incorporate ethics. As I have stated above,
JAL’s training efforts are already paying
off, and that is fine. Nevertheless, when
one looks back on JAL’s history, thecompany was gripped by a similar enthusiasm in an earlier period. According to
Kuniharu Watanabe’s book Nihon Koku
no Chosen (The Challenge of Japan Airlines), that happened during the five to six

years following the start of the “CI Movement” in 1987.
At that time, there was a sense of crisis
in JAL that “employees were self-centeredand dismissive of management and otherdepartments,” and so a Group-wide reform of corporate culture was launched.
This movement ended in 1989 after 424
seminars, attended by over 20,000 employees. Many felt they had been given
an opportunity for self-reflection throughtheir dialog with fellow employees in otherdivisions. As one person involved at thetime noted, “we felt we had been givena fresh start, and participating employees developed a desire to shake off themindset of government dependency.”
Communication between staff in different departments declined over the years,
however, due in part to the transition to afunction-based organization. This led toa second “Service Improvement Movement” in the early 1990s, which cannot
be termed a success, judging from thesubsequent stagnation suffered by thecompany after 2000.
What should JAL do to avoid repeating its past mistake? I believe the only
way is to have each individual, and especially those in management, accept “TheFormula for Success (The Formula forLife and Work),” laid down by Chairman
Emeritus Inamori, as their own credo andpractice it. The formula emphasizes theimportance of attitude, which is to saythat “by thinking, deciding and acting for
oneself, each of these elements creates
who you will be tomorrow as well as thecompany’s future.” Each of you must
remember to return to that point and reflect on what type of person you would
like to become and what kind of JAL you
would like to create. I cannot help feeling that “The Formula for Life and Work,”
which did not exist in past movements,
holds the key to guiding JAL toward further success.

Response to the Third-Party Opinion
Thank you so much for your thoughtful comments on our activities and for sharing your valuable insights upon the
publication of JAL Report 2014.
When we relisted our shares, we were firmly resolved to always maintain our sense of gratitude for the support wehave received as we strive to become a company that can contribute to society through our air transport business andbe needed by society. We have therefore been conducting our CSR activities with an emphasis on efforts unique to JAL.
As noted in the Tohoku Support Project, or JAL SORAIKU, our CSR activities are characterized by the participationof very many employees. We believe this is rooted in the awareness we have been cultivating through the JAL Philosophy Session, that “Each of Us Makes JAL What It Is” and that we must “Align Mental Vectors,” as well as the
positive attitude described by the formula: “The Result of Life and Work = Attitude × Effort × Ability.”
We will continue our efforts to contribute to society through activities that uniquely reflect JAL, while firmly keeping
your point in mind as the management so we can lead by example, thinking positively and with passion about “whatkind of JAL we would like to create” and taking action to create the “future JAL” together with our employees.

52

JAL REPORT 2014

Hiroyuki Hioka
Executive Officer,
General Affairs (CSR)
Japan Airlines Co., Ltd.

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Touchdown on a sunset-touched runway
And arms raised, as if to send a sign
“Welcome back”

Governance
JAL REPORT 2014

JAL REPORT 201453

Corporate Governance
We have established and actively implement our Basic Corporate Governance Policy to enhance management transparency
and monitoring.

Our Basic Corporate Governance Policy
We have established the “JAL Philosophy” under the JAL Group
Corporate Policy as a set of company guidelines on proper
conduct. The JAL Philosophy guides our efforts to increase
corporate value and maintain accountability through a corporate governance structure that produces high managementtransparency and robust monitoring while also facilitating rapid,
focused decision making.
The Board of Directors has established corporate governancestandards by adopting Corporate Governance Guidelines as a
key set of rules to supplement the Companies Act, related laws
and regulations, and our own Articles of Incorporation. The
Board reviews the Corporate Governance Guidelines at least
once a year. Directors strive to realize our corporate policy byputting the JAL Philosophy into practice and reporting on the
progress of implementing the philosophy at Board meetings.
These Corporate Governance Guidelines have been madeavailable to the public via our website so that stakeholders—
including customers—can readily refer to and understand the
JAL Group’s corporate stance.

Board of Directors
The Chairman of the Board of Directors chairs meetings of theBoard to clearly separate management monitoring and business execution functions.
As of July 2014, the Board of Directors is composed of nine
members, seven men and two women. We have also appointed two External Directors, Tatsuo Kainaka and Kimie Iwata.
Kainaka offers a wealth of experience, accomplishments anddeep insight in the areas of corporate governance and legal
affairs based on extensive knowledge accumulated over hislong career in the judicial system. Iwata brings a wealth ofexperience, accomplishments and deep insight related to supporting the professional development of women and corporatesocial responsibility gained through her extensive experience
with government and corporate management. We believe thathaving both of them as External Directors provides significant
benefits to JAL Group management.
Directors receive legal guidance to ensure they are aware of
their formal duties, including the fiduciary duty of loyalty and thedue care of a prudent manager. Directors serve one-year terms,
confirming their role and accountability each fiscal year.

http://www.jal.com/en/outline/corporate/governance.html

Board of Corporate Auditors
As a company with auditors, we are seeking to strengthen our
auditing system by appointing three External Audit and Supervisor Board Members out of a total of five auditors. External
auditors are appointed on the merits of their extensive knowledge of and experience in a wide range of fields. Together withthe other auditors, the external auditors work closely with the

Corporate Governance Guidelines
Regulations of the Board of
Directors, etc.

Fundamental Policies on the Internal
Controls System

Regulations for Kessai and Administrative
Authority / Administrative Authority Criteria Table

Outline of JAL GroupInternal Controls

General Meeting of Shareholders
Appointment/
Dismissal

Appointment/Dismissal
Auditing

Board of Directors
Instruction (Prior Deliberation)/
Delegation of Authority
Appointment/Dismissal,
Instruction/Command

ReportRecommendation

Executive Committee
ReportPresident

Instruction/
Delegation of
Authority

Report Significant
IssuesGroup Council for
Safety Enhancement

Instruction/ReportManagement Liaison
Committee

Group Operational
Safety Promotion
Committee

JAL REPORT 2014

Financial
Audit

Collaboration

ReportAccounting Auditor
Collaboration

Audit

Risk Management Committee
Financial Risk Committee
JAL Philosophy Committee
CSR Committee
Internal Audit

Departments and Subsidiaries

Board of Corporate
Auditors

Officers Disciplinary Committee

Executive Officers

54

Compensation Committee
Personnel Committee

Instruction/Delegation of Authority

Group Earning
Announcement Session

Nominating Committee

Appointment/
Dismissal

Guidance/Advice

Collaboration

Legal Advisors

Highlights

President’s Message

Review of Operations

Internal Auditing Department and corporate auditors to ensure
sound management by conducting audits from a neutral andobjective standpoint.
Committees
The JAL Group has established a Nominating Committee,
Compensation Committee, Personnel Committee and Officers
Disciplinary Committee to enhance management transparency.
Risk Management System
The JAL Group manages risks by dividing them into three categories: (1) operational risks associated with aviation safety,
aviation security and other issues related to air transportation;(2) corporate risks associated with management in general, excluding risks related to air transportation; and (3) strategic risks
associated with business management that may have a material impact on corporate revenue and expenditures.
With respect to aviation safety, we have established a Council
for JAL Group Safety Enhancement chaired by the President ofJapan Airlines Co., Ltd. and composed of Directors appointed
by the President and the Presidents of Group airline companies.
We have also established the Operational Safety Promotion
Committee under the Council for JAL Group Safety Enhancement, headed by the General Manager of Corporate Safety &Security of Japan Airlines Co., Ltd. Membership includes theVice Presidents of the Safety Management Departments andboard members in charge of safety at Group airline companies.
The Operational Safety Promotion Committee monitors andevaluates the safety management system based on the statusof flight operations. By formulating and evaluating the plans,
policies and measures on aviation safety and making overall adjustments and offering recommendations, advice and guidance,
this committee seeks to maintain and strengthen collaboration
between departments and between Group airline companies
on issues related to safety and enhance the level of safety.
To stabilize Group management by comprehensively managing risks other than those associated with aviation safety, which
includes safety and security management, we have established
the Risk Management Committee based on the JAL Group
Basic Policies on Risk Management. Headed by the Executive
Officer of general affairs, this committee formulates basic risk
management guidelines, submits progress reports, and sharesinformation on measures taken when risks are identified. On
an annual basis, the Risk Management Committee conducts afixed-point observation related to risks faced by each department of Japan Airlines Co., Ltd. and major Group companies.
At the management level we endeavor to build a common
awareness of the results of the review and policies formulated
in response to the results. We also assess and analyze risks

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

identified by the review and provide support to responsibleorganizations so they can promptly implement measures toprevent risk from materializing. In dealing with specific risks thatthreaten our ability to fulfill our responsibility as a provider ofpublic transportation, such as a new strain of the influenza virus
or an earthquake, we have established a system that enables
us to continue business in an appropriate manner under emergency situations based on guidelines set up in collaboration
with regulatory bodies and other relevant institutions.
In addition, we have established an Information Security Committee headed by the Executive Officer of general affairs andExecutive Officer for IT planning to strengthen our controls overpersonal and corporate information handled by the entire Group.
We have also established the Financial Risk Committee—
headed by the Executive Officer of finance and accounting—to
provide corporate management with an appropriate understanding of financial risks. The Financial Risk Committee regularly
monitors the results of simulations on the financial condition of
the company, estimates the potential impact of risks that may
materially and quantitatively affect corporate performance, andresponds to risks as necessary in tandem with the Risk Management Committee.
Compliance System
To promote compliance with all laws, regulations and rules governing our corporate activities, we have designated the General
Affairs Department of Japan Airlines Co., Ltd. to act as thesupervising division for compliance issues and are making a focused effort to raise employee awareness by adopting various
measures.
We have organized the JAL Group Compliance Network
comprising Directors from each Group company, which seeks
to enhance the compliance culture of the entire Group by promoting the prompt sharing of related information, providing
e-learning and educational programs, and regularly publishing
the compliance information magazine RASHINBAN.
A contact point has also been set up within the General Affairs Department to receive reports on legal violations from
whistleblowers inside and outside the Group in an effort togather information related to compliance.
Internal Controls System
The JAL Group establishes the “Fundamental Policies on theInternal Controls System” according to the regulations of theCompanies Act and observes these laws in order to ensure
the reliability of the financial reports as well as the effectivenessand validity of our operations. The board of directors’ meeting
held on March 27, 2013, decided the following “Fundamental
Policies on the Internal Controls System.”

JAL REPORT 201455

Corporate GovernanceFundamental Policies on the Internal Controls System
1. Regarding the system to ensure compliance with the Articles ofIncorporation and the laws and regulations governing the execution of
the duties of the director• We established “Corporate Governance Guidelines” and set up a corporate
governance system that will demonstrate high management transparency
and promote a strong management monitoring function in order to ensure
the proper maintenance of the internal controls system.
• We established “JAL Philosophy” as conduct guidelines of our company.
The directors are encouraged to abide by these practices.
• The board of directors decides the “Fundamental Policies on the Internal
Controls System,” and the general affairs department promotes themaintenance of the internal controls system.
•The general affairs department supervises compliance operations andmonitors the operations situation and maintenance of related regulations.
• We have set up an inspection system to ensure the duties of the directors
are executed in compliance with relevant laws and regulations.
2. Regarding the system related to the management and preservation of
information related to the execution of the director’s duties
We manage and properly preserve the information related to execution ofduties according to relevant laws and regulations and company rules.
3. Regarding other official regulations systems related to the management of the risk of losses
In order to manage the risk of the entire group, we have established a“Council for Safety Enhancement,” a “Risk Management Committee,” and a“Financial Risk Committee” to prevent losses by consistently monitoring theappropriateness of duties, establishing the “Outline of JAL Group Internal
Controls,” alongside managing the risks appropriately. In addition, we plan
to minimize loss by corresponding on all levels when a danger of loss does
happen to occur.
4. Regarding the system to ensure the execution of the director’s duties
is effectively carried out•We hold a monthly board of directors’ meeting and additionally, holdprovisional meetings when important decisions regarding groupmanagement policies and plans need to be decided. In addition, to ensure
the effective execution of the directors’ duties, we have installed meetingbodies such as the “Executive Committee” and “Earnings Announcements
Sessions.”• In accordance with company rules, we have segregated authority in orderto maintain effective execution of duties, and determined the division ofduties, authority of managerial posts and authority of duties.
5. Regarding the system to ensure employees execute their duties incompliance with relevant laws and regulations and the Articles ofIncorporation.
•
We have established “JAL Philosophy” as conduct guidelines of ourcompany and encourage employees to put them to practice.

• The general affairs department promotes the maintenance of the internal
controls system.
• The general affairs department oversees operations related to complianceand monitors the operations situation and maintenance of related official
regulations.
• We have set up an inspection system to ensure the employees execute
their duties in compliance with relevant laws and regulations.
6. Regarding the system that ensures business appropriateness in thecorporate group
We established “JAL Group Business Management Official Regulations.”
Each company in the group ensures that the system is used to effectively
and justly carry out management based on the “JAL Philosophy.” In addition,
the “Outline of JAL Group Internal Controls” is enacted and continuously
monitors the appropriateness of duties.
7. Regarding matters related to the employees concerned in the eventthat auditors request that employees be appointed to assist in theirduties
We appoint employees (auditing staff) to establish an organization
independent from the directors to increase the effectiveness of the auditor’s
inspection and perform auditing duties smoothly.
8. Regarding matters related to the independence of the aforementioned
employees from the directors
The auditing staff is appointed with the approval of the auditors and receives
instructions and orders from the auditors.
9. Regarding the systems for employees and others to report to theauditors• 
By establishing a corporate governance system, we strengthen the
management monitoring system of directors and employees by theauditors.
• We ensure the system and the opportunity for the director and employees
to appropriately report to the auditors.
• We request that auditors attend meetings of the board of directors andother important meetings, and forward important circulars to the auditors.
In addition, we report the circumstances on the execution of duties andall important matters on company management and business operations
to the auditors.
10. Regarding the other system to ensure the effectiveness of the boardof auditors and the auditors’ inspection• We establish the system in accordance with the inspection plan devised
each year by the auditors in order to effectively implement the inspection.
• The directors, employees, the directors of each group and the auditing
group all exchange opinions with the auditor.
* “Employees” refers to the executive officers and trained staff.

Governance Data

(As of the end of years)
FY2011FY2012FY2013

Unit

Governance
Executives
Female Directors

5

7

7

Persons012Persons

External Directors

2

2

2

Persons

Auditors
External Auditors

4

5

5

Persons2

3

3

Persons

Executive Remuneration
Directors Total (including external directors)

—

235

294

Millions of yen

—

172

228

Millions of yen

Auditors Total (including external directors)

—

63

66

Millions of yen

Note: There have been 9 directors (including 2 external directors) and 5 auditors (including 3 external auditors) since the 65th ordinary general meeting of shareholders heldon June 18, 2014.

56

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Executive Officers

External Director

External Director

Tatsuo KAINAKA

Kimie IWATA

Director, Senior Managing
Executive Officer

Director, Senior Managing
Executive Officer

Director, Senior Managing
Executive Officer

Director, Senior Managing
Executive Officer

Tadashi FUJITA

Hirohide KAMIKAWA

Junko OKAWA

Norikazu SAITO

Director, Chairman

Representative Director,
President

Representative Director,
Executive Vice President

Masaru ONISHI

Yoshiharu UEKI

Nobuhiro SATOJAL REPORT 201457

Executive Officers(As of July 1, 2014)

Members of the Board of Directors
Director, Chairman

Masaru ONISHI

Chairman of the Board of Directors

Representative Director, President

Yoshiharu UEKI

Chairman of the Board of Managing Executive Officers, Chairman of Council for Safety
Enhancement, Chairman of the JAL Philosophy Committee, Chairman of the CSR Committee

Representative Director, Executive Vice President

Nobuhiro SATO

Aide to the President, General Manager, Safety

Director, Senior Managing Executive Officer

Hirohide KAMIKAWA

General Manager, Managing Division Passenger Sales, Domestic Passenger Sales, Presidentof JAL Sales

Director, Senior Managing Executive Officer

Junko OKAWA

Cabin Attendants

Director, Senior Managing Executive Officer

Tadashi FUJITA

Deputy General Manager, Managing Division Passenger Sales, International Passenger Sales,
Web Sales, Senior Vice President, Eastern Japan

Director, Senior Managing Executive Officer

Norikazu SAITO

Finance and Accounting

External Director

Tatsuo KAINAKA

External Director

Kimie IWATA

Auditors
Audit & Supervisory Board Member

Hisao TAGUCHI

Audit & Supervisory Board Member

Yasushi SUZUKA

External Audit & Supervisory Board Member

Eiji KATAYAMA

External Audit & Supervisory Board Member

Hiroyuki KUMASAKA

External Audit & Supervisory Board Member

Shinji HATTA

Executive Officers
Senior Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Managing Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer
Executive Officer

58

JAL REPORT 2014

Hideki KIKUYAMA
Shigemi KURUSU
Toshiaki NORITA
Toshinori SHIN
Nobuyoshi GONDO
Kiyoshi ISHIZEKI
Tsuyoshi YAMAMURA
Akira YONEZAWA
Toshiki OKA
Jun KATO
Hiroyuki HIOKA
Tadao NISHIO
Shinichiro SHIMIZU
Hidetsugu UEDA
Tomohiro NISHIHATA
Takahiro ABE
Hideki OSHIIMA
Yuji AKASAKA
Kiyoshi MARUKAWA
Ryuzo TOYOSHIMA
Tetsuya ONUKI
Arata YASUJIMA
Hoshiko NAKANO
Hiroki KATO
Munemitsu ERIKAWA

Managing Division Route Marketing
Corporate Control
Corporate Planning, Business Creation Strategy
Flight Operations
Corporate Safety & Security
IT Planning
Cargo & MailManaging Division Route Marketing (International Route Marketing)Purchasing
Managing Division Route Marketing (Marketing & Branding)General Affairs
Managing Division Route Marketing (Domestic Route Marketing)
Human Resources
Human Resources in charge of Education, Vice President, Human Resources Management
Managing Division Route Marketing (Passenger System Planning)
Airport Operations
Managing Division Route Marketing (International Relations and Alliances)
Engineering & Maintenance, President of JAL Engineering
President of Japan Transocean Air
President of JAL EXPRESS
President of J-AIR
President of Japan Air Commuter
Senior Vice President, Western Japan
Vice President, Haneda Airport President of JAL Sky
Senior Vice President, China Vice President and Regional Manager, Beijing District SalesManager, Beijing

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Financial Section
JAL REPORT 2014

From airplane windows light reaches the airport
Behind them, thoughts of family
The night grows darker but home is near

JAL REPORT 201459

Management’s Discussion and Analysis
Economic Environment
During this consolidated fiscal year (April 1, 2013 to March 31,2014), the Japanese economy remained on a recovery track
supported by an upturn in exports and the impact of various
government policies that led to a rise in household income andinvestments, in addition to last-minute demand ahead of theincrease in the consumption tax rate. Meanwhile, a downturnin overseas economies kept a lid on further growth in the domestic economy.

The State of the JAL Group
Under these circumstances, the JAL Group did its utmost to
provide customers with unparalleled service with a focus on
maintaining safe operations, and heightened the profit consciousness of employees under the practice of JAL Philosophy
and a divisional profitability management system. These measures are intended to further improve management efficiency
and ultimately achieve the management targets set out in the
JAL Group Mid-term Management Plan Rolling Plan 2013
announced on April 30, 2013.

Consolidated Business Performance
Operating revenues for FY2013 increased by 5.7% from the previous year to 1,309.3 billion yen, mainly because of an increasein passengers on both our domestic and international routes.
While operating expenses increased by 9.5% from the previous year to 1,142.5 billion yen due to a weaker yen and otherfactors, we intended to restrain rising costs by further reinforcing our profit consciousness through measures such as thedivisional profitability management system.
As a result, operating profit was 166.7 billion yen, with anoperating profit margin of 12.7%. The EBITDAR margin wasmaintained at a high level of 21.5%, and unit cost was 8.8 yen.

Overview of Consolidated Financial Results
FY2012
Operating Revenue
Air Transportation Segment
Operating Expense
Air Transportation Segment
Operating Profit
Air Transportation Segment(JPY Bn)

FY2013% y/y1,238.8

1,309.3+5.7%

1,113.7

1,166.6+4.8%

1,043.5

1,142.5

+9.5%

935.2

1,017.5

+8.8%

195.2

166.7

−14.6%−16.4%

178.4

149.1

Operating Profit Margin (%)

15.8%

12.7%

−3.0ptOrdinary Income

185.8

157.6

−15.2%Net Income

171.6

166.2

−3.2%

ASK*1 (Mn seat km)

81,18983,319+2.6%

RPK*2 (Mn passenger km)

57,04959,135+3.7%

EBITDA Margin (%)*3

22.3%

19.1%

−3.2ptEBITDAR Margin (%)*4

24.8%

21.5%

−3.3pt

8.5

8.8

+0.3

11.5

12.2

+0.7

Unit Cost (JPY)*5
Including fuel cost

*1 ASK: available-seat-kilometer*2 RPK: revenue-passenger-kilometer*3 EBITDA Margin = EBITDA ÷ operating revenue,
EBITDA = operating profit + depreciation*4 EBITDAR Margin = EBITDAR ÷ operating revenue,
EBITDAR = operating profit + depreciation + aircraft leases*5 U nit Cost: consolidated air transportation segment cost (excluding fuelcost) ÷ ASK
Note for consolidated air transportation segment: from FY2013 the scopeof consolidation was expanded from 6 air transportation companies to 32
companies by adding 26 air transportation-related companies. The figure
for the previous year was calculated using the same method.

60

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Operating Profit

Analysis of FY2013 Results
ASK y/y: +2.6%
RPK y/y: +3.7%(JPY Bn)

Revenue +70.5 billion yen

Expenses +98.9 billion yen

International
Cargo
Other
Revenue Fuel
Domestic
Operation
Passenger
Coupled
Cost
International
Revenue
Passenger+30.3
Coupled Other
−37.0
Cost
+2.1 +7.0
Cost
−6.2

−5.1

195.2

+30.9

166.7

Owing to a year-on-year increase in revenue of 30.9 billion
yen from international flights and 2.1 billion yen from domestic
flights due to a greater number of passengers, and with the addition of other revenue, aggregate revenue increased by 70.5
billion yen. As for expenses, fuel costs increased by 37.0 billion
yen due to unfavorable currency markets and increased supply.
While we saw rises in product and service improvement costs
and in maintenance costs due to seat renovations, we kept theincrease in costs at a minimum.
As a result, operating profit declined by 28.4 billion yen fromthe previous year to 166.7 billion yen.

−50.5

–28.4
billion yen(−14.6%)FY2012FY2013

International Passenger Operations (Operating Results)
FY2012FY2013% y/yPassenger Revenue (JPY Bn)

406.6

437.5

+7.6%

ASK (Mn seat km)

44,745

46,235+3.3%

RPK (Mn passenger km)

34,03635,390+4.0%

Passengers (thousand people)

7,525

7,723

+2.6%

L/F (%)

76.1%

76.5%

+0.5pt

11.9

12.4

+3.5%

9.1

9.5

+4.1%

54,041

56,657+4.8%

Yield (JPY)*

1

Unit Revenue (JPY)*2
Revenue per Passenger (JPY)*3*1 Yield = passenger revenue ÷ RPK*2 Unit Revenue = passenger revenue ÷ ASK*3 Revenue per Passenger = passenger revenue ÷ passengers

International Passenger Operations (Changes in Revenue)(JPY Bn)+30.9
billion yen(+7.6%)

International Passenger Operations – Operating
Results and Passenger Revenue
On international routes, ASK increased by 3.3% and RPK grewby 4.0% year-on-year. Our load factors rose by 0.5 points
year-on-year to 76.5%. Our yield increased by 3.5% from theprevious year, resulting in a 7.6% rise in passenger revenue to437.5 billion yen.
Demand in Europe and Southeast Asia was particularly
strong, resulting in load factors of 78.3% for European routes
and 76.1% for Southeast Asian routes. Factors behind revenue growth in international passenger operations include anincrease in inbound passengers from overseas and a rise inrevenue per passenger on fares for inbound flights due to theweaker yen.
In addition, the launch of JAL SKY SUITE for more routes
contributed to enhancing our load factors and yield.

437.5
+9.0

406.6
+21.9

FY2012• Exchange rate
• Passenger mix• Strong demand in Europe
and Southeast Asia

Revenue per
Passenger

Number of
Passengers

FY2013

JAL REPORT 201461

Management’s Discussion and Analysis

Domestic Passenger Operations – Operating
Results and Passenger Revenue
On domestic routes, ASK increased by 1.8%, RPK increased by
3.2% year-on-year and our load factor by 0.9 points to 64.0%.
While our yield declined by 2.6%, passenger revenue increased by 0.5% to 487.4 billion yen.
In FY2013, we enjoyed robust consumer demand resulting
from our demand-stimulating promotions and group tour offerings. Particularly high demand for inbound routes from outlying
regions to the Tokyo metropolitan area was generated by the
30th anniversary of Tokyo Disney Resort® as well as for routes
to the San-in region following a period of renovation of the Izumo Taisha Grand Shrine in Shimane Prefecture.
We launched the “JAL Jalan Pack,” which enables customers to create their own tours by freely combining JAL airtickets with lodgings of their choice, and stimulated demandthrough the “Tokubin Discount 21” campaign, which also
boosted revenues.

Domestic Passenger Operations (Operating Results)
FY2012FY2013Passenger Revenue (JPY Bn)

485.2

487.4

+0.5%

ASK (Mn seat km)

36,44337,084+1.8%

RPK (Mn passenger km)

23,012

23,745+3.2%

Passengers (thousand people)

30,02031,218+4.0%

L/F (%)

63.1%

64.0%

+0.9ptYield (JPY)

21.1

20.5

–2.6%

Unit Revenue (JPY)

13.3

13.1

–1.3%

16,163

15,613–3.4%

Revenue per Passenger (JPY)

Domestic Passenger Operations (Changes in Revenue)(JPY Bn)+2.1

billion yen(+0.5%)

485.2

Fuel costs rose 15.0% year-on-year to 283.3 billion yen due
to the weaker yen, and the exchange rate fluctuations caused
fuel costs to rise by 48.2 billion yen and costs other than fuelby 19.3 billion yen, amounting to a total cost increase of 67.5
billion yen.
Intensive cabin renovations resulted in an increase in outsourced maintenance cost, while personnel costs rose dueto the raise in bonus levels from the previous year. In addition,
there were costs related to product and service improvements
and costs due to increased supply.
Sensitivity to fuel and foreign exchange was approximately
2.0 billion yen in terms of crude oil and approximately 2.5 billion
yen in terms of the yen exchange rate against the U.S. dollar.

487.4

−17.1

+19.3

• Passenger mix and others• Increase in seats supplied• Other measures

Revenue per
Passenger

Number of
Passengers

FY2012Major Operating Expense Items% y/yBreakdown of Operating Expenses

FY2013(JPY Bn)

FY2012FY2013

% y/y

Fuel

246.3

283.3

+15.0%

Landing Fees

75.1

80.2

+6.7%

Maintenance

30.4

41.1

+35.2%

Sales Commissions (Air Transport)

20.3

22.5

+10.8%

Aircraft Depreciation

60.0

62.5

+4.1%

Aircraft Leases

30.9

31.5

+1.8%

Personnel

226.7

235.2

+3.7%

Other

353.4

385.9

+9.2%

1,043.5

1,142.5+9.5%

FY2012FY2013% y/ySingapore Kerosene (USD/bbl)

127.1

121.5

−4.4%

CIFJ (USD/bbl)

114.4

110.3

−3.6%

FX Rate: (JPY/USD)

82.4

99.9

+21.3%

Total Operating Expenses

Exchange Rates and Fuel Price

Fuel/FX Sensitivity (Impact on Operating Profit without Hedge)
FY201362

JAL REPORT 2014

Crude Oil (Change in 1 USD/bbl)

2.0

FX (Change in 1 JPY/USD)

2.5(JPY Bn)

Highlights

President’s Message

Review of Operations

Financial Conditions(JPY Bn)

End of FY2012 End of FY2013
Total Assets
Cash and Deposits

Difference

1,216.6

1,340.1+123.5

347.9

368.7

+20.7

Balance of Interest-bearing Debt*1

160.1

134.2

−25.8

Off-balance Sheet Lease Payments

207.1

145.5

−61.6

Shareholders’ Equity

565.0

690.2

+125.2

Shareholders’ Equity Ratio

46.4%

51.5%

+5.1pt

0.3x

0.2x

−0.1

D/E Ratio (×)*2*1 Accounts payable – installment purchase included*2 Net D/E Ratio: (on-balance sheet interest-bearing debt) ÷ (shareholders’ equity)

Cash FlowsNet Income before Income Taxes andMinority Interests(JPY Bn)

FY2012FY2013Difference

190.4

160.0

−30.4

Depreciation

81.0

82.7

+1.7

Other

−6.6

5.1

+11.8

Cash Flow from Operating Activities

264.8

247.9

−16.9

Capital Expenditure*1−121.8−164.5

−42.6

−7.1

−2.1

+5.0

Cash Flow from Investing Activities*2−129.0− 166.7−37.6

Free Cash Flow*3

135.8

81.2

−54.5

Repayment of Interest-bearing Debt*4

−62.9

−45.9

−16.9

2.3

−15.9

−18.2

−60.6

−61.9

−1.2

Other

Other
Cash Flow from Financing Activities
Total Cash Flow*5

75.1

19.3

−55.8

EBITDA

276.2

249.5

−26.7

EBITDAR

307.1

281.0

−26.1

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Financial Conditions
We continued to make progress in repaying long-term loans
and lease obligations, and the balance of interest bearing debts
decreased by 25.8 billion yen compared to the end of the previous year to 134.2 billion yen. Off-balance sheet lease payments
also decreased by 61.6 billion yen compared to the end of theprevious year to 145.5 billion yen.
Our equity ratio improved by 5.1 points from the end of theprevious year to 51.5%, thereby meeting our numerical target of
50% in the Mid-Term Management Plan.

Cash FlowsNet cash provided by operating activities was 247.9 billion yen.
Net cash used in investing activities was 166.7 billion yen due tothe purchase of new and leased aircraft, which resulted in 81.2
billion yen in free cash flow for FY2013.
Due to the decrease in long-term borrowings and leasing liabilities, net cash used in financing activities was 61.9 billion yen.
Consequently, cash flow in total was 19.3 billion yen.

*1 Expense due to purchases of fixed assets*2 Excludes deposits and withdrawals from deposit accounts*3 Cash Flow from Operating Activities + Cash Flow from Investing Activities*4 Repayment of Long-term Debt + Repayment of Lease Debt
*5 C ash Flow from Operating Activities + Cash Flow from Investing Activities +Cash Flow from Financing Activities

Number of Aircraft in Service (Consolidated)
End of FY2012
Owned Leased

Boeing 777-200
Boeing 777-200ER
Large Boeing 777-300
Boeing 777-300ER
Subtotal
Boeing 787-8
Boeing 767-300
MediumBoeing 767-300ER
Subtotal
MD90
Boeing 737-400
Small
Boeing 737-800
Subtotal
Embraer 170
Bombardier CRJ200
Bombardier D8-400
Regional
SAAB340B
Jet
Bombardier D8-300
Bombardier D8-100
Subtotal
Total

15
11
7
13
46
7
16
14
37
2
14
18
34
12
9
9
9
1
4
44
161

0
0
0
0
0
0
0
18
18
0
2
31
33
0
0
2
2
0
0
4
55

Total

15
11
7
13
46
7
16
32
55
2
16
49
67
12
9
11
11
1
4
48
216

(Number of aircraft)
End of FY2013

Owned Leased

15
11
7
13
46
15
15
18
48
0
11
21
32
15
9
9
10
1
4
48
174

0
0
0
0
0
0
0
14
14
0
2
29
31
0
0
2
1
0
0
3
48

Total

15
11
7
13
46
15
15
32
62
0
13
50
63
15
9
11
11
1
4
51
222

Changes
—
—
—
—
—
+8
−1

Number of Aircraft in Service
The change in the number of aircraft in service was as shownin the chart at left.

—
+7
−2
−3
+1
−4
+3
—
—
—
—
—
+3
+6

JAL REPORT 201463

Business Risks
Risks affecting investor decisions are discussed below. How-

these systems, methods, and requirements are changed, finan-

ever, the following list does not cover all possible circumstanc-cial forecasts announced in the plans could be affected.

es that may impact the JAL Group, as unforeseen risks could
arise. This section includes forward-looking statements basedd. Risks concerning our aircraft delivery planson judgments as of March 31, 2014. The JAL Group is exposed

The JAL Group strives to build a fleet centered on new, fuel-to these risks within its primary business operations of sched-efficient, small to mid-sized aircraft for its air transport business,uled and unscheduled air transport services.

and has placed orders with aircraft manufacturers such as Boeing. Any postponed delivery of aircraft due to technical, finan-a. Risks concerning changes in the international situation

cial, or other factors involving the aircraft manufacturer could

The JAL Group transports international air passengers and air

impact the JAL Group’s mid- to long-term business.

cargo mainly to North America, Europe, Asia-Oceania, andChina. Air transport demand can significantly decline due to ter-e. Risks concerning alliancesrorist attacks, regional conflicts, wars, and outbreaks and trans-

Developments have been underway in the airline business to

mission of infectious diseases. The announcement of travel

form a global alliance of several airlines or to create joint busi-

advisories recommending against travel to regions of conflict ornesses with partner airlines across national borders with the ap-

outbreaks and epidemics of infectious diseases, or widespread

proval of antitrust immunity (ATI). The JAL Group is a member ofdecisions to defer nonessential and non-urgent travel could

the global oneworld alliance, which includes American Airlines

have serious negative impacts on demand for JAL Group flights(AA) and British Airways (BA). We have also entered into a jointthat arrive in and depart from those regions.

business agreement with AA for transpacific routes and with
BA for European routes. Our reliance on strategic partners andb. Risks concerning changes in the Japanese and global
economythe oneworld alliance may expose us to a variety of risks that
could affect our alliance strategies, such as changes in busi-

The JAL Group’s international and domestic passenger opera-

ness conditions affecting our partners, oneworld membership,tions significantly depend on the Japanese market. Therefore,and partnerships with the JAL Group.

economic trends in Japan and global economic conditions,
including the European debt crisis, or a decline in air travelf. Risks concerning competition

demand from the customer base in Japan, natural disasters,

The JAL Group faces substantial and intensifying competition

inclement weather, or other unexpected circumstances could

with respect to routes, services, and fares in both domestic andnegatively impact the JAL Group’s business. Our international

international markets.

passenger operations in particular are vulnerable to economic
conditions.

On domestic routes, we face tough competition with anothermajor Japanese airline, new low-cost carriers (LCCs), and the
Shinkansen; competition with LCCs is particularly expected toc. Risks concerning our mid-term and annual plans

intensify.

Although the JAL Group establishes mid-term and annual plans,

On international routes, competition with major Japanesevarious internal and external factors pose a risk to the execu-

and international airlines is growing increasingly fierce, whichtion of these plans. These plans are based on a number of as-

is intensifying by the increase of departure and arrival slots at

sumptions and if they do not proceed as expected, our ability to

Haneda and Narita airports. Alliance and codeshare partner-

achieve planned revenue targets and profit goals could be neg-

ships are also increasing competition over international routes.

atively affected. The JAL Group’s mid-term and annual plans

To date, the impact of LCCs has been contained within ourdepend on effective accounting and tax systems, processing

projections. If competition with Japanese and international

methods, and legal requirements at the time of compilation. If

LCCs intensifies, however, we will be compelled to reduce our64

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

fares. In addition, if significant numbers of customers shift fromlarly susceptible to movements in the U.S. dollar, and therefore

JAL Group flights to LCCs, the Group’s LCC strategies as wellvolatility in U.S. dollar currency wields a stronger impact on ex-

as our business operations could be negatively affected.

penses than revenue. To reduce risks to profitability associatedSignificant changes in the competitive environment andwith currency volatility, foreign currency revenues are essentiallyoperating environment could negatively affect our businessapplied to expenditures in the same currency. We also enter

operations. In an additional note, we have established part-

into derivative contracts.

ownership of Jetstar Japan, an LCC established with Jetstar ofAustralia and another party as an affiliated company under thej. Risks concerning disasters

equity method.

Most passengers for the JAL Group’s airlines use aircraft departing and arriving at Haneda and Narita airports and therefore

g. Risks concerning cost structure

these two airports are central to the Group’s air transport busi-

The JAL Group maintains a high unit cost (cost per ASK) com-ness. The Group’s key information system center for aircraft

pared to Asian airlines and LCCs, and our freedom to reduce

operations and reservations is located in the Tokyo area, whichcosts in the face of economic conditions is severely constrainedis also home to the Operation Control Center that manages theby operating expenses that are significantly determined by theoperations and schedules of aircraft worldwide. Our businesscosts of fuel, personnel, aircraft, and taxes. A significant decline

operations could be significantly affected by interruptions toin demand or decrease in airfares could negatively affect our

the operation of this vital facility and closure of the Haneda andbusiness.

Narita airports due to a large earthquake in the Tokyo area, fire,
terrorist attack, or other disaster, or any extended suspension ofh. Risks concerning changes in jet fuel prices

our information systems or operations functions.

The JAL Group’s business performance is significantly affectedby fuel price fluctuations. The Group’s fuel costs in FY2013

k. Risks concerning trust in airline safety

were approximately 283 billion yen, accounting for approxi-

The JAL Group takes action every day to ensure the safe opera-

mately 25% of consolidated operating expenses. While risingtions of our aircraft. In the event we were to become liable forfuel prices since the summer of 2004 have negatively impact-

a fatal accident caused by an aircraft crash, we would not only

ed our business, severe competition in the airline industry has

lose customer confidence and public trust in the safety of ourmade it difficult to fully compensate for the higher fuel costs by

operations, but we would also be required to compensate forincreasing fares or asking customers to pay a fuel surcharge.

the deaths and injuries of passengers, which could consequent-

We conduct a variety of hedging strategies using commodity

ly place us under circumstances that make it extremely difficult

derivatives of crude oil or jet fuel to minimize the risks posed

to continue our business. If a safety-related incident were toby fluctuating fuel prices. Depending on our hedging positions

occur involving aircraft of the same model being deployed inand associated factors, a sudden plummet in the price of crude

our flight operations or on a codeshare flight by a partner airline,

oil or jet fuel in a short period of time may not be immediately

this could cause a decline in customer confidence and publicreflected in our business performance and may not contributetrust in the safety of our operations and negatively impact ourto improving business results.

business. The Group complies with industry standards in regard
to the amount and coverage of liability insurance to alleviate any

i. Risks concerning fluctuations in foreign exchange rates

damage arising from aircraft accidents and to secure compen-

Since the JAL Group conducts extensive business in domes-

sation for accident victims.

tic and international markets, a portion of our revenue andexpense transactions is handled in foreign currencies. Jet fuell. Risks concerning legal regulations

prices, which account for the largest share of costs, are particu-

The JAL Group’s business complies with international regula-

JAL REPORT 201465

Business Risks

tions and operates in conformance with national and regional

negatively affect our business.

laws, ordinances, and regulations. Significant revisions to theselaws, ordinances, and regulations could increase the regulatoryburden on the business and require greater expenditures.

(d) Tax and fees
Taxes and fees in the airline business include such expenses
as landing fees and navigation support facility fees. Landing(a) Airworthiness directives

fees at some Japanese airports are subject to governmental

If technical problems were to seriously affect the safety

mitigation, but depending on the financial conditions andof aircraft operations, the Minister of Land, Infrastructure,policies of specific transport administrations, the reinstate-Transport and Tourism may issue an airworthiness directive

ment of landing fees that had been reduced or a substantial

or require corrective action in accordance with laws andincrease in taxes could negatively affect our business.

ordinances, and operations of the aircraft might not be approved until safety has been confirmed. Even if an airwor-

m. Risks concerning litigation

thiness directive is not issued under laws and ordinances,

The JAL Group is currently subject to various legal proceed-

there is the possibility that we would have to voluntarily

ings concerning its business operations, which could affect oursuspend operation of the aircraft under internal regulations

business. Suits have been filed in one or more of the following

or other applicable rules. Any of these circumstances could

proceedings, which, depending on the specific circumstances,disrupt operations of our aircraft, including the Boeing 787,

could negatively affect our business if additional expenditures or

which has been a priority addition to our fleet, and nega-a reserve fund is required.

tively affect our business.
(a) Incidents concerning employment of former employees(b) Laws, ordinances, and regulations concerning the air

In Japan, former employees filed a suit demanding confir-transport businessmation of status under their labor contracts. In March 2012,

The JAL Group as an air transport operator conducts busi-

the plaintiff’s claims were dismissed in the Tokyo District

ness in accordance with prevailing laws, ordinances, andCourt, but in April 2012 the plaintiffs appealed to the Tokyo

regulations governing the airline business. On international

High Court, and the suits are still in litigation as of Marchroutes, we are required to conform to conventions such as2014 (a decision by the appeals court is scheduled for May

bilateral aviation agreements and other international rules.

or June 2014). One other labor suit is still in litigation, andFurthermore, fares and fees in the air transport business areseveral suits have been filed in Brazil demanding confirma-

subject to regulation under antitrust laws and other similartion of wages and allowances and status under the labor

overseas laws and ordinances.

contract.

(c) Environmental regulations(b) Incidents concerning cartels

Increased awareness of corporate social responsibility for

The JAL Group filed a suit with European and South Korean

the global environment, including the prevention of global

courts in January 2011 in regard to allegations of engag-

warming, has heightened environmental regulations con-ing in an air cargo price cartel by antitrust authorities andtrolling gas emissions, noise, and toxic substances. The

objecting to orders to pay a fine. A civil suit had been filed

introduction of global economic measures in the inter-in the Netherlands against several airlines including JAL bynational aviation scene or a tightening of environmental

shippers claiming that they had suffered damages from anregulations, such as fines for global warming gases, could

alleged air cargo cartel. With regard to these incidents, a

66

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

reserve fund to cover reasonably calculated future losses

cess to customer data in its possession, the Group might be

has been established.

obliged to provide compensation or be subjected to administrative action. If this were to happen, public trust in our busi-

n. Risks concerning our dependence on third parties

ness, systems, and brand could be damaged, and we could

The JAL Group’s business to a certain extent depends on ser-lose the trust of the customers and markets, which could neg-vices by third parties such as maintenance staff, airport staff,

atively affect our operations, financial conditions, and businessaviation security agents, fuel attendants, baggage staff, andperformance.

private security companies. In addition, we place orders with
Boeing and Airbus for the majority of new aircraft scheduled tor. Risks concerning recruitment

be introduced into our fleet. Therefore, if Boeing or Airbus can-We need to secure employees with specific qualifications, in-

not fulfill its contract with JAL for financial or other reasons, we

cluding national certifications and the skills legally required towill be compelled to significantly change our fleet plan, which

operate aircraft, in order to conduct our business operations.

may affect our business in the mid to long term.

Considerable time, however, is required for staff to acquire thenecessary certifications and skills. Any delay in securing theo. Risks concerning IT (information systems)

necessary workforce beyond the time it is required could affect

The JAL Group depends on information systems for its busi-

our business and operations.

ness operations. Our information systems are vulnerable tohardware and software problems as well as computer virusess. Risks concerning labor disputesthat could result in the loss of important data or entail additional

Many Group employees belong to labor unions. An extended

costs for repairs and thereby negatively affect our business. In

labor dispute involving collective action by our employees could

addition, large-scale infrastructure problems, such as a failure

negatively affect our aircraft operations.

in the electric power system that supports our information systems, could seriously disrupt our business.
p. Risks concerning financing
The JAL Group plans to renew part of its fleet by purchasing
aircraft, refurbish cabin interiors, and upgrade core systems,
and may need to procure funds from financial institutions ormarkets to fulfill capital requirements. Our ability to procure
funds and financing costs may change depending on the condition of financial markets and our credit rating. Adverse trends
in financial markets, a decline in our credit rating, or a change
in the system of government-affiliated financial institutions, etc.,
could make it difficult to procure funds, and we could suffer adecrease in cash on hand or increased financing costs that
include interest rates on our existing financial liabilities.
q. Risks concerning handling of customer data
If the JAL Group experiences information leaks or unlawful ac-

JAL REPORT 201467

Consolidated Balance Sheets
Japan Airlines Co., Ltd. and Consolidated Subsidiaries

As of March 31

Millions of yen

Thousands of U.S.
dollars (Note 4)

2014

2013

2014

¥ 368,774¥ 347,986$ 3,583,113

ASSETS
Current assets:
Cash and time deposits (Notes 5, 7 and 10)

58

7

563

Notes and accounts receivable—trade (Note 7)

Short-term investments in securities (Notes 5, 7, 8 and 10)

143,807

121,058

1,397,269

Flight equipment spare parts and supplies

20,68022,277200,932

Deferred income taxes (Note 12)

4,532

1,055

44,034

Other

68,082

59,727

661,504

(926)

(764)

(8,997)

Total current assets

Allowance for doubtful accounts

605,009551,348

5,878,439

Investments in securities (Notes 6, 7, 8 and 10)

64,931

55,826

630,888

Flight equipment (Note 10)447,021385,267

4,343,383

Ground property and equipment (Note 10)52,26348,745507,802

Advances on flight equipment and other purchases

61,99270,425602,331

Total tangible fixed assets

561,277

504,438

5,453,527

Software47,33640,991459,930

Long-term loans receivable (Note 10)

10,74513,018104,401

Deferred income taxes (Note 12)

10,5704,354

102,701

275

—

2,671

40,39247,011

392,460

(371)

(376)

(3,604)

Tangible fixed assets, net:

Asset for retirement benefits (Note 11)
Other (Note 10)
Allowance for doubtful accounts
Total fixed assets
Total assets

68

JAL REPORT 2014

735,158

665,263

7,143,004¥1,340,168¥1,216,612$13,021,453

Highlights

President’s Message

Review of Operations

As of March 31

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Millions of yen

Thousands of U.S.
dollars (Note 4)

2014

2013

2014

¥ 148,999¥ 135,830$1,447,716

287

828

2,788

LIABILITIESCurrent liabilities:
Accounts payable—trade (Note 7)
Short-term borrowings (Notes 7 and 10)
Current portion of long-term loans payable (Notes 7 and 10)

8,062

9,767

78,332

Lease payable (Notes 7 and 10)

32,45535,801

315,342

Accounts payable—installment purchase (Notes 7 and 10)
Advances received
Reserve for reconstruction on business
Deferred income taxes (Note 12)
Asset retirement obligations (Note 20)
Other

196

240

1,904

72,83055,163

707,636

332

1,184

3,225

122

2,751

1,185

1,048

—

10,182

69,931

71,585

679,469

334,265

313,154

3,247,813

Long-term loans payable (Notes 7 and 10)

45,08434,517438,048

Lease payable (Notes 7 and 10)

46,996

77,592456,626

Long-term accounts payable—installment purchase (Note 7 and 10)

1,200

1,396

11,659Total current liabilities
Non-current liabilities:

Deferred income taxes (Note 12)

91

7,669

884

Accrued pension and severance costs (Note 11)—154,483—

166,643—

1,619,150

Reserve for loss on antitrust litigation

Liability for retirement benefits (Note 11)

6,352

6,466

61,717

Asset retirement obligations (Note 20)

3,356

4,271

32,607

25,11233,871

243,995

Total non-current liabilities

Other

294,838

320,269

2,864,729

Total liabilities

629,103

633,423

6,112,543

Issued: 181,352,000 shares in 2014 and 2013

181,352

181,352

1,762,067

Capital surplus

183,043

183,043

1,778,497

Retained earnings

332,067

198,196

3,226,457

Contingent liabilities (Note 18)
NET ASSETS (Note 13)
Stockholders’ equity:
Common stock:
Authorized: 350,000,000 shares in 2014 and 2013

Treasury stock, at cost: 33,659 shares in 2014 and 31,950 shares in 2013

(130)

(122)

(1,263)696,332

562,469

6,765,759

Net unrealized gains on other securities (Note 8)

6,450

2,353

62,670

Deferred gains on hedges (Note 9)

6,887

6,603

66,916

Foreign currency translation adjustments(5,187)(6,378)(50,398)

Accumulated adjustments for retirement benefits (Note 11)(14,193)—(137,903)

Total stockholders’ equity
Accumulated other comprehensive income

Total accumulated other comprehensive income(6,044)

2,578(58,725)

Minority interests

20,775

18,141

201,855

Total net assets

711,064

583,1896,908,900¥1,340,168¥1,216,612$13,021,453

Total liabilities and net assets
The accompanying notes are an integral part of these consolidated financial statements.

JAL REPORT 201469

Consolidated Statements of Income andComprehensive Income
Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

Millions of yen

Thousands of U.S.
dollars (Note 4)

2014

2013

2014

¥ 487,414¥ 485,214$ 4,735,853

384,351

346,967

Operating revenues:
Passenger:
Domestic
International
Incidental and other revenues
Total operating revenues

437,578406,657

1,309,343

1,238,839

12,721,949

235,278

226,779

2,286,027

80,20575,16931,50930,941

388,311352,9174,251,632
3,734,463

Operating expenses:
Wages, salaries and benefits
Aircraft fuelLanding fees and other rent
Aircraft maintenanceAircraft rent
Depreciation and amortization
Other
Total operating expenses
Operating income

283,380

246,345

41,14730,43982,71881,004

1,142,550

166,792

1,043,596
195,2422,753,400
779,294
399,795
306,150

803,711

3,772,940

11,101,340
1,620,598

Non-operating income (expenses):
Interest income
Dividend income
Interest expense
Gain on sales of flight equipment
Loss on sales and disposal of flight equipment
Equity in losses of affiliates
Exchange gain (loss), net
Gain from compensation
Lease penalties
Loss on impairment of fixed assets (Note 15)
Write-down of flight equipment spare parts and supplies
Effect of change to the standard method of accounting for the projected benefit
obligation (Note 11)
Other
Total non-operating income (expense)

Income before income taxes and minority interests
Income taxes—current (Note 12)
Income taxes—deferred (Note 12)
Total income taxes
Income before minority interests
Minority interests
Net income
Minority interests
Income before minority interests
Other comprehensive income (Note 14)
Net unrealized gains on other securities, net of taxes
Deferred gains on hedges, net of taxes
Foreign currency translation adjustments
Share of other comprehensive income of associates accounted for using the equity method
Total other comprehensive income
Comprehensive income

784

987

813
563

(2,078)(3,182)(4,716)(3,434)

1,234(1,826)

1,136

3,221

(3,749)(2,188)

8,411

8,674

(1,497)(1,764)(1,663)(1,748)(4,554)

(2)

7,617
9,589

(20,190)
11,037(45,821)(36,426)
11,98981,723(44,247)(14,545)(16,158)—(1,472)—(1,040)(2,416)(10,104)

160,047

190,477

11,15912,882(6,745)(21,498)(10,338)(4,764)

1,047
13,929(65,536)

1,555,062
108,424(208,880)(100,446)

170,386

176,547

166,251

171,672

170,386

176,547

1,655,518

3,019

39,117

4,134
4,134

4,026
280

4,875
4,875

1,358

1,512

931

5,891

5,310

71

1

1,655,518
40,167

1,615,342
40,1672,720

14,691

689

57,238¥ 176,277¥ 181,857$ 1,712,757¥ 171,822¥ 176,646$ 1,669,471

Comprehensive income attribute to
Owners of the parent
Minority interests
The accompanying notes are an integral part of these consolidated financial statements.

70

JAL REPORT 2014

4,455

5,211

43,286

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Consolidated Statements of Changes in Net Assets
Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

Millions of yen

Thousands of U.S.
dollars (Note 4)

2014

2013

2014

¥181,352¥181,352$1,762,067

—

—

—

Stockholders’ equity
Common stock:
Balance at beginning of year
Changes during the fiscal year
Total changes
Balance at end of year

—

—

—

181,352

181,352

1,762,067

183,043

189,901

1,778,497—(6,858)—

Capital surplus:
Balance at beginning of year
Changes during the fiscal year:
Reserve for losses
Total changes
Balance at end of year—

(6,858)—183,043

183,043

1,778,497

198,196

19,665

1,925,728

Retained earnings:
Balance at beginning of year
Changes during the fiscal year:
—

6,858

—

Cash dividends

Reserve for losses(32,379)—(314,603)

Net income for the fiscal year

166,251

171,672

1,615,342

Total changes

133,871

178,530

1,300,728

332,067

198,196

3,226,457

(122)

—

(1,185)Purchases of treasury stock

(8)

(122)

(77)

Total changes

(8)

(122)

(77)

(130)

(122)

(1,263)

562,469

390,919

5,465,108

Cash dividends(32,379)—(314,603)

Net income for the fiscal year

166,251

171,672

1,615,342

Purchases of treasury stock

(8)

(122)

(77)

Balance at end of year
Treasury stock, at cost:
Balance at beginning of year
Changes during the fiscal year:

Balance at end of year
Total stockholders’ equity:
Balance at beginning of year
Changes during the fiscal year:

Total changes
Balance at end of year

133,863

171,550

1,300,650¥696,332¥562,469$6,765,759

JAL REPORT 201471

Years ended March 31

Millions of yen

Thousands of U.S.
dollars (Note 4)

2013

2014

2014

Accumulated other comprehensive income
Net unrealized gains (losses) on other securities, net of taxes (Note 8):
Balance at beginning of year

¥

2,353

¥

(661)

$

22,862

Changes during the fiscal year:
Changes other than to stockholders’ equity, net

4,097

3,014

39,807

Total changes

4,097

3,014

39,807

6,450

2,353

62,670

6,603

5,343

64,156

Changes other than to stockholders’ equity, net

283

1,260

2,749

Total changes

283

1,260

2,749

6,887

6,603

66,916(6,378)(7,077)(61,970)

Changes other than to stockholders’ equity, net

1,190

699

11,562

Total changes

1,190

699

11,562(5,187)(6,378)(50,398)———

Changes other than to stockholders’ equity, net(14,193)—(137,903)

Total changes(14,193)—(137,903)(14,193)—(137,903)

2,578(2,395)(25,048)

Changes other than to stockholders’ equity, net(8,622)

4,974(83,773)

Total changes(8,622)

4,974(83,773)(6,044)

2,578(58,725)

18,141

25,337

176,263

Changes other than to stockholders’ equity, net

2,634(7,196)25,592

Total changes

2,634(7,196)25,592

20,775

18,141

201,855

583,189

413,8615,666,430

Balance at end of year
Deferred gains on hedges, net of taxes (Note 9):
Balance at beginning of year
Changes during the fiscal year:

Balance at end of year
Foreign currency translation adjustments:
Balance at beginning of year
Changes during the fiscal year:

Balance at end of year
Accumulated adjustments for retirement benefits
Balance at beginning of year
Changes during the fiscal year:

Balance at end of year
Total accumulated other comprehensive income
Balance at beginning of year
Changes during the fiscal year:

Balance at end of year
Minority interests
Balance at beginning of year
Changes during the fiscal year:

Balance at end of year
Total net assets
Balance at beginning of year
Changes during the fiscal year:
Cash dividends(32,379)—(314,603)

Net income for the fiscal year

166,251

171,672

1,615,342

Purchases of treasury stock
Changes other than to stockholders’ equity, net
Total changes
Balance at end of year
The accompanying notes are an integral part of these consolidated financial statements.

72

JAL REPORT 2014

(8)

(122)

(77)

(5,988)(2,222)(58,181)

127,875

169,328

1,242,469¥711,064¥583,189$6,908,900

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Consolidated Statements of Cash Flows
Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Years ended March 31

Millions of yen

Thousands of U.S.
dollars (Note 4)

2014

2013

2014

¥ 160,047¥ 190,477$1,555,062

82,71881,004

803,711

6,875

3,089

66,799

—

(322)

—

Operating activities
Income before income taxes and minority interests
Adjustments to reconcile income before income taxes and minority interests to net
cash provided by operating activities:
Depreciation and amortization
Gain and loss on sales and disposal of fixed assets and loss on impairment of
fixed assets, net
Net reversal of accrued pension and severance costs
Decrease in liability for retirement benefits(2,129)—(20,685)

Interest and dividend income(1,772)(1,376)(17,217)

Interest expense

2,078

3,182

20,190Exchange loss, net

652

2,299

6,335

3,749

2,188

36,426(22,131)(3,777)(215,031)

380

718

3,692

Increase in accounts payable—trade

12,883

10,405125,174

Other

17,194(3,366)167,061

Subtotal

260,546284,523

2,531,539

Equity in losses of affiliates
Increase in notes and accounts receivable—trade
Decrease in flight equipment spare parts and supplies

Interest and dividends received

2,303

1,631

22,376

Interest paid

(2,232)(3,349)(21,686)

Income taxes paid

(12,675)(17,950)(123,153)

Net cash provided by operating activities

247,941

264,853

2,409,065

Purchases of time deposits(471,404)(486,697)(4,580,295)

Proceeds from maturity of time deposits

506,867

351,3034,924,863

Purchases of fixed assets(1,599,203)

Investing activities(164,590)(121,894)

Proceeds from sales of fixed assets

2,893

10,20028,109Purchases of investments in securities(8,176)(20,294)(79,440)

Proceeds from sales and maturity of investments in securities

1,206

430

11,717

145

—

1,408

Loans receivable made

(4,293)(295)(41,712)

Collection of loans receivable

6,138

1,791

59,638

(24)

1,019

(233)

(131,237)(264,436)(1,275,136)

Proceeds from purchase of subsidiaries resulting in change in scope of
consolidation (Note 16)

Other
Net cash used in investing activities
Financing activities

23

266

223

Proceeds from long-term loans

Increase in short-term borrowings, net

17,88011,836

173,727

Repayment of long-term loans(9,833)(26,599)(95,540)

Dividends paid

(32,283)—(313,670)

Dividends paid to minority interests(1,929)(8,177)(18,742)

Payments for lease payable(36,112)(36,342)(350,874)

Other

342

(1,625)

3,322(61,912)(60,643)(601,554)

Effect of exchange rate changes on cash and cash equivalents

1,045

643

10,153

Net increase (decrease) in cash and cash equivalents

55,836(59,582)

542,518

Cash and cash equivalents at beginning of year

99,413

158,995

965,924

Increase in cash and cash equivalents by merger

2

—

19

Cash and cash equivalents at end of year (Note 5)¥ 155,252¥ 99,413$1,508,472

Net cash used in financing activities

The accompanying notes are an integral part of these consolidated financial statements.

JAL REPORT 201473

Notes to Consolidated Financial Statements
Japan Airlines Co., Ltd. and Consolidated Subsidiaries

1. BASIS OF PRESENTING FINANCIAL STATEMENTS
Japan Airlines Co., Ltd. (the “Company”) and its domestic consolidated subsidiaries maintain their accounting records andprepare their financial statements in accordance with accounting
principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirementsof International Financial Reporting Standards. The accompanying consolidated financial statements have been compiled fromthe consolidated financial statements filed with the appropriate
Local Finance Bureau of the Ministry of Finance as required by
the Financial Instruments and Exchange Act of Japan and include
certain additional financial information for the convenience of readers outside Japan. Some supplementary information included in
the statutory Japanese language consolidated financial statements, but not required for fair presentation, is not presented in theaccompanying consolidated financial statements.
As permitted by the Financial Instruments and Exchange Act ofJapan, amounts of less than one million yen have been omitted. As
a result, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars) do not necessarily
agree with the sum of the individual amounts.
Certain amounts previously reported have been reclassified toconform to the current year’s classification.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESa. Principles of Consolidation and Accounting for Investments
in Unconsolidated Subsidiaries and Affiliates
The accompanying consolidated financial statements include theaccounts of the Company and all significant subsidiaries controlled
directly or indirectly by the Company. Companies over which theCompany exercises significant influence in terms of their operating
and financial policies have been included in the accompanying
consolidated financial statements on an equity basis.
The balance sheet date of 9 of the consolidated subsidiaries is December 31. Any significant differences in intercompany
accounts and transactions arising from intervening intercompany
transactions during the period between the balance sheet date ofeach subsidiary and the consolidated balance sheet date havebeen adjusted, if necessary. The differences between the acquisition and the fair value of the net assets at the respective datesof acquisition of the consolidated subsidiaries and companies
accounted for by the equity method are recorded as goodwill
amortized by the straight-line method over a period of 5 years.
All significant intercompany accounts and transactions andunrealized gain or loss on intercompany accounts and transactions are eliminated in consolidation.
b. Securities
Securities, except for investments in unconsolidated subsidiaries
and affiliates, are classified as trading securities, held-to-maturity
securities or other securities. Trading securities are carried at fairvalue. Held-to-maturity securities are carried at amortized cost.
Marketable securities classified as other securities are carried atfair value with any unrealized gain or loss reported as a separate
component of net assets, net of taxes. Non-marketable securities
classified as other securities are carried at cost. Cost of securities
sold is determined principally by the moving-average method.

74

JAL REPORT 2014

c. Inventories
Inventories are valued at the lower of cost and net realizable value
with cost determined by the moving-average method.
d. Tangible Fixed Assets (excluding leased assets)
Tangible fixed assets, excluding leased assets, are stated at cost,
net of accumulated depreciation and accumulated impairment
losses, if any, except as indicated in the following paragraph.
Accumulated depreciation of tangible fixed assets at March 31,
2014 and 2013 amounted to ¥297,802 million ($2,893,528 thousand) and ¥241,914 million, respectively.
Depreciation of tangible fixed assets is computed as follows:Flight equipment: the straight-line method based on its estimated useful lifeOther: principally the straight-line method based on the estimated useful lives of the respective assets
The estimated useful lives are as follows:
Flight equipment: from 12 to 20 years
Other: from 2 to 65 years
Effective from April 1, 2012, the Company has changed useful
lives of certain aircrafts including spare parts to reviewed useful
lives based on the estimated future use. As a result of this change,
for the year ended March 31, 2013, operating income decreasedby ¥3,452 million and income before income taxes and minority
interests decreased by ¥3,192 million compared to the amounts
that would have been reported if the previous methods had been
applied consistently. The effects of this change in specific segments are described in the Segment Information section.
e. Software (excluding leased assets)
Computer software intended for internal use is amortized by thestraight-line method based on its estimated useful life which ranges principally from 5 to 7 years.
f. Leased Assets
Depreciation of leased assets is computed as follows:
Leased assets arising from finance lease transactions that transfer the ownership of leased assets to the lessee are depreciatedby the same method applied to assets arising from purchase transactions.
Leased assets under finance lease transactions that do nottransfer the ownership to the lessee are depreciated to a residual
value of zero by the straight-line method using the lease term as
the useful life.
As for certain consolidated subsidiaries, finance lease transactions that do not transfer the ownership of the leased assets to thelessee contracted prior to April 1, 2008, continue to be accounted
for by a method corresponding to that used for ordinary operatinglease transactions.
g. Allowance for Doubtful Accounts
General provision for doubtful accounts is provided by applying areserve percentage to receivables based on experience from pasttransactions. When considered necessary, specific reserves are
made based on the assessment of individual accounts.
h. Accounting Method for Retirement Benefits
In calculating the retirement benefit obligation, the method ofHighlights

President’s Message

Review of Operations

attributing expected benefit to the accounting period is based on
the straight-line basis.
The unrecognized benefit obligation at transition is being amortized by the straight-line method principally over a period of 15
years.
Actuarial gain and loss are amortized by the straight-line method
over a period ranging from 5 to 15 years, which is less than the
average remaining years of service of the active participants in theplans. Amortization is computed from the fiscal year subsequent to
the year in which the difference was recorded.
Past service cost is principally charged to income as incurred.
However, at certain subsidiaries, past service cost is being amortized by the straight-line method over a period which is less than
the average remaining years of service of the active participantsin the plans.
i. Reserve for Loss on Antitrust Litigation
Estimated future loss is accrued in order to provide for penalty andcompensation potentially arising from price cartel in cargo andpassenger flight.
j. Reserve for Reconstruction on BusinessReserve for reconstruction on business is made for the amount of
the estimated expenses to be incurred in connection with business reconstruction including removal of existing facilities under
the reorganization plan.
k. Foreign Currency Translation
Income and expenses in foreign currencies are translated at therates prevailing at the time of the transaction. Except as noted in l.
Derivatives and Hedge Accounting. Foreign currency receivables
and payables are translated into yen at the applicable year-end
foreign exchange rates and any gain or loss on translation is
included in current earnings.
Foreign currency translation adjustments arising from the translation of assets, liabilities, revenues and expenses of foreign
consolidated subsidiaries and affiliates accounted for by the equity method into yen at the applicable exchange rates at the year
end are presented as foreign currency translation adjustments
and minority interests in the accompanying consolidated balance
sheets.
l. Derivatives and Hedge Accounting
Derivatives positions are stated at fair value.
Gain or loss on derivatives designated as hedging instruments
is deferred until the gain or loss on the underlying hedged items
is recognized with any unrealized gain or loss reported as a separate component of net assets, net of taxes. Foreign currency
receivables and payables are translated at the applicable forward
foreign exchange rates if certain conditions are met.
m. Revenue Recognition
Passenger and cargo revenues are recognized when the transportation services are rendered.
n. Income Taxes
Deferred tax assets and liabilities are recognized for expected
future tax consequences attributable to temporary differences

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

between the financial statement carrying amounts of existing assets
and liabilities and their respective tax basis, and operating loss
and tax credit carryforwards. A valuation allowance is recorded toreduce deferred tax assets to their net realizable value if it is more
likely than not that some portion or all of the deferred tax asset will
not be realized.
The Company and certain domestic consolidated subsidiaries
adopted the Japanese consolidated corporate tax return system.
o. Cash Equivalents
Cash equivalents are defined as highly liquid, short-term investments with an original maturity of 3 months or less.
3. CHANGES IN ACCOUNTING POLICY
Effective from April 1, 2012, the Company’s certain domestic subsidiaries and affiliates have changed their method of depreciation
based on an amendment to the Corporation Tax Act of Japan for
tangible fixed assets acquired on or after April 1, 2012. The effectof this change on the consolidated operating income and income
before income taxes and minority interests for the year ended
March 31, 2013 was immaterial.
Effective from the year ended March 31, 2014, the Company andits consolidated domestic subsidiaries have applied the Accounting Standard for Retirement Benefits (ASBJ Statement No. 26, May
17, 2012 (hereinafter, the “Statement No. 26”)) and Guidance on
Accounting Standard for Retirement Benefits (ASBJ Guidance No.
25, May 17, 2012 (hereinafter, the “Guidance No. 25”)) except
the article 35 of the Statement No. 26 and the article 67 of the
Guidance No. 25, and actuarial gains and losses and past service
costs that are yet to be recognized have been recognized and thedifference between retirement benefit obligations and plan assets
has been recognized as a liability (asset) for retirement benefits.
In accordance with the article 37 of the Statement No. 26, theeffect of the change in accounting policies arising from initial
application has been recognized in accumulated adjustments for
retirement benefit in accumulated other comprehensive income.
As a result of the application, accumulated other comprehensive
income has decreased by ¥14,193 million ($137,903 thousand), at
the end of the current fiscal year. The effects of this change on net
assets per share have decreased by ¥78.28.
Accounting Standards Issued but not yet Effective• Accounting Standard for Retirement Benefits (ASBJ Statement
No. 26, May 17, 2012)• Guidance on Accounting Standard for Retirement Benefits (ASBJ
Guidance No. 25, May 17, 2012)a. Summary
Under the amended rule, actuarial gains and losses and past service costs that are yet to be recognized in profit or loss would
be recognized within the net asset section, after adjusting for tax
effects, and the deficit or surplus would be recognized as a liability or asset without any adjustments. For determining method of
attributing expected benefit to periods, the Standard now allows tochoose benefit formula basis, as well as straight-line basis. Methodfor determination of discount rate has also been amended.
b. Effective dates
Amendments relating to determination of retirement benefit obligations and current service costs are effective from the beginning of

JAL REPORT 201475

annual periods ending on or after March 31, 2015.
c. Effect of application of the standard
As a result of the application, the beginning balance of retained
earnings in the consolidated statements of changes in net assets
will decrease by ¥30,965 million ($300,864 thousand), at the
beginning of the next fiscal year. In addition, operating income will
increase by ¥2,301 million ($22,357 thousand) and income before
income taxes and minority interests will increase by ¥2,302 million($22,366 thousand), in the next fiscal year.
• Accounting Standard for Business Combinations (ASBJ Statement No. 21, September 13, 2013)• Accounting Standard for Consolidated Financial Statements(ASBJ Statement No. 22, September 13, 2013)• Accounting Standard for Business Divestitures (ASBJ Statement
No. 7, September 13, 2013)• Accounting Standard for Earnings Per Share (ASBJ Statement
No. 2, September 13, 2013)• Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures (ASBJ Guidance No. 10, September 13, 2013)• Guidance on Accounting Standard for Earnings Per Share (ASBJ
Guidance No. 4, September 13, 2013)
a. Summary
Under the revised accounting statements, the followings havebeen predominantly amended.
(1) Accounting treatment for changes in equity of parent company
to its subsidiary in case where parent company still controls
its subsidiary in case of additional purchase of investment in
subsidiary(2) Accounting treatment of acquisition related costs(3) Presentation of net income and change from minority interests
to non-controlling stockholders’ interests(4) Provisional accounting treatmentb. Effective dates
Effective for the beginning of annual periods ending on or after
March 31, 2015. Provisional accounting treatment is effective fromthe beginning of annual periods ending on or after March 31, 2015.
Presentation of net income and change from minority interests tonon-controlling stockholders’ interests is effective from the beginning of annual periods ending on or after March 31, 2016.
c. Effect of application of the standard
The effects of adoption of these new standards are to be determined.
4. U.S. DOLLAR AMOUNTS
Amounts in U.S. dollars are included solely for the convenienceof the reader. A rate of JPY 102.92 = USD 1.00, the approximate
exchange rate prevailing on March 31, 2014, has been used intranslation. The convenience translations should not be constructed as representations that the Japanese yen amounts have been,
could have been, or could in the future be, converted into U.S.
dollars at this or any other rate of exchange.
5. CASH AND CASH EQUIVALENTS
The components of cash and cash equivalents in the accompanying consolidated statements of cash flows at March 31, 2014 and2013 were as follows:76

JAL REPORT 2014

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

Cash and time deposits¥ 368,774¥ 347,986$ 3,583,113

Time deposits with a maturity of more than threemonths(213,580)(248,573)(2,075,204)

As of March 31

Short-term investments in securities with amaturity of three months or less
Cash and cash equivalents

58

—

563

¥ 155,252¥ 99,413$ 1,508,472

6. INVESTMENTS IN SECURITIES OF NON-CONSOLIDATEDSUBSIDIARIES AND AFFILIATES
Investments in securities of non-consolidated subsidiaries andaffiliates which were included in “Investments in securities” inthe consolidated balance sheets at March 31, 2014 and 2013
amounted to ¥31,227 million ($303,410 thousand) and ¥30,329
million, respectively, and bonds of affiliates which were included
in “Investments in securities” in the consolidated balance sheetsat March 31, 2014 and 2013 amounted to ¥3,330 million ($32,355
thousand) and ¥666 million, respectively.
7. FAIR VALUES OF FINANCIAL INSTRUMENTS
The JAL Group manages its financial instruments to raise funds,
principally for the purpose of flight equipment and facilities inaccordance with management plans for air transportation, utilizing loans from financial institutions, finance lease transactions, andderivatives. Funds from short-term borrowings are utilized for ordinary operations. Funds from long-term loans payable and financelease transactions are utilized for flight equipment and facilities.
Derivatives are utilized for the purpose of reducing the risk on fluctuations of interest rates and foreign currency exchange rates, notfor the purpose of speculation.
With respect to trade receivables, the JAL Group exercises due
date management and outstanding balance management in accordance with internal policies. The JAL Group makes best efforts
to identify and mitigate risks of bad debts from major customers
with financial difficulties by periodically monitoring their creditworthiness. Short-term investments in securities and investments
in securities are composed of mainly the shares of companies
with which the JAL Group has business relationships. The JAL
Group reviews the fair values of such financial instruments andthe financial position of the issuers periodically in order to identify
and mitigate risks of impairment. Most of accounts payable-tradeis due within one year. As for derivatives, the JAL Group believes
that the credit risks are extremely low, as it enters into derivativetransactions only with reputable financial institutions with a soundcredit profile.
In order to mitigate the risks of fluctuations in interest rates andforeign currency exchange rates on receivables and payables, theCompany utilizes derivatives. The Group utilizes forward foreign
currency exchange contracts to reduce the risk of foreign currency
exchange rate fluctuations for specific foreign currency denominated receivables and payables, mainly for overseas travel service
payables.
The JAL Group also utilizes commodity derivatives in order tomitigate the risk of fluctuations in commodity prices of fuel andstabilize such fuel costs.
There are internal policies for derivative transactions which set

Highlights

President’s Message

Review of Operations

forth authorization levels and upper limits on transaction volumes
and the JAL Group enters into derivative transactions in accordance with such policies. Moreover, monthly meetings are heldwith the attendance of board members responsible for derivatives
to determine methods and ratios for minimizing risks as well as toreport and confirm results of derivative transactions.
The fair value of financial instruments is based on the quoted market price, when it is available. When there is no market
price available, fair value is reasonably estimated. Since various
assumptions and factors are reflected in estimating the fair value,
different assumptions and factors could result in a different fairvalue.
The book value of financial instruments in the consolidated balance sheets, their fair value, and the difference as of March 31,
2014 and 2013 were as follows:
Millions of yen
Book
value

Fair value(1) Cash and time deposits¥368,774¥368,774(2) Notes and accounts receivable—trade143,807

143,807

As of March 31, 2014

Differences

Assets¥—(i) Investments in securities of non-consolidated
subsidiaries and affiliates

13,865

12,367(ii) Other investment securities

25,19925,199—

Total

551,645

550,147(1,498)(1,498)

Liabilities
148,999

148,999—(2) Short-term borrowings

287

287

—

(3) Long-term loans payable

53,14653,146—(4) Lease payable

79,45279,452

1,396

1,396

Total

283,281283,281—

Derivatives*¥ 14,823¥ 15,157¥ 334(5) Long-term accounts payable—installment purchase—* Derivatives assets and liabilities are stated on a net basis, and a net liability position is enclosed in parentheses.

Thousands of U.S. dollars
Book
value

Fair value(1) Cash and time deposits$3,583,113$3,583,113(2) Notes and accounts receivable—trade

1,397,269

1,397,269—(i) Investments in securities of non-consolidated
subsidiaries and affiliates

134,716

120,161(14,554)(ii) Other investment securities

244,840

244,840—

5,359,939

5,345,384(14,554)

As of March 31, 2014

Differences

Assets$—(3) Short-term investment securities and investment
securities

Total
Liabilities

1,447,716

1,447,716—(2) Short-term borrowings

2,788

2,788

—

(3) Long-term loans payable

516,381516,381(4) Lease payable

771,978

771,978—(5) Long-term accounts payable—installment purchase

13,563

13,563—(1) Accounts payable—trade

CSR

Governance

Financial Section

Book
value

Fair value

Differences(1) Cash and time deposits¥347,986¥347,986¥(2) Notes and accounts receivable—trade121,058

121,058—(i) Investments in securities of non-consolidated
subsidiaries and affiliates

13,35910,415(2,943)(ii) Other investment securities

19,74919,749—

Total

502,154499,211(2,943)

Millions of yen
As of March 31, 2013
Assets—(3) Short-term investment securities and investment
securities

Liabilities(1) Accounts payable—trade135,830

135,830—(2) Short-term borrowings

828

828

—

(3) Long-term loans payable

44,28544,285(4) Lease payable

113,394

113,394

—

1,637

1,637

—

Total

295,975

295,975—

Derivatives*¥ 14,515¥ 14,939¥ 424(5) Long-term accounts payable—installment purchase* Derivatives assets and liabilities are stated on a net basis, and a net liability position is enclosed in parentheses.

—(3) Short-term investment securities and investment
securities(1) Accounts payable—trade

Each of Us Making JAL What It Is

Total

2,752,438

2,752,438—

Derivatives*$ 144,024$ 147,269$ 3,245* Derivatives assets and liabilities are stated on a net basis, and a net liability position is enclosed in parentheses.

(i) Methods of calculating the fair value of financial instruments,
including securities and derivatives transactions
Assets(1) Cash on hand and in banks and (2) Notes and accounts receivable—trade
The fair value equates to the book value due to the short-term
nature of these instruments.
(3) Short-term investment securities and Investment securities
The fair value of securities is determined based on the market price. These investment securities are described further in“Note 8. INVESTMENT SECURITIES”.
Liabilities(1) Accounts payable—trade and (2) Short-term borrowings
The fair value equates to the book value due to the short-term
nature of these instruments.
(3) Long-term loans payable, (4) Lease payable and (5) Long-term
accounts payable – installment purchase
The fair value of long-term loans payable, lease payable andlong-term accounts payable – installment purchase with fixedinterest rates is based on the present value of future cash flows
discounted using the current borrowing rate for similar debt of
a comparable maturity.
Derivatives
Derivatives are described further in “Note 9. DERIVATIVES ANDHEDGING ACTIVITIES”.
(ii) Financial instruments for which the fair value is extremely
difficult to measure

As of March 31
Investments in unconsolidated subsidiaries andaffiliates

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥17,362¥16,970$168,694

Held-to-maturity securities

3,330

666

32,355

Other securities

5,234

5,088

50,855

JAL REPORT 2014

77

The above are not included in “(3)(ii) Other investment securities”
in the fair value of financial instruments because there is no market
value and it is difficult to measure the fair value.
(iii) R edemption schedule for monetary claims and securities withmaturity date subsequent to the consolidated balance sheet dateMillions of yen

As of March 31, 2014

Within one
year

More than
one year,within fiveyears

Cash and time deposits¥368,774¥ —Notes and accounts receivable—trade143,807—

More than
five years,
within ten
years
¥ —

As of March 31, 2014

Carrying
value

Unrealized
gain (loss)

Unrealized gain:
Stocks$151,525$241,780$90,254

151,525

241,780

90,254

3,089

3,050

(29)

3,089

3,050

(29)

Total

$154,615$244,840$90,215

As of March 31, 2013

Acquisition
costs

Carrying
value

Unrealized
gain (loss)¥15,799¥19,349¥3,54915,79919,349

3,549

610

400

(210)

610

400

(210)

¥16,410¥19,749¥3,339Unrealized loss:
StocksMore thanten years¥—

Millions of yen——

Short-term investment securities andinvestment securities
Held-to-maturity securities

Thousands of U.S. dollars
Acquisition
costs

Unrealized gain:
Stocks
—

—

—

3,330
Unrealized loss:
StocksThousands of U.S. dollars

As of March 31, 2014

Within one
year

More than
one year,within fiveyears

More than
five years,
within ten
years

Cash and time deposits$3,583,113

$ —

$ —

Notes and accounts receivable—trade

1,397,269

—

—

—

—

—

—

32,355

As of March 31, 2013

Within one
year

More than
one year,within fiveyears

More than
five years,
within ten
years

More thanten years

Cash and time deposits¥347,986

¥ —

¥ —

¥ —

Notes and accounts receivable—trade121,058

—

—

—

—

—

—

666

Total
More thanten years$—

Short-term investment securities andinvestment securities
Held-to-maturity securities

Millions of yen

Short-term investment securities andinvestment securities
Held-to-maturity securities

Redemption schedule for short-term and long-term debt subsequent to the consolidated balance sheet date is described in “Note
10. SHORT-TERM BORROWINGS AND LONG-TERM DEBT”.
8. INVESTMENT SECURITIESNo trading securities were held at March 31, 2014 and 2013.
Securities classified as other securities are included in “Short-term
investments in securities” and “Investments in securities” in theaccompanying consolidated balance sheets.
The components of unrealized gain or loss on marketable securities classified as other securities at March 31, 2014 and 2013
were summarized as follows:
Millions of yen
As of March 31, 2014
Unrealized gain:
Stocks
Unrealized loss:
StocksTotal

78

JAL REPORT 2014

Acquisition
costs

Carrying
value

Unrealized
gain (loss)¥15,595¥24,884¥9,28915,59524,884

9,289

318

314

(3)

318

314

(3)

¥15,913¥25,199¥9,285

Proceeds from sales of securities classified as other securities forthe years ended March 31, 2014 and 2013 amounted to ¥1,190
million ($11,562 thousand) and ¥130 million, respectively. For theyears ended March 31, 2014 and 2013 the aggregate gain realized on those sales totaled ¥930 million ($9,036 thousand) and¥49 million, respectively, and the aggregate loss realized on thosesales totaled ¥0 million ($0 thousand) and ¥0 million, respectively.
9. DERIVATIVES AND HEDGING ACTIVITIES
Certain consolidated subsidiaries utilize forward foreign exchange
contracts and currency options on a consistent basis to hedge
certain foreign currency transactions related to foreign purchase commitments, principally for flight equipment and foreign
accounts receivable and payable, and other items. The Company
also enters into a variety of options in its management of risk exposure related to the commodity prices of fuel.
The Company and certain consolidated subsidiaries enter into
these hedging transactions in accordance with the internal guidelines and strategies established by management. The routine
operations of the department which is responsible for hedging
transactions are examined by other departments. Gain and loss onhedging instruments and the assessment of hedge effectiveness,
which is performed both at inception and on an ongoing basis,are reported at meetings of the related department managers ona timely basis. Other consolidated subsidiaries have adopted procedures for hedging transactions which are more simplified thanthose adopted by the Company.
The contract amount and the estimated fair value of the open
derivatives positions at March 31, 2014 and 2013, which met thecriteria required for the application of hedge accounting are summarized as follows:Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

GovernanceMillions of yen
As of March 31, 2014

Thousands of U.S. dollars

Contract amounts

Type of derivatives

Major hedged items

Financial Section

Contract amounts

Total

Maturing
after 1 year

Estimatefair value

Total

Maturing
after 1 year

Estimatefair value

Forward foreign currency exchange contracts:
Buy:
USD

Accounts payable—trade¥ 25,976¥ 3,047¥ 5,255$ 252,390$ 29,605$ 51,059

EUR

Accounts payable—trade

3,430

—

160

33,326—

1,554

Others

Accounts payable—trade

1,215

—

29

11,805—281

Accounts payable—trade194,217

22,666

7,031

1,887,067

220,229

68,315

Accounts payable—trade82,331

20,957(1,151)

799,951

203,624(11,183)

Aircraft fuel105,640

26,964

3,364

1,026,428

261,989

32,685

Aircraft fuel150,001—134

1,457,452

—

1,301

Currencies options:
Buy:
Call option
Sell:
Put option
Commodity swap:
Received variable/pay fixed
Commodity options:
Buy:
Call option

Method of hedge accounting: Special treatment (Note 2. l.)
Forward foreign currency exchange contracts:
Buy:
USD

Accounts payable—trade

2,969

—

319

28,847

—

3,099

EUR

Accounts payable—trade

217

—

15

2,108

—

145

Others

Accounts payable—trade

157

—

(0)

1,525

—

¥15,157

Total

All derivative transactions were conducted as over-the-countertransactions. Fair value is estimated based on prices quoted byfinancial institutions and others.
Millions of yen
As of March 31, 2013
Type of derivatives

Contract amounts
Major hedged items

Total

Maturing
after 1 year

Estimatefair value

Forward foreign currency exchange contracts:(0)$147,269

All derivative transactions were conducted as over-the-countertransactions. Fair value is estimated based on prices quoted byfinancial institutions and others.
10. SHORT-TERM BORROWINGS AND LONG-TERM DEBT
The weighted-average interest rate for short-term borrowings outstanding at March 31, 2014 was 0.1%. Long-term debt at March
31, 2014 and 2013 consisted of the following:

Buy:
USD

Accounts payable—trade¥ 41,252¥15,757¥ 7,381

EUR

Accounts payable—trade

2,660

—

255

Others

Accounts payable—trade

1,158

—

186

Currencies options:
Accounts payable—trade

168,373

8,151

7,466

Sell:
Put option

Accounts payable—trade63,346

7,745(1,930)Commodity swap:
Received variable/
pay fixed

Aircraft fuel99,17525,225919

Buy
Aircraft fuel135,944

—

236

2014

78,332

1.2%

2013

Current portion of long-termloans payable¥ 8,062¥ 9,767

Long-term loans payable(excluding current portion)due 2015 to 2028

45,08434,517438,048

1.3%

Current portion of lease payable

32,45535,801

315,3420.1%

Lease payable (excluding current
portion) due 2015 to 2024

46,996

77,592456,626

0.2%

196

240

1,904

2.1%

2.0%

$

Long-term accounts payable –installment purchase:
Current portion of Long-termpayable – installment purchase

Method of hedge accounting: Special treatment (Note 2. l.)

Long-term accounts payable –installment purchase (excluding
current portion) due 2021

Forward foreign currency exchange contracts:
Buy:

Total

2014

2014

As of March 31

Lease payable:

Commodity options:
Call option

Weightedaverageinterest rates

Long-term loans:

Buy:Call option

Millions of yen

Thousands of
U.S. dollars

USD

Accounts payable—trade

2,572

—

373

EUR

Accounts payable—trade

143

—

29

Others

Accounts payable—trade

94

—

Total

1,200

1,396

11,659¥133,995¥159,317$1,301,933

21¥14,939

JAL REPORT 2014

79

The aggregate annual maturities of long-term debt within 5 years
subsequent to March 31, 2014 are summarized as follows:
Years ending March 31,
2015

Millions of yen

Thousands of
U.S. dollars¥ 40,713$ 395,579

2016

33,388324,4072017

18,537

180,1102018

10,461

101,642

2019

7,137

69,3452020 and thereafter
Total

23,756

230,820¥133,995$1,301,933

Assets pledged as collateral at March 31, 2014 for long-term andshort-term debt of ¥53,791 million ($522,648 thousand) are flightequipment and others of ¥183,558 million ($1,783,501 thousand).
Assets pledged as collateral at March 31, 2013 for long-term andshort-term debt of ¥45,112 million are flight equipment and othersof ¥197,789 million.
Also included as part of pledged assets are certain assets set
aside for revolving pledges on obligations accompanying syndicated loans taken out by an affiliate, Tokyo International Airport
Terminal Corporation, for core business purposes. The amounts
include security deposits paid to the banks regarding derivativetransactions.
The Company entered into loan commitment agreements
amounting to ¥50,000 million ($485,814 thousand) with threebanks. There were no loan payables outstanding at March 31,
2014 under these loan commitment agreements.

Millions of yen
Year ended March 31
Balance at beginning of year80

JAL REPORT 20142014
$3,863,262

Service cost

10,244

99,5338,119

78,886

Actuarial loss

1,454

14,127

Benefit paid

(20,966)(203,711)

Other
Balance at end of year

(9)

(87)

¥396,449$3,852,011(2) Movements in plan assets, except plan applying the simplified
methodMillions of yen
Year ended March 31
Balance at beginning of year

Thousands of
U.S. dollars

2014

2014

¥229,229$2,227,254

Expected return on plan assets

3,538

34,376

Actuarial gain

2,207

21,443Contributions paid by the employer

16,478160,104

Benefit paid

(18,122)(176,078)¥233,331$2,267,110

Balance at end of year(3) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits, applying thesimplified method
Millions of yen
Balance at beginning of year

Thousands of
U.S. dollars

2014

2014

¥3,050$29,634

Retirement benefit cost

171

1,661

Contributions paid by the employer(205)(1,991)(2,215)

Benefit paid

(228)

Decrease on partial termination of defined benefit plan

(20)

(194)

Increase by merger

464

4,508

Other
Balance at end of year

17

165

¥3,249$31,568(4) Reconciliation from retirement benefit obligations and plan
assets to liability (asset) for retirement benefits
Millions of yen

Thousands of
U.S. dollars

2014

2014

Funded retirement benefit obligations¥299,952$2,914,418

Plan assets(237,004)(2,302,798)

Year ended March 31

Unfunded retirement benefit obligations

62,948611,620

103,419

1,004,848

Total net liability (asset) for retirement benefits

166,367

1,616,469

Liability for retirement benefits

166,643

1,619,150

Asset for retirement benefits

For the year ended March 31, 2014
a. Defined benefit plans(1) Movement in retirement benefit obligations, except plan applying the simplified method

2014¥397,607

Interest cost

Year ended March 31

11. RETIREMENT BENEFIT PLANS
Outline of Current Retirement Benefit System
An employee whose employment is terminated is entitled, in mostcases, to pension annuity payments or to a lump-sum severance
payment determined by reference to the employee’s basic rate ofpay, length of service and the conditions under which the termination occurs.
The Company and certain significant domestic consolidated
subsidiaries have established contributory defined benefit pension
plans such as corporate pension funds and lump-sum severance
indemnity plans. In certain cases, additional severance payments
may be provided.
As of March 31, 2014, the Company and 43 consolidated subsidiaries had adopted a lump-sum severance indemnity plan.
Additionally, there were 3 corporate pension funds, including theJapan Airlines Welfare Pension Fund. Certain foreign subsidiaries
have also established contributory defined benefit pension plans.
The Japan Airlines Welfare Pension Fund also introduced an
option similar to a cash-balance plan as well as other alternatives.
The JAL Group Pension Fund, which was established by certain
consolidated subsidiaries, introduced a cash-balance plan option.

Thousands of
U.S. dollars

Total net liability (asset) for retirement benefits(275)(2,671)¥166,367$1,616,469

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance(5) Retirement benefit costs

Financial Section

Millions of yen

Millions of yen

Thousands of
U.S. dollars

As of March 31

2013

Projected benefit obligation¥(404,537)

2014

2014

Plan assets

233,109

Service cost

¥10,244$99,533

Accrued pension and severance costs

154,483

Interest cost

8,119

78,886

Prepaid pension and severance costs

Expected return on plan assets(3,538)(34,376)

Net unrecognized amount

Years ended March 31

Past service costs amortization

(18)

(174)

Net actuarial loss amortization

1,884

18,305

Amortization of unrecognized severance benefit
obligation at transition

684

6,645

Retirement benefit cost based on the simplified method

171

1,661

Other
Subtotal
Loss on partial termination of defined benefit plan, net
Total

(671)
16,876(6,519)163,97225

242¥16,901$164,214(892)¥ (17,838)

The net unrecognized amounts at March 31, 2013 were as follows:
Millions of yen
As of March 31

2013

Unrecognized benefit obligation at transition¥ (1,371)

Actuarial differences(16,920)

Past service costs

453

Net unrecognized amounts(6) Accumulated adjustment for retirement benefit
Millions of yen

Thousands of
U.S. dollars

2014

2014

Past service costs that are yet to be recognized¥ (435)$ (4,226)

Actuarial losses that are yet to be recognized

14,282

138,767

As of March 31

Unrecognized benefit obligation at transition

680

6,607

¥14,527$141,148¥(17,838)

In computing the projected benefit obligation, small companies
are permitted to adopt certain simplified methods and certain subsidiaries have done so.
b. Components of Net Periodic Retirement Benefit Expenses
The components of net periodic pension and severance costs
excluding the employees’ contributory portion for the years ended
March 31, 2013 were as follows:(7) Plan assets
Years ended March 31

Millions of yen
2014

As of March 31%

Service cost2013
¥ 9,974

General insurance fund79Interest cost on projected benefit obligation

8,312

Bond

6

Expected return on plan assets(3,526)

Other

15

Amortization of unrecognized severance benefit obligation at transition

Total

100

Amortization of actuarial differences

685
1,599

Amortization of past service costs

Current and target asset allocations, historical and expected
returns on various categories of plan assets have been considered
in determining the long-term expected rate of return.
(8) Actuarial assumptions
The principal actuarial assumptions at March 31, 2014 (expressed
as weighted averages) were as follows:
Discount rate
1.0% to 2.1%
Long-term expected rate of return 1.0% to 2.5%
b. Defined contribution plans
The Company and its consolidated subsidiaries contributed to thetotal of ¥1,545 million ($15,011 thousand) for the fiscal year ended
March 31, 2014.
For the year ended March 31, 2013
a. Retirement Benefit Obligation
The projected benefit obligation and the funded status of the plans
at March 31, 2013 were summarized as follows:(24)

Subtotal

17,021

Other

1,574

Net periodic retirement benefit expenses

18,595

Effect of changes to the standard method of accounting for the projected
benefit obligation

1,472

Total

¥20,067

Special additional termination benefits paid, but not included indetermining the projected benefit obligation, were charged toincome when incurred. “Other” consists of contributions to defined
contribution plans and lump-sum payments of retirement benefits
based on an early payment scheme.
c. Basis for Calculation of Retirement Benefit Obligations
As of March 31

2013

Periodic allocation of estimated retirement benefits

Straight-line method

Discount rates for projected benefit obligation at the end of year

1.0%–2.3%

Expected rates of return on plan assets

1.0%–2.5%

JAL REPORT 201481

12. INCOME TAX
The significant components of deferred tax assets and liabilities
and the related valuation allowances at March 31, 2014 and 2013
were as follows:
Millions of yen

Thousands of
U.S. dollars

2013

2014

—

$ 557,879

2014

As of March 31
Deferred tax assets:
Liability for retirement benefits¥ 57,417¥—

53,681—

Lease payable

22,38135,913

217,460

Deferred liability on aircraft and aircraft
equipment

4,760

7,540

46,249Accounts payable—trade

8,947

8,692

86,931

Non-recurring depreciation

3,497

2,280

33,977

Reserve for loss on antitrust litigation

2,176

2,219

21,142

Asset retirement obligations

1,513

1,514

14,700308,571347,617

2,998,163

Accrued pension and severance costs

Tax loss carryforwards

7,755

8,524

75,349417,020467,984

4,051,884(377,712)(439,926)(3,669,957)

39,30728,058

381,917

Leased assets

13,65821,543

132,705

Deferred gain on hedging instruments

4,104

4,441

39,875Net unrealized gain on other securities

3,273

1,178

31,801

Other

3,381

5,906

32,85024,41833,069237,252¥ 14,889¥ (5,011)

Other
Valuation allowance
Deferred tax liabilities:

Net deferred tax assets (liabilities)$

144,665

A reconciliation between the Japanese statutory income tax rate
and the Company’s and the consolidated subsidiaries’ effective
tax rates for the years ended March 31, 2014 and 2013 were as
follows:
Years ended March 31

2014

2013

%

%

36.7

Statutory rate

36.7

0.9

0.4

Changes in valuation allowance(42.4)(28.5)

Undistributed earnings of consolidated subsidiaries and affiliates

(1.6)

(1.0)

Other

(0.1)

(0.3)

Effective tax rate

(6.5)

7.3

Equity in earnings/losses of affiliates

Income taxes in Japan applicable to the Company and its domestic
consolidated subsidiaries consist of corporation tax, inhabitants’taxes and enterprise tax. Income taxes of foreign consolidated
subsidiaries are based generally on the tax rates applicable intheir countries of incorporation.
On March 31, 2014, the “Act for Partial Revision of the Income Tax
Act etc.” (Act. No. 10 of 2014) was officially issued and, accordingly, the special Japanese reconstruction corporate tax applicableto the Company and its domestic subsidiaries will not be applied
effective the year ending March 31, 2015.

82

JAL REPORT 2014

Corresponding to this change, the statutory tax rate applied in
calculating deferred income taxes was reduced from 36.7% to34.3%. The effect of this change on the accompanying consolidated financial statements of the Company was immaterial.
13. NET ASSETSThe Companies Act of Japan (the “Act”), provides that an amountequal to at least 10% of the amount to be disbursed as distributionsof capital surplus (except for distributions from additional paid-in
capital) and retained earnings (except for distributions from thelegal reserve) be appropriated to additional paid-in capital and thelegal reserve, respectively, until the sum of additional paid-in capital and the legal reserve equals 25% of the capital stock account.
Such distributions can be made at any time by resolution of thestockholders, or by the Board of Directors if certain conditions aremet, but neither additional paid-in capital nor the legal reserve isavailable for distribution by resolution of the Board of Directors.
A company may, by a resolution of its Board of Directors, designate an amount not exceeding half of the price of new sharesas additional paid-in capital, which is included in capital surplus.
The maximum amount that a company can distribute as dividends
is calculated based on its unconsolidated financial statements inaccordance with the Act.
At the annual stockholders’ meeting held on June 18, 2014,
the stockholders approved cash dividends amounting to ¥29,016
million ($281,927 thousand). Such appropriations have not been
accrued in the Consolidated Financial Statement as of March 31,
2014. The total number and changes in the total number of sharesof stock authorized and in issue for the year ended March 31, 2014
were as follows:
Thousands of sharesYear ended March 31, 2014

At April
1, 2013

Increase

Decrease

At March
31, 2014
350,000

Number of shares of stock authorized:
Common stock

350,000——

Preferred stock

50,000——50,000400,000——

400,000

Total
Number of shares of stock in issue:
Common stockTotal

181,352——

181,352

181,352——

181,352

Number of shares of common stock intreasury:
Common stock
Total

31

1

—

33

31

1

—

33

The increase in common stock in treasury of 1 thousand shares
during the year ended March 31, 2014 mainly resulted from theCompany’s purchases of the equivalent of 1 thousand shares byaffiliates accounted for by the equity method.

Highlights

President’s Message

Review of Operations

The total number and changes in the total number of shares ofstock authorized, in issue and common stock in treasury for theyear ended March 31, 2013 were as follows:
Thousands of shares
At April
1, 2012

Increase

Decrease

At March
31, 2013

Common stock

225,000

125,000—

350,000

Preferred stock

50,000——50,000275,000

125,000—

400,000

181,352——

181,352

181,352——

181,352

Year ended March 31, 2013
Number of shares of stock authorized:

Total
Number of shares of stock in issue:
Common stock
Total
Number of shares of common stock intreasury:
Common stock
Total

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Total number of issued shares after the stock split: 362,704,000
sharesTotal number of authorized shares after the stock split:
750,000,000 sharesc. Schedule of the stock split(1) Official notice of record date: September 12, 2014
(2) Record date for the stock dividend: September 30, 2014
(3) Effective date: October 1, 2014
d. Per share information based on the assumption that thestock split was conducted on April 1, 2012 is as follows:
Yen
March 31

U.S. dollars

2014

2013

2014

—

31

—

31

Net assets per share of common stock (Basic)¥1,903.53¥1,558.15$18.49

—

31

—

31

Net income per share of common stock¥ 458.45¥ 473.36$ 4.45The increase in common stock in treasury of 31 thousand shares
during the year ended March 31, 2013 resulted from the Company’s purchases of the equivalent of 31 thousand shares byaffiliates accounted for by the equity method.
Additional Information
The Company resolved to conduct a stock split of common stockat the Board of Directors meetings held on January 31 and April
30, 2014, and amendments to the Company’s Articles of Incorporation were approved at the 65th annual stockholders’ meeting on
June 18, 2014. Outline of stock split is as follows:a. Purpose of the stock split and the partial amendment to theCompany’s Articles of Incorporation
The Company is aware of the general price of a stockholder’sinvestment in companies listed on the first section of the Tokyo
Stock Exchange, and will undertake a two-for-one stock split todevelop an environment to make its common shares more affordable to a broader range of investors including individual investors
and increase the Company’s stockholder base. The Articles ofIncorporation will be partially amended to implement the stock
split above.
b. Method of stock split(1) The stock split will be implemented by way of a stock dividend
whereby each stockholder will receive one additional share foreach share owned as of the close of business on the record
date, September 30, 2014. Shares which the Company refused
to register in the stockholders’ list (adjusted shares held by foreigners) pursuant to provisions of the Civil Aeronautics Act will
also be split.
(2) Number of shares increasing as a result of stock split
Total number of issued shares prior to the stock split:
181,352,000 shares
Number of shares increasing as a result of the stock split:
181,352,000 sharese. The content of Partial amendment to Articles ofIncorporation(1) Total number of authorized shares of the Company will be
increased from 400,000,000 shares to 750,000,000 shares,
and total number of authorized shares of the Company’scommon stock will be increased from 350,000,000 shares to
700,000,000 shares.
(2) Effective date: October 1, 2014.
14. OTHER COMPREHENSIVE INCOME
Reclassification adjustments for each component of other comprehensive income including tax effect for the years ended March 31,
2014 and 2013 were as follows:

Years ended March 31

Millions ofyen

Thousands of
U.S. dollars

2014

2013

2014

¥ 5,936¥4,189$ 57,675

Net unrealized gains on other securities, net of taxes:
Unrealized holding gains arising during the period
Less: Reclassification adjustment included in net
income

194

—

1,884

Pre-tax amount

6,130

4,189

59,560Tax expense(2,103)(1,169)(20,433)

Net Unrealized gains on securities, net

4,026

3,019

39,117

Deferred gains (losses) during the period

13,045

3,824

126,748

Less: Reclassification adjustment included in net
income(126,632)

Deferred gains (losses) on hedges, net of taxes:(13,033)(1,691)Pre-tax amount

11

2,133

106

Tax benefit/(expense)

268

(775)

2,603

Deferred gains (losses), net of taxes

280

1,358

2,720

1,512

931

14,691

Foreign currency translation adjustments:
Translation adjustments arising during the period
Less: Reclassification adjustment included in net
income———Foreign currency translation adjustments

1,512

931

14,691

Share of other comprehensive income of associates
accounted for by the equity method:
Share of other comprehensive income ofassociates accounted for by the equity method
arising during the period
Total other comprehensive income

71

1

689

¥ 5,891¥5,310$ 57,238

JAL REPORT 201483

15. LOSS ON IMPAIRMENT OF FIXED ASSETS
Assets are attributed or allocated to cash generating units which
generated largely independent cash flows for calculating impairment losses. Assets to be sold and idle assets are written down totheir respective recoverable amounts.
The Company and its consolidated subsidiaries estimatedrecoverable amounts at the higher of fair value less costs to selland value in use. Fair value is based on reasonable estimates
made by the Company and its consolidated subsidiaries in accordance with the contract amounts of sales for the periods ended
March 31, 2014 and 2013, respectively.
The Company and certain consolidated subsidiaries have recognized impairment losses on the following groups of assets in theaccompanying consolidated statements of income and comprehensive income for the year ended March 31, 2014:

17. LEASESAs Lessee
The following amounts represent the acquisition costs, accumulated depreciation and net book value of the leased assets at March
31, 2014 and 2013, and the related depreciation and interest
expense for the periods ended March 31, 2014 and 2013, which
would have been reflected in the accompanying consolidated balance sheets and the related consolidated statements of income if
finance lease accounting had been applied to the finance leases
currently accounted for as operating leases whose contracts wereentered into prior to April 1, 2008:

Assets utilized in the Company’s andconsolidated subsidiaries’ operations

Groups of assets

Locations

Machinery, equipment and vehicles

Assets to be soldFlight equipment—

An impairment loss of ¥1,497 million ($14,545 thousand) on flightequipment was recognized as non-operating expense in theaccompanying consolidated statements of income and comprehensive income for the year ended March 31, 2014.
The Company and certain consolidated subsidiaries have recognized impairment losses on the following groups of assets in theaccompanying consolidated statements of income and comprehensive income for the year ended March 31, 2013:
Assets utilized in the Company’s andconsolidated subsidiaries’ operations

Groups of assets

Locations

Assets to be soldMachineryOta-ku, Tokyo

Idle assets

Flight equipment—

16. SUPPLEMENTARY CASH FLOW INFORMATION
The assets and liabilities of a subsidiary included in consolidation
following the purchase of its shares during the year ended March
31, 2014 were as follows:
Millions of yen

Thousands of
U.S. dollars

Current assets¥323$3,138Fixed assets

12

116

(329)

(3,196)

Non-current liabilities

(7)

(68)

Minority interests

329

Current liabilities

Acquisition
cost

Net
book value

¥ 988

¥ 939

¥49

118

100

17

Other

407

385

22

Total

¥1,514¥1,424¥89

As of March 31, 2014
Flight equipment

Thousands of U.S. dollars

As of March 31, 2014

Acquisition
cost

Less
accumulated
depreciation

Netbook value$ 9,599$ 9,123$476

Machinery, equipment and vehicles

1,146

971

165

Other

3,954

3,740

213

Total

$14,710$13,835$864

Acquisition
cost

Less
accumulated
depreciation

Netbook value

Flight equipment

¥ 988

¥ 840

¥148

Machinery, equipment and vehicles

1,146

996

149

Other

407

317

90

Total

¥2,542¥2,154¥388

Millions of yen

Thousands of
U.S. dollars

Flight equipment

Millions of yen

An impairment loss of ¥1,764 million was recognized as non-operating expense in the accompanying consolidated statements ofincome and comprehensive income for the year ended March 31,
2013. A breakdown of the total loss on impairment of fixed assets
was as follows: ¥1,081 million on flight equipment, ¥204 million onbuildings and structures, and ¥479 million on machinery.

Year ended March 31, 2014

Millions of yen
Less
accumulated
depreciation

As of March 31, 2013

Years ended March 31

2014

2013

2014

Lease expenses

¥320

¥518

$3,109Depreciation equivalent

296

480

2,876

Interest equivalents

10

27

97

The present value of future rental expenses under finance leases
accounted for as operating leases outstanding at March 31, 2014
and 2013 were as follows:
Millions of yen

Thousands of
U.S. dollars

Expenditure for purchase of shares of common stock2

19

As of March 31

2014

2013

2014

Gain on step acquisition

(2)

(19)

Within 1 year

¥92

¥312

$893

Cash and cash equivalents held by subsidiaries(145)(1,408)Over 1 year

Net proceeds¥145$1,408

Total

84

JAL REPORT 2014

2

94

19

¥94

¥407

$913

Highlights

President’s Message

Review of Operations

Depreciation equivalent is calculated by the straight-line methodon the assumption that the useful lives of the related assets are thesame as the lease term and the residual value is zero.
Interest expense equivalent is calculated on the assumption thatthe difference between aggregate lease rentals and the acquisition cost of leased assets is deemed to be the interest portion andis apportioned over the term of the lease by the interest method.
No impairment loss has been recognized on leased property
under finance leases accounted as operating leases for the year
ended March 31, 2014 and 2013.
Future rental expenses under operating leases outstanding at
March 31, 2014 and 2013 were as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

Within 1 year

¥ 28,079¥ 36,498$ 272,823

Over 1 year

117,398

170,276

1,140,672

Total¥145,478¥206,774$1,413,505

As of March 31

18. CONTINGENT LIABILITIESAt March 31, 2014 and 2013, contingent liabilities for guarantees,
principally for employees, amounted to ¥281 million ($2,730 thousand) and ¥341 million, respectively.
19. AMOUNTS PER SHARE
Basic net income per share is computed based on the net income
available for distribution to or allocable to the stockholders of common stock and the weighted-average number of shares of common
stock outstanding during each year. Diluted net income per shareis computed based on the net income available for distribution to
the stockholders and the weighted-average number of shares ofcommon stock outstanding during each year after giving effect tothe potentially dilutive securities to be issued upon the conversionof convertible bonds. However, diluted net income per share had
not been presented for the years ended March 31, 2014 and 2013
since the Company had no equity instruments issued that had adilutive effect on earnings per share.
Yen

U.S. dollars

2014

2013

2014

Basic

¥916.90¥946.71$8.90

Diluted———Year ended March 31
Net income per share of common stock:

The following table sets forth the computation of basic net income
per share of common stock and diluted net income per share ofcommon stock for the years ended March 31, 2014 and 2013:

Years ended March 31

Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥166,251¥171,672$1,615,342

—

—

—

¥166,251¥171,672$1,615,342

Net income (allocable to) available forstockholders of common stock:
Net income
Appropriations for payment of preferred
dividend

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Thousands of shares
Years ended March 31
Weighted-average number of shares of common stock outstanding

2014

2013

181,319

181,335

Net assets per share are computed based on the net assets available for distribution to the stockholders of common stock and thenumber of shares of common stock outstanding at each balance
sheet date.
Yen
As of March 31
Net assets per share of common stock

U.S. dollars

2014

2013

2014

¥3,807.05¥3,116.30$36.9920. ASSET RETIREMENT OBLIGATIONS
a. Asset retirement obligations recognized in the consolidated balance sheets at March 31, 2014 and 2013
The Company and its consolidated subsidiaries, in connection
with some buildings and land, have entered into real estate lease
contracts with terms ranging from 2 to 46 years and 2 to 46 years
for the years ended March 31, 2014 and 2013, respectively. Assetretirement obligations have been recognized in respect of the obligation of the Company and its consolidated subsidiaries to theowner of the buildings and land to remove the facilities from leased
real estate at the end of those contracts. The liabilities at March
31, 2014 and 2013 have been calculated with expected useful
lives ranging from 2 to 46 years and 2 to 46 years, respectively,
and discount rates ranging from 0.1% to 2.5% and 0.1% to 2.5%,
respectively.
The following table summarizes the changes in the aggregate
carrying amount of asset retirement obligations for the years ended March 31, 2014 and 2013:
Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

¥4,271¥3,166$41,498

111

—

1,078

Accretion due to the passage of time

61

60

592

Decrease due to settlement

(38)

(3)

(369)

Years ended March 31
Balance at beginning of year
Increase due to purchases of tangible fixed
assetsChanges in estimated obligations and accretion
Balance at end of year

—

1,047

—

¥4,405¥4,271$42,800b. Asset retirement obligations not recognized in the consolidatedbalance sheets as of March 31, 2014 and 2013
The Company and its consolidated subsidiaries have rented lots
and buildings from domestic service airports based on the permission of national property use and the real estate rental contract
about national property, and have obligation to remove the facilities from leased real estate. The enterprise of the Company and its
consolidated subsidiaries have a large role of public traffic, anddepend on the trend of the aviation administration of a country. For
this reason, the time of building withdrawal and leaving cannot be
determined only by discretion of the Company and its consolidated
subsidiaries about the rented airport related facilities. Moreover,since there is also no schedule of building withdrawal and leaving
at present, asset retirement obligations cannot be estimated rationally. Therefore, the asset retirement obligations corresponding to
the debt concerned is not added up.

JAL REPORT 201485

21. SEGMENT INFORMATIONThe reportable segments of the Company and its consolidated
subsidiaries are components for which discrete financial information is available and whose operating results are regularly
reviewed by the Board of Directors to make decisions about
resource allocation and to assess performance. Air transportation

includes international and domestic passenger operations, cargo
operations and other transportation services.
The accounting policies of the segments are substantially thesame as those described in the significant accounting policies
in Note 2. Inter-group sales are recorded at the same conditions
used in transactions with third parties.
Millions of yen

Year ended March 31, 2014

Air transportation

Other

Total

¥1,048,107¥261,236¥1,309,343

118,574

31,852

150,426

Eliminations

Consolidated¥—¥1,309,343(150,426)—

Net sales
External
Intersegment
Total

1,166,681

293,089

1,459,770(150,426)

1,309,343

Operating income¥ 149,135¥ 17,648¥ 166,784¥

8¥ 166,792

Assets¥1,279,671¥155,475¥1,435,146¥ (94,978)¥1,340,168

Depreciation and amortization¥

80,643¥ 2,080¥

82,724¥(5)¥

Impairment losses

¥

1,497

¥

—

¥

1,497

¥

—

Investments in companies accounted for using the equity method

¥

3,121

¥ 20,613¥

23,735¥—¥

Capital expenditure¥ 159,406¥ 3,945¥ 163,351¥—¥ 163,351

82,718¥1,49723,735

Thousands of U.S. dollars
Year ended March 31, 2014

Air transportation

Other

Total

Eliminations

Consolidated$10,183,705$2,538,243$12,721,949

1,152,098

309,483

1,461,581—$12,721,949(1,461,581)

—

Total

$11,335,804$2,847,736$14,183,540$(1,461,581)$12,721,949

Operating income$ 1,449,038$ 171,472$ 1,620,520$

77$ 1,620,598

Assets$12,433,647$1,510,639$13,944,286$ (922,833)$13,021,453

Depreciation and amortization$

783,550$

20,209$803,769

$

(48)

$

Impairment losses$

14,545$—$

14,545$—$

14,545Investments in companies accounted for using the equity method$

30,324$ 200,281$

230,616$—$

230,616

Capital expenditure$ 1,548,834$$ 1,587,164$—$ 1,587,164

Net sales
External
Intersegment

Up until the previous fiscal year, the Company and five consolidated subsidiaries of transport operators were reported in thereporting segment (air transport segment). However, as the cost
structure of the air transport business practically covers manygroup company businesses relating to air transportation, the Company has decided to change the reporting segment (air transport

86

JAL REPORT 2014

38,330$803,711segment) to the Company and 31 consolidated subsidiaries, starting from the current fiscal year in order to build a more appropriate
cost management system.
Segment information for the previous fiscal year has been madeand disclosed, based on the categorization of reporting segment
after this change.

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Air transportation

Other

Total

Eliminations

Consolidated¥ 995,127¥243,711¥1,238,839¥¥1,238,839

Millions of yen
Year ended March 31, 2013
Net sales
External
Intersegment—

118,576

33,942

152,519(152,519)

—

Total

¥1,113,704¥277,654¥1,391,359¥(152,519)¥1,238,839

Operating income¥ 178,461¥ 17,522¥ 195,983

¥

(741)

¥ 195,242

Assets¥1,159,136¥141,814¥1,300,951¥ (84,338)¥1,216,612

Depreciation and amortization¥

79,254¥ 1,820¥

81,074¥(70)¥

81,004

Impairment losses

¥

1,764

¥

—

¥

1,764

¥

—

¥

1,764

Investments in companies accounted for using the equity method

¥

2,662

¥ 20,077¥

22,740¥—¥22,740Capital expenditure¥ 122,719¥ 2,641¥ 125,361

¥

(679)

¥ 124,681

As described in “Note 2. d. Tangible Fixed Assets”, effective from
April 1, 2012, the Company has changed useful lives of certain
aircrafts including spare parts to reviewed useful lives based on
the estimated future use. As a result of this change, for the year
ending March 31, 2013, operating income of the air transportation
segment decreased by ¥3,452 million compared to the amounts
that would have been reported if the previous methods had been
applied consistently.
Information by Geographical Area
Operating revenues from overseas operations, which include international passenger and cargo services of domestic consolidated
airline subsidiaries rendered during the years ended March 31,
2014 and 2013, export sales of domestic consolidated subsidiaries, and sales of consolidated subsidiaries outside Japan, for theyears ended March 31, 2014 and 2013 were as follows:
Millions of yen

Thousands of
U.S. dollars

2014

2013

2014

Asia and Oceania¥235,696¥222,244$2,290,089

North America

171,803

156,046

1,669,286

Years ended March 31

Europe99,91890,571

970,831

Total¥507,418¥468,861$4,930,217

Information about amortization and unamortized balances of
goodwill by segment for the years ended March 31, 2014 and2013 were as follows:
Millions of yen
Year ended March 31,
2014

Air
transportation

Other

Total

Amortization during the
year

¥ —

¥ 852

¥ 852

¥ —

¥ 852

Unamortized balance

—

2,154

2,154

—

2,154

Eliminations Consolidated

Thousands of U.S. dollars
Year ended March 31,
2014

Air
transportation

Other

Total

Amortization during the
year

$ —

$ 8,278$ 8,278$ —$ 8,278

Unamortized balance—

20,92820,928—20,928Year ended March 31,
2013

Air
transportation

Other

Total

Amortization during the
year

¥ —

¥ 836

¥ 836

¥ —

¥ 836

Unamortized balance

—

3,004

3,004

—

3,004

Eliminations Consolidated

Millions of yen
Eliminations Consolidated

22. RELATED PARTY INFORMATION
There are no material transactions that need to be presented forthe years ended March 31, 2014 and 2013.

JAL REPORT 201487

Independent Auditor’s Report
To the Board of Directors of Japan Airlines Co., Ltd.:We have audited the accompanying consolidated financial statements of Japan Airlines Co., Ltd. and its consolidated subsidiaries, which
comprise the consolidated balance sheets as at March 31, 2014 and 2013, and the consolidated statements of income and comprehensive
income, statements of changes in net assets and statements of cash flows for the years then ended, and a summary of significant accounting
policies and other explanatory information.
Management’s Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in Japan, and for such internal control as management determines is necessary to enable the preparationof consolidated financial statements that are free from material misstatements, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in Japan. Those standards require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the consolidated
financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in thecircumstances, while the objective of the financial statement audit is not for the purpose of expressing an opinion on the effectiveness ofthe entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Japan Airlines Co., Ltd.
and its consolidated subsidiaries as at March 31, 2014 and 2013, and their financial performance and cash flows for the years then endedin accordance with accounting principles generally accepted in Japan.
Convenience Translation
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the year ended March 31, 2014 are presented
solely for convenience. Our audit also included the translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation
has been made on the basis described in Note 4 to the consolidated financial statements.

KPMG AZSA LLC
June 19, 2014
Tokyo, Japan88

JAL REPORT 2014

Highlights

President’s Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Consolidated Subsidiaries
Number of Group Companies
Business Segment

Number of Subsidiaries

Consolidated Subsidiaries

Affiliated Companies

Equity Method Affiliates

Air Transport Business

33

31

3

3

Other

62

29

56

9

Group Total

95

60

59

12

Segment

Company Name

Paid-in Capital (Millions of yen)

Ratio of Voting Rights
Direct (%)

Indirect (%)

Total (%)

Air Transport Business
Air Transport BusinessAirport Passenger Handling

Ground Handling

Maintenance
Cargo

JAPAN TRANSOCEAN AIR CO., LTD.

4,537

72.8

—

72.8

JAL EXPRESS CO., LTD.

2,500

100.0

—

100.0

JAPAN AIR COMMUTER CO., LTD.

300

60.0

—

60.0

J-AIR CO., LTD.

200

100.0

100.0

RYUKYU AIR COMMUTER CO., LTD.

396

—

—
74.5

JAL SKY CO., LTD.

100

100.0

—

100.0

JALSKY OSAKA CO., LTD.

30

100.0

—

100.0

JALSKY KYUSHU CO., LTD.

30

100.0

—

100.0

JALSKY SAPPORO CO., LTD.

30

100.0

—

100.0

JALSKY NAHA CO., LTD.

30

51.0

49.0

100.0

JTA SOUTHERN SKY SERVICE CO., LTD.

20

—

100.0

100.0

JALSKY KANAZAWA CO., LTD.

10

100.0

—

100.0

JALSKY SENDAI CO., LTD.

10

100.0

—

100.0

JAL GROUND SERVICE CO., LTD.

474

99.8

0.2

100.0

JAL GROUND SERVICE TOKYO CO., LTD.

20

—

100.0

100.0

JAL GROUND SERVICE OSAKA CO., LTD.

10

—

100.0

100.0

JAL GROUND SERVICE KYUSHU CO., LTD.

10

—

100.0

100.0

JAL GROUND SERVICE SAPPORO CO., LTD.

10

97.7

97.7

OKINAWA AIRPORT SERVICE CO., LTD.

33

—
70.6

29.4

100.0
100.0

74.5

JAL ENGINEERING CO., LTD.

80

100.0

JAL MAINTENANCE SERVICE CO., LTD.

10

100.0

—
—

JAL KANSAI AIRCARGO SYSTEM CO., LTD.

123

69.2

—

69.2

JAL CARGO SERVICE CO., LTD.

50

100.0

—

100.0

JAL CARGO HANDLING CO., LTD.

50

—

100.0

100.0

JAL CARGO SERVICE KYUSHU CO., LTD.

20

40.0

40.0

80.0

JAL NAVIA CO., LTD.

50

100.0

100.0

100.0

JAL MILEAGE BANK CO., LTD.

40

100.0

—
—

Airport-Related Business

JAL ROYAL CATERING CO., LTD.

2,700

51.0

—

51.0

Airport Passenger Handling

JAL HAWAII, INC.

USD 1,000

100

—

100.0

100.0

Passenger Sales

JAL PASSENGER SERVICES AMERICA INC.

USD 1,000

205

—

100.0

100.0

Other

PACIFIC INVESTMENT HOLDINGS CORP.

USD 1,000

59,701

100.0

—

100.0

Passenger Sales

100.0

Other
Maintenance
Passenger Sales

Airport-Related Business
Other

JAL AIRTECH CO., LTD.

315

66.6

3.4

70.0

JAL SIMULATOR ENGINEERING CO., LTD.

10

100.0

—

100.0

JALPAK CO., LTD.*1

80

96.4

1.2

97.7

JAL SALES CO., LTD.

460

100.0

100.0

JAL JTA SALES CO., LTD.

30

16.7

—
83.3

OKINAWA FUELING FACILITIES CO., LTD.

100

40.0

20.0

60.0

JAL ABC, INC.

100

51.0

—

51.0

JAL INFORMATION TECHNOLOGY CO., LTD.

702

100.0

—

100.0

AXESS INTERNATIONAL NETWORK, INC.

700

100.0

—

100.0

JAL AEROPARTS CO., LTD.

490

100.0

—

100.0

JALCARD, INC.

360

50.6

—

50.6

JAL FACILITIES CO., LTD.

180

85.0

—

85.0

JAL BRAND COMMUNICATIONS CO., LTD.

100

100.0

—

100.0

JTA INFORMATION & COMMUNICATION CO., LTD.

50

—

100.0

100.0

JAL SUNLIGHT CO., LTD.

20

100.0

100.0

100.0

10

50.0

—
4.0

Cargo

JUPITER GLOBAL LTD.

HKD 1,000

1,960

46.4

4.6

51.0

Passenger Sales

JALPAK INTERNATIONAL HAWAII, INC.

USD 1,000

1,000

—

100.0

100.0

JALPAK INTERNATIONAL (CHINA) CO., LTD.

USD 1,000

600

—

100.0

100.0

JALPAK INTERNATIONAL (EUROPE) B.V.

EUR 1,000

1,600

—

100.0

100.0

JALPAK INTERNATIONAL (FRANCE) S.A.S.

EUR 1,000

160

—

100.0

100.0

JALPAK INTERNATIONAL (GERMANY) GMBH

EUR 1,000

102

—

100.0

100.0

EURO-CREATIVE TOURS (U.K.) LTD.

GBP 1,000

100

—

100.0

100.0

JALPAK INTERNATIONAL ASIA PTE. LTD.

SGD 1,000

146

—

100.0

100.0

JAL SATELLITE TRAVEL CO., LTD.

HKD 1,000

750

—

100.0

100.0

PT. TAURINA TRAVEL DJAYA*2

IDR 1,000

500,000

—

49.0

49.0

JLC INSURANCE CO., LTD.

USD 1,000

2,000

100.0

—

100.0

PACIFIC BUSINESS BASE, INC.

USD

400

100.0

—

100.0

JAL AIRLINES MANAGEMENT CORP.

USD

93

—

100.0

100.0

OFFICIAL FILING CO., LTD.

Other

54.0

*1 Operating revenue (excluding operating revenue between consolidated subsidiaries) of JALPAK CO., LTD. accounts for over 10% of consolidated operating revenue.
*2 Although JAL’s ownership is 50% or less, the company is considered a subsidiary because JAL exerts effective control.

JAL REPORT 201489

JAL Group Route Network

International Routes(Schedule for Summer 2014)

Newcastle
Manchester
BelfastGlasgow
Edinburgh
Aberdeen

Hamburg
Dusseldorf

Amsterdam

Copenhagen
Stockholm

KittilaGothenburg

Ivalo

Oslo

BrusselsRovaniemi
Oulu
Helsinki
Moscow

ViennaFrankfurt
MunichIstanbul

Basel
Lyon
GenevaLisbonMadridMalagaNizhny Novgorod

Kazan

Warsaw
BerlinPragueBudapest

LondonParis
Stuttgart

Tallinn
St. Petersburg
VilniusSamaraKhabarovsk

Yekaterinburg
Chelyabinsk

Ufa

Perm

Volgograd

Shenyang

Rostov

Sochi

Yantai
Beijing
Chongqing

Bologna

Tianjin
Qingdao

Xi'an

Chiang Rai

Mandalay

Nice

Kunming

Chiang Mai

Marseille

ChengduNay Pyi Taw

Toulouse
Barcelona

Vladivostok

DalianKrasnodar

ZurichAthens
Rome
Milan

Japan

Seoul

Doha

MumbaiHyderabadBangalore
Koh Samui
ColomboMale
Langkawi
PenangJohannesburg

NanjingShanghai

Guangzhou

Delhi

Dubai

Wuhan

Busan
Jeju

Shenzhen

Hanoi

YangonTaipei
Kaohsiung
Hong Kong

Chennai

Guam
ManilaLuang Prabang
Siem Reap
Vientiane
Phnom Penh
Ho Chi Minh City

BangkokPhuketKuantan
Kuala Lumpur
Singapore

Kota Kinabalu
JakartaSurabayaDenpasar
Kuching

DarwinCairnsBrisbaneGold Coast• The routes above include codeshare flights.
• To highlight the cities on JAL’s route network, continents on the map above havebeen expanded and may appear deformed or distorted.

90

JAL REPORT 2014

Perth

SydneyMelbourne

Highlights
Highlights

President’s
President’sMessages
Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Yellowknife
ToledoCleveland
Detroit
Buffalo
TorontoWhitehorse

Edmonton

Calgary
Kelowna
VancouverRochesterMontreal

Grand Rapids
Kalamazoo
Milwaukee

Minneapolis

Burlington

Madison

Syracuse

Winnipeg

Columbus
PortlandPittsburgh
BostonHartford
New York

Redmond
EugeneChicago
Omaha

Salt Lake City

Des Moines

Reno

San Francisco
FresnoLos Angeles

Oklahoma City

Denver
Wichita
Tulsa
Las Vegas
Albuquerque
El Paso

St. Louis
MemphisDallasSan Diego
Phoenix
TucsonLouisville
Nashville

Evansville
Fayetteville
New Orleans

HoustonAustinSan Antonio
Monterrey

Long Beach

Honolulu

Bloomington

Kansas City

Sacramento

San Jose

PeoriaKnoxville

Washington
Richmond

Norfolk
Indianapolis
Cincinnati

HuntsvilleJacksonville
Tampa

Philadelphia
Harrisburg
Baltimore
DaytonLexington

RaleighDurhamRaleigh/DurhamCharlotte
AtlantaOrlandoWest Palm Beach
Fort Lauderdale

Miami
CancunGuadalajara

Fort Myers

Mexico CitySan JuanBirmingham

PapeeteLima
AucklandSao Paulo
Rio De Janeiro
Santiago

JAL REPORT 201491

JAL Group Route Network

Domestic Routes(Schedule for Summer 2014)• Routes between the following cities (airports) are codeshare flights
with Fuji Dream Airlines Co., Ltd. (FDA): Shizuoka-Sapporo (New
Chitose), Shizuoka-Fukuoka, Matsumoto-Sapporo (New Chitose),
Matsumoto-Fukuoka, Nagoya (Komaki)-Fukuoka, Nagoya(Komaki)-Yamagata, Nagoya (Komaki)-Niigata, Nagoya (Komaki)Kochi, Nagoya (Komaki)-Kumamoto, and Niigata-Fukuoka.
FDA aircraft and crews are used for flights on these routes.

Rishiri• Routes between the following cities (airports) are codeshare flights
with Hokkaido Air System Co., Ltd. (HAC): Sapporo (Okadama)Rishiri, Sapporo (Okadama)-Hakodate, Sapporo (Okadama)Misawa, and Hakodate-Okushiri.
HAC aircraft and crews are used for flights on these routes.

Memanbetsu
Asahikawa
Kushiro (Tancho Kushiro)

Sapporo (Okadama)
Sapporo (New Chitose)• Routes between the following cities (airports) are seasonalroutes and there are periods when these are not in service:
Tokyo (Haneda)-Kumejima, Osaka (Itami)-Matsumoto, Osaka(Itami)-Asahikawa, Osaka (Itami)-Memanbetsu, Osaka (Itami)Tanegashima, Sapporo (New Chitose)-Izumo, Sapporo (New
Chitose)-Tokushima, Nagoya (Chubu)-Kushiro, and Nagoya(Chubu)-Obihiro.

Okushiri

Obihiro (Tokachi Obihiro)

Hakodate

Aomori
MisawaTajima(Konotori Tajima)
Akita

Hanamaki (Iwate Hanamaki)

Yamagata(Oishii Yamagata)
Niigata
Sendai

Komatsu
Izumo(Izumo Enmusubi)

Oki
Okayama

Hiroshima

Yamaguchi Ube

Fukuoka

Kitakyushu

Takamatsu

Matsuyama

Oita

NagasakiMatsumotoTokyo(Shinshu Matsumoto) (Narita)

Tokyo(Haneda)Shizuoka(Mt. Fuji Shizuoka)
Nagoya (Komaki)

Kumamoto (Aso Kumamoto)

MiyazakiKagoshima

Nagoya (Chubu)
Osaka (Itami)
Osaka (Kansai)
Nanki Shirahama

Tanegashima
Yakushima

Amami-Oshima
Kikai

Tokunoshima(Tokunoshima Kodakara)
Yoron

Okinoerabu
Kita-Daito

Kumejima
Okinawa(Naha)Tarama Miyako
Yonaguni

Ishigaki(Painushima Ishigaki)

92

JAL REPORT 2014

Minami-Daito

Kochi(Kochi Ryoma)

Tokushima (Tokushima Awaodori)

Highlights
Highlights

President’s
President’sMessages
Message

Review of Operations

Each of Us Making JAL What It Is

CSR

Governance

Financial Section

Shareholder Information(As of March 31, 2014)

Fiscal Year

From April 1 through March 31 of thefollowing year

General Meeting of Shareholders
Record Date

Aggregate Number of Shares Issuable

400,000,000 shares*

Within 3 months after March 31

Aggregate Number of Shares Issued andOutstanding (Common Stock)

181,352,000 shares

March 31

Number of Shareholders

89,411

Record Date for Dividend Payment March 31

Stock Listing

Tokyo Stock Exchange (First Section)

Trading Unit

* Includes common stock (350,000,000 shares) and Class 1 to Class 4 preferred stock(12,500,000 shares each).

100 shares

Repurchase of Odd-lot Shares• Location of Handling Office
Mitsubishi UFJ Trust and Banking Corporation,
	Stock Transfer Agency Division 4-5,
Marunouchi 1-chome, Chiyoda-ku, Tokyo• Administrator of
Shareholder Registry:	Mitsubishi UFJ Trust and Banking Corporation
4-5, Marunouchi 1-chome, Chiyoda-ku, Tokyo• Intermediary Offices—• Negotiating Commission
Free of charge

Breakdown of Shareholders*(As of March 31, 2014)

Japanese financial
institutions
19.27%
Japanese securities
companies
5.04%

Individuals and others
43.03%

Method of Public Notice
The Company will publish notices electronically. If by accident or other unavoidable
circumstance the Company is unable to publish a public notice electronically, it will
publish the notice in the Nihon Keizai Shimbun, issued in the Tokyo area.

Foreign companies
and institutions
24.39%

Restrictions on the Entry or Recording of Foreign Entities
in the Shareholder Registry

In relation to Article 120-2 of the Civil Aeronautics Act, the Company has included the following
provisions in its Articles of Incorporation.

Other Japanesecompanies
8.27%* Excluding odd lot.

Article 12 In the event that complying with a request by any of the entities listed below to enter or record their name and address in the Company’s shareholder registry would
result in the total voting rights held by the below entities to exceed one third of theCompany’s voting rights, the Company shall refuse to enter or record the name oraddress in the shareholder registry.
(1) Non-Japanese nationals(2) Foreign public organizations and similar establishments in foreign states(3) Juridical persons and other organizations established in accordance with foreign laws
2.	With respect to shareholders notified by the Book Entry Transfer Institution under the
Law Concerning Book-Entry Transfer of Corporate Bonds, Shares, etc., Article 1511 or Article 151-8, in the event that entering or recording the entire shareholdings ofentities listed above would result in the total voting rights held by these entities to
exceed one third of the Company’s voting rights, the Company shall enter or record
a portion of the shares in the shareholder registry in accordance with proceduresfor entering and recording information in the shareholder registry as designated by
the Ministry of Land, Infrastructure, Transport and Tourism in order to ensure thatthe total voting rights held by the above entities does not exceed one third of theCompany’s voting rights.

Note:
Figures for “Individuals and others” include 48,635,100 shares the Company refused to enter orrecord in the shareholder registry (shares adjusted for foreign ownership) under the Civil Aeronautics Act and Articles of Incorporation.

Stock Price and Trading Volume(Yen)

Stock price (left axis)

Trading volume(Millions of shares)

6,000

120

5,000

100

4,000

80

3,000

60

2,000

40

1,000

20

0

Sept.
2012

Oct.
2012

Nov.
2012

Dec.
2012

Jan.
2013

Feb.
2013

Mar.
2013

Apr.
2013

May
2013

Jun.
2013

Jul.
2013

Aug.
2013

Sept.
2013

Oct.
2013

Nov.
2013

Dec.
2013

Jan.
2014

Feb.
2014

Major Shareholders

Mar.
2014

Apr.
2014

May
2014

0

(As of March 31, 2014)

Number of Shares Held

Ratio of Shareholding (%)

The Master Trust Bank of Japan, Ltd. (trust account)

8,517,100

4.69

Japan Trustee Services Bank, Ltd. (trust account)

5,914,000

3.26

State Street Bank and Trust Co. (Standing proxy: The Hongkong and Shanghai Banking Corporation Limited, Tokyo Branch)

4,682,100

2.58

MSCO Customer Securities (Standing proxy: Morgan Stanley MUFG Securities Co., Ltd.)3,833,200

2.11

Kyocera Corp.

3,819,200

2.10

Daiwa Securities Group Inc.

2,500,000

1.37

Goldman, Sachs & Co., REG (Standing proxy: Goldman Sachs Securities Japan)

2,237,100

1.23Japan Trustee Services Bank, Ltd. (trust account 1)

2,097,200

1.15

Morgan Stanley MUFG Securities Co., Ltd.

1,932,611

1.06

The Bank of New York, Non-Treaty JASDEC Account (Standing proxy: The Bank of Tokyo-Mitsubishi UFJ, Ltd.)1,914,600

1.05

Disclaimer
Unless specifically dealing with matters of historical fact, the plans, forecasts and strategies described in this document represent estimates of future results based on the information available at the timeof writing, but are inherently subject to risks and uncertainties. These risks and uncertainties may result in divergence between actual results and the forecasts and estimates contained herein. Risks anduncertainties include but are not limited to market risks, rising fuel costs, changes in the exchange rate between the Japanese yen and the US dollar and other currencies, acts of terrorism and war, contagion, and other risks inherent in the airline business. Information contained herein regarding companies, etc., other than JAL and members of the JAL Group is quoted from public sources, etc., but
we have not verified and do not guarantee the accuracy or appropriateness of this information. All copyrights and other rights with respect to this document belong to Japan Airlines Co., Ltd.

JAL REPORT 201493

Dawn returns
An aircraft awaits in silenceEngines awaken again to take off to the skies

94

JAL REPORT 2014

JAL REPORT 201495

Japan Airlines Co., Ltd.
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CSR Information:
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