FLY INTO TOMORROWJAL REPORT 2019
Fiscal year ended March 2019

The JAL Group adopts the Corporate Policy as its universal management goal
and management rationale, and established the Safety Charter as the Group’s
safety policy based on the Corporate Policy.
The JAL Group also established the JAL Philosophy as a mindset, values andattitude expected of all Group employees, with the hope that application of thisPhilosophy will lead to realization of the Corporate Policy.

JAL Group Corporate Policy

JAL REPORT 2019

The JAL Group Will:
Pursue the material and intellectual growthof all our employees;
Deliver unparalleled service to ourcustomers;
andIncrease corporate value and contribute to
the betterment of society.

JAL PHILOSOPHYPart 1
Chapter

1

In Order to Lead a Wonderful LifeThe Formula for Success(The Formula for Life and Work)Part 2
Chapter1

2

Have the Right Attitude

Base Criteria for Decision-Making on“Doing What Is Right as a Human Being”
Have a Beautiful Mind
Be Humble and Honest
Always Be Cheerful and Positive
A Small Good Is Like a Great Evil, While aGreat Good May Appear MercilessWrestle in the Center of the Ring
Grasp Matters Simply
Possess Opposing Extremes

Chapter3

Accumulate Tedious Efforts
with Passion

Work Earnestly
Accumulate Tedious Efforts
Work with Voluntary Attention
Fire Yourself Up
Strive for Perfection
Chapter42

3

Safety: The protection of lives.
This is the commitment and basic foundation of business continuity for the JAL Group.
We take to heart our mission and responsibility as safety professionals to ensure a safe

Unite Our Hearts

Make the Best Baton Pass
Align Mental Vectors“Workfloor” Management
Follow the Merit System
Chapter

4

Possess a Fighting Spirit

Maintain an Ardent Desire
Never Give Up Until We Succeed
Boast and Make It Come True
Possess True Courage

Ability Will Improve

Ability Will Improve

S A F E T Y C H A RT E R

Have a Keen Sense of Profitability

Maximize Revenues and Minimize Expenses(Measure Your Inflow and Control Your Outflow)
Elevate Our Cost-Consciousness
Pursue Profit Fairly
Manage the Company Based on Accurate Figures
Chapter

Chapter

Each of Us Makes JAL What It Is

Each of Us Makes JAL What It Is
Discuss Frankly
Lead by Example
Be the Center of the Vortex
Valuable Lives Are Entrusted to Us in Our WorkBe Thankful
Put Yourself in the Customer’s Position

The Result of Life and Work = Attitude ×
Effort × Ability
Chapter

To Become a Wonderful JAL

Chapter5

Be Creative in Our Work

Today Should Be Better Than Yesterday, Tomorrow
Better Than Today
Conceive Optimistically, Plan Pessimistically, andExecute OptimisticallyThink Through to Visualize the Results
Decide and Act with Speed
Face Challenges with Courage
Aim High

operation on every flight with the best of our knowledge, skills and abilities.
To accomplish this, we will act according to the following principles.
● Stop immediately when safety concern arises.
● Comply with rules and strictly follow standard operating procedures.
● Always check and confirm; never rely on assumptions.
● Promptly communicate information without omission to ensure safety.
● Deal with problems quickly and appropriately without underestimation.

01

EDITORIAL POLICYCONTENTSThe JAL Group has published this JAL Report 2019 to inform stakeholders about businessMessage from the President

04

Message from the President

Business Activities and Strategy

16

History of the JAL Group18

Value Creation Process

20

JAL Group’s Basic Stance on Value
Creation

25

Medium Term Management Plan Rolling Plan 201932

Financial Strategy

36

Human Resources Strategy

38

JAL Group Business Activities

44

Value Provided by JAL Group —Commitment to Quality

Ministry of Economy, Trade and Industry, were used as references in creating this report. The

48

Risk Management

GRI Standard issued by the Global Reporting Initiative (GRI) was also used as references for ESG

50

Financial and Non-Financial Highlights

52

ESG Management Approach

54

Environment

59

Customers and Regions

61

Human Rights, Diversity & Inclusion

65

Corporate Governance77

Supply Chain Initiatives

82

Financial Data — Eight-year Summary

84

Evaluation and Analysis of Financial
Conditions

94

Consolidated Financial Statements

117

Consolidated Subsidiaries

118

ESG Data

120

International Route MAP

122

Domestic Route MAP

123

Stock Information / Corporate
Information

activity outcomes in the previous year, medium- and long-term management strategies, and toprovide an understanding of the Group’s pursuit of both economic value and social value andefforts to achieve sustainable growth.
Period covered by the report
Primarily April 2018 to March 2019 (fiscal 2018)
Scope of the report
This report covers 142 JAL Group companies, comprising Japan Airlines Co., Ltd., 83 subsidiaries
and 58 affiliates.
Reference guidelines
The International Integrated Reporting Framework issued by the International Integrated
Reporting Council (IIRC), and the Guidance for Collaborative Value Creation issued by the

JAL REPORT 2019

information.

ESG Management

Date of publication
September 2019JAL corporate website
WEB

https : //www.jal.com /en /Offers a comprehensive insight into JAL’s business approach and activities in general, as well as
investor and CSR information.
About forward-looking statements
This report includes forward-looking statements about JAL Group businesses and outlooks. These statements reflectcurrent JAL Group analysis related to existing information and various trends. Actual performance may differ fromcurrent forecasts as a result of business risks and uncertainties.

02

Financial Data / Corporate Information

03

MESSAGE FROM THE PRESIDENT
Our Approach to Safety and Sense of Security

used for pre-flight alcohol tests with the new model that

In fiscal 2018, the JAL Group was involved in the causation

time of the London incident, we had completed distributionof serious problems and suffered a considerable loss ofof the new detectors to all airports in Japan but distribution

trust from its customers and stakeholders. In October 2018,

to overseas airports was considerably behind schedule andan alcohol-related incident by a copilot caused significant

had not been completed. Also, even though a large volumeconcern and inconvenience to society. As President of theof historical test data had been missing, nobody noticed

JAL Group responsible for safety, I feel deep remorse andand the situation was left as it was. On December 21, 2018,express my sincerest apologies.

this series of incidents resulted in the issuance of a Business

Maintaining flight safety is the greatest mission of the JAL

Improvement Order to Japan Airlines by the Ministry of Land,

Group. Precious lives of our customers are entrusted toInfrastructure, Transport and Tourism.

us in our business. This means that the behavior of every

Since then, we interviewed all persons concerned, conductedemployee can pose a risk to the lives of our customers.

reproduction experiments and verification tests as much as

This alcohol-related incident threatened safety, the basic

possible, and based on the findings, established recurrence

foundation of our business, and betrayed the trust of

prevention measures such as improvement of tests including

society, which is totally unacceptable.

distribution of new breathalyzers, and awareness reform

What I find most regrettable is that our organization

including education to increase knowledge on alcohol, andshould have and could have prevented such an incident

submitted a report to the Civil Aviation Bureau on Januaryfrom happening. As a group of safety professionals, we

18, 2019.

were more precise and prevented improper testing. At the

Message from the President
Business Activities and Strategy

are determined to restore public trust by identifying
inherent issues within the organization and engaging allof laws and regulations by cockpit crew (Komatsu incident)
2016 Violation
After flight duty, a copilot went drinking with the captain at theJune 27

quickly and thoroughly.

Background to Receiving the Business
Improvement Order
On October 28, 2018, a copilot assigned to JAL flight 44

July 13

Serious Reprimand2017• 20 alcohol-related incidents occurred caused by alcohol consumption by
cockpit crew.
• The copilot in the London incident was suspended from flight duty
immediately before duty twice in a row due to poor health.
• A cabin attendant involved in an onboard alcohol consumption incident
was suspected of alcohol consumption while on duty.

2018
May 22

police authorities before starting duty. This was because theJune 6driver of the bus carrying the copilot notified the authorities

October 28

after noticing alcohol on his breath. The test showed a breath

November 28

authorities, the copilot was found to have violated British

December 17

day in violation of the company’s Operations Manual but heis also suspected of slipping through the pre-flight alcohol
test conducted by the company. In addition, the captain and

December 21

second in command assigned to the same flight, who were
present at the copilot’s pre-flight test, did not notice that test
procedures were not followed.
In addition, the flight was scheduled to operate with athree-man complement consisting of the captain, secondin command and copilot, but was allowed to fly without
the copilot with the approval of JAL’s relevant department

Delayed scheduled flights due to alcohol consumption
by cockpit crew (flight delay)
The pre-flight alcohol test of a captain assigned to JAC flight 3741
(Kagoshima-Yakushima) showed that he was above the prescribed limit.
It was clear that normal operations would be hindered, and as a result a
total of four flights were delayed.

law and was subsequently arrested and taken into custody.

Representative Director,
Executive President

2019

Alcohol consumption by an on duty cabin attendant(onboard alcohol consumption incident)
After receiving a report from an overseas-based cabin attendant that acabin attendant aboard JAL flight 786 (Narita-Honolulu) “smelled of
alcohol,” the cabin attendant took an alcohol test and was tested positive.

Business Improvement Order
Serious Reprimand

January 11

Business Improvement Advisory

January 18

JAL reported on corrective measures concerning the Business Improvement
Order and Business Improvement Advisory, and JAC reported on corrective
measures concerning the Serious Reprimand.

Types of Aviation Safety-related Adverse Dispositions, etc.
Adverse Dispositionin Tokyo However, approval was wrongly given due tomisinterpretation of the Operations Manual and the flightshould have been operated with a three-man complement.
Since June 2016, we have been replacing alcohol detectors

04

Financial Data/ Corporate Information

under British law and the copilot was detained by authorities.

Yuji Akasaka

Serious Reprimand
Scheduled flight delayed due to alcohol consumption by
cockpit crew (London incident)
A copilot assigned to JAL044 (London-Haneda) was arrested for drinking
in excess of the legal alcohol limit set under British aviation law. The flight
was scheduled to be operated by two captains and one copilot but was
operated with two captains, because staff simplistically interpreted theManual as allowing a two-pilot complement.

alcohol concentration that exceeded regulations definedNot only did the copilot consume excess alcohol the previous

Inappropriate conduct by a cabin attendantA cabin attendant consumed alcohol in a lavatory during duty aboard JAL
flight 8791 (Honolulu-Kansai)

underwent an alcohol (breath) test conducted by the London

After a further blood alcohol test conducted by thedestination (Komatsu), and assaulted the captain and allegedly interferedin the execution of duties of with a policeman who came to the scene.
He was immediately arrested.

ESG Management

JAL REPORT 2019organizations in working towards resolving those issues

Administrative
Guidance

Business License Rescission
Business Suspension OrderBusiness Improvement OrderBusiness Improvement Advisory
Serious Reprimand
Verbal Guidance05

MESSAGE FROM THE PRESIDENT

However, on November 28, 2018 during the Civil Aviation

To resolve these issues, we formulated measures based on

Bureau’s onsite inspection period in relation to thesethe following three pillars and are progressively putting

matters, JAC flight 3751 was delayed because a cockpit

them into action.

crew tested position in the pre-flight alcohol test, and on

1. Learn what real safety is!

Future Measures 2.
A Framework and Corporate Culture to
Solve Problems Thoroughly

1. Awareness with safety as basic foundation

We revised the Safety Charter to clarify the JAL Group’s

1. Practice the JAL Philosophy with a sense of responsibility!

Order, an on-duty cabin attendant on JAL flight 786 was

2. A framework and culture to solve problems thoroughly

renewed focus on safety. To help everyone associate

We will review JAL Philosophy Education that we provide

found to have consumed alcohol while onboard. These

3. Organizations that ensure safety

their own jobs with safety, and think and increase safety

to all employees, and provide venues to learn lessons fromawareness, we provide safety education to all Groupalcohol-related incidents and other failures reflect on

employees once a year.

whether we are ignoring unfavorable problems in ourselvescase limited to a specific individual. They meant that theWe also established the following three points thatmeasures formulated in response to the London incident

management should particularly continually implement.

were just stopgap measures, and made us aware that weThis is a message from the Committee directed to not only

2. Apply lessons learned from incidents!

from actual situations and not only concepts. We will also

had to delve deeper in the root cause if we were to truly

current management, but also future management.

When deliberate violations occur, or people turn a blind eyelink education with organizational management to provide

to those violations, we will quickly share what happened,

opportunities for sharing decisions within workplaces andwhat was wrong, and what disciplinary action was taken

for reviewing implementation. In this way, we provide

throughout the company, and raise the sense of urgency

educational opportunities for thinking about how towithin the organization to prevent recurrence and warn

practice the JAL Philosophy with an awareness of ourothers who might make the same mistake.

rigorous responsibilities.

3. Understand each other better!

2. It is the leader’s duty to solve problems!

We conduct cross-assignments to understand different

We will work to improve problem-solving capabilities ofduties between jobs, to strengthen ties between mutuallyleaders in order to increase sensitivity to issues within therelated professionals, and to remove hazards.

organization and enable them to accurately assess theattempt to prevent recurrence.
1. Continuously pass on lessons learned. Do not let themforgotten

Based on this awareness, we established an in-house
Verification Committee led by myself as company president.
I personally selected persons with expertise in an objective

problems through decision-making and actions with anor in the organization and think of how we correct thisunderstanding of root problems
3. Develop environments where staff can concentrate on
their work with peace of mind

position to serve on the committee.
We concluded the in-house Verification Committee report

years leading to the issuance of the Business Improvementwith the following words.

Order. We then looked at lessons learned from the Mountsituation, analyze factors multilaterally and make the right
4. Let’s start from communication!

decisions even when faced with difficulties in dealing withOsutaka accident and other past incidents related to theStart now to raise awareness and think about the

Workplaces that encourage employees to speak up areissues. We will introduce and gradually expand externalcurrent problems. In addition, we gathered opinions fromverifications by the Committee and recommendations in thisimportant for removing hazards. We are strengthening

training starting with Managers, regardless of in frontline

employees involved in the incidents, JAL Group employees

Report, voluntarily put them into action, and change yourinitiatives that deepen mutual bonds because lively

sections or back offices, to strengthen their assessment

in frontline sections, frontline back offices and Head Officeawareness through action.

communication within the workplace leads to mutual

capabilities to grasp their level of awareness, crisis

departments, external directors with extensive knowledge,

These measures may continue for a long time but we must

understanding and removes walls between different

management capabilities, and problem-solving capabilities.

the Safety Advisory Group, and the bereaved families whoreach the goal.

workplaces and jobs.

know Japan Airlines well. Based on this information, theWe would like to build a company where every staff thinks,

3. Distribute information to the right people!

committee members raised questions, exchanged opinions,“It is my pride and joy to work for JAL. I will fulfill my

We will revise internal communication systems to ensure thatand considered and verified issues that were the underlying

responsibility as a professional.”

the right information is provided at the right time to theand root cause of these cases and measures and methods to“JAL is a trustworthy company. JAL is safe and provides asolve them.

sense of security. I can put my trust in staff who work for

As a result, we identified the following six substantive

JAL.” To customers and society, this is the “corporate value

issues.

of JAL Group.” Let’s work together and move forward,

2. Can you speak up when you think that something iswrong?

These are continuing initiatives, but I feel that we canand issues. The reason is that we have rebuilt the company
based on these reflections. I promise to draw on lessons

4. Do you give individual, personal attention to staff?

learned from these incidents including recommendations

5. Do you understand the purposes of your duty?

from the Verification Committee and grow into a company

6. Aren’t you thinking nothing but to fly the aircraft?

that can continually provide even higher levels of safety andsense of security.

awareness as well as safety issues were consistent with
my own feelings that there was an organizational
culture of avoiding trouble, lacking concern for others,
underestimating risks, and mistaking the purpose andmethod.

Awareness to put top priority on safety
1. Learn what real safety is!
2. Apply lessons learned from incidents!
3. Understand each other better!
4. Let’s start from communication!

information and communication tools for each level, we will
make sure to provide optimal and clear information so thatfrontlines always feel a sense of unity with management. In
this way, we will provide opportunities for every employee
to treat events as their own problem and think of actions totake, and for management to grasp developments across theGroup. We will ensure that necessary information is sharedovercome them as long as we are aware of our problems

3. Aren’t you concealing unfavorable information?

Issues relating to organizational culture and employee

right people and organizations without bias. While revisingGroup-wide Measures

Financial Data/ Corporate Information

believing that this will lead to the happiness of every staff!
1. Are you being aware of issues which could lead to

ESG Management

JAL REPORT 2019

The committee started by reviewing the facts and the few

safety problems?

Business Activities and Strategy

Establishment of In-house Verification Committee

2. Continuously develop human resources who can solve

Message from the President

December 17 prior to receipt of the Business Improvement

events showed that the London incident was not a special

06

Future Measures 1.
Awareness to Put Top Priority on Safety

A framework and corporate culture to solve problems thoroughly
1. Practice the JAL Philosophy with a sense of responsibility!
2. It is the leader’s duty to solve problems!
3. Distribute information to the right people!

in workplaces in an accurate and timely manner in order toimprove organizational performance and encourage mutualcommunication.

Organizations that ensure safety
1. Organizations that give individual, personal attention!
2. Health management is safety management!
3. If you are hesitant, consult!
4. The Operation Division oversees daily flight safety!
5. Do not overlook latent risks!

07

MESSAGE FROM THE PRESIDENT

Deployment
000000000000000000000000000
Flow of Measures to Resolve Issues
For reliable realization of problem solving, we will deploy company-wide initiatives at each division, and respond voluntarily
and independently at each workplace.

Society and Customers

Future Measures 3.
Organizations that Ensures Safety

Disclose and Explain

Individual Measures

3. If you are hesitant, consult!

We will review the way organizations should be in order

We will establish an internal safety hotline to create an

to pay individual attention to employees and respondenvironment that facilitates whistle blowing on hazards andappropriately to those who need individual care. We

prevents personal problems, such as drinking. The hotline

will develop environments to support individuals, where

will deal with problems that are difficult to discuss includingorganization leaders apply mentoring management.

consultation on safety concerns that may lead to unsafe

We will increase the number of frontline support

events.

Promoted by divisions and Group companies

Efforts by division andGroup companies

Hold customized Safety Education Follow up on JAL Philosophy Education
Promote understanding among job types Improve organizational problem-solving skills
Set up communication environment Organizations that pay individual, personal attention to staff
Supported by General Affairs, Corporate Safety and Security,and Human Resources divisions

Group-wide efforts

Redesign Safety Education Review JAL Philosophy Education Establish Operations Division
Promote understanding between job types Improve problem-solving skills of the organization
Establish Risk Management Council Set up communication spaces
Improve internal information communication Improve health management system
Supported by General Affairs, Corporate Safety and Security,
Human Resources divisions

departments and frontline managers, and actively provide
opportunities for direct dialogue with frontline employees,

4. The Operation Division oversees daily flight safety!

to understand their situation in more detail and respond as

The new Operations Division was established as annecessary.

independent division reporting directly to the President,
responsible for making the final decision and executing
quick and accurate action with safety as top priority in daily

As precious lives are entrusted to us in our work, the air

operations and in the event of irregularities. The operationstransportation business must take greater responsibility

oversight function was previously established in the Airport

than other industries and have reaffirmed that healthOperations Division, but by separating it, decision on the

problems as not only private matters but also pose a risk

premise of safety can be made independently without being

to safety. To prevent increase communication within theinfluenced by the objectives of other divisions.

Put top priority on safety

Systems and corporate culture to solve issues thoroughly

AdviceSafety Advisory Group

Continuously follow up on progress

Risk Management Council

The Risk Management Council was newly establishedto employees by strengthening coordination within the

directly under the President to provide a mechanism toorganization, and with health management organizations

detect latent risks on frontlines and implement measuresand industrial physicians.

continuously. Taking over the purpose of the in-house

Kunio Yanagida

Verification Committee, the Council detects potential andChairperson
JAL Safety Advisory Group

President
Safety General Manager

AirportOperations

Production
divisionsOperations Division

General Affairs

Other divisions

the Mission Director and workplace leaders, (3) innovationsin information handling and the way communication isdone, and (4) measures to ensure personal issues are notignored, such as initiatives to form individual relationships
in the workplace and the establishment of an internal safety
hotline.
When cockpit crew, cabin attendants, maintenance engineers

The overall picture goes beyond the innovative organizationand employees in jobs that directly affect safety consume

and awareness reform advised by the Safety Advisory Groupalcohol in violation of regulations and then attempt to work,in 2005, and proposes measures that will greatly change

and these incidents continually occur, it indicates not only

ideas and practice around safety initiatives.

laxness in the awareness of employees in the air transport

However, the scope of these new initiatives is so extensive

business, which is entrusted with the passengers’ lives, but

and broad that any attempt to introduce all of them at once

also defects in the organization that could not prevent the

could cause considerable confusion. Therefore, the proposed

problem from spreading. It means that the company’s safetymeasures must be separated into groupings according toculture is on very shaky ground.

factors such as

Looking at the problem from this perspective, issues thatto be implemented along with organizational reform,

the level of urgency,

Financial Data/ Corporate Information

Establishment of the Operations Division

the crisis management and problem-solving capabilities of

ESG Management

JAL REPORT 2019

also realize management that pays individual attention

perspective of safety as the highest priority.

08

opportunities for communication, (2) measures to improve

5. Do not overlook latent risks!

the JAL Group Medium Term Management Plan from theCouncil for Safety Enhancement

the Risk Management Council, Operations Division, andabout their health conditions and drinking habits. We willcontinuously confirms and verifies measures set out in

Coordinate

On the In-house Verification Committee Reportorganization, with the employees’ understanding, to learn

new risks and implements preventive measures. It also

Organization that ensures safety

Business Activities and Strategy

2. Health management is safety management!

Corporate Safety & Security

Message from the President

1. Organizations that give individual, personal attention!

Awareness link problems to safety Do not avoid conflicts and trouble Mind health as safety management
Do not avoid or ignore problems. Point out and report. Understand and share information correctly

whether they are

the JAL Group as a whole must address go beyond justoreliminating alcohol-related incidents. A lax safety culture

awareness reform, and then they must be implemented onwithin an organization means that terrible accidents

the frontline one at a time.

could happen anywhere and anytime, which indicates the

For issues that individual employees will need to learn,possibility of severe hidden risk.

such as leadership improvement, information handling,

The in-house Verification Committee Report, with due

and communication problems, a handbook will have to beconsideration to this situation, probes the root causes ofdeveloped with a series of scripts for confirming model casethis laxity in the organization and lax awareness, identifies

studies and failures, and workshops will have to be held in

problems and lists specific issues, and then puts forward

each workplace to ensure proper implementation.

measures to ensure resolution. Among the extremely

It is anticipated that issues identified and advice proposed indiverse measures put forward are (1) an organization-

the in-house Verification Committee Report will penetrate

focused transformation starting with establishment of

deep into the hearts and minds of all directors and employees.

whether they require serious attention such as with

09

MESSAGE FROM THE PRESIDENT

Achieving the Long-term Targets of the “Grand Design”

When I was appointed President in April 2018, we

In February 2019, we announced the JAL Group Medium

appointed a new management team, which will take overTerm Management Plan - Rolling Plan 2019, which wasand continue to implement the JAL Group Medium Termbased on the current JAL Group Medium Term Management

Management Plan for Fiscal Years 2017–2020 launched inPlan for Fiscal Years 2017–2020. Rolling Plan 2019 is a2017 under the theme, “Challenge, Leading to Growth.”

revision of the Medium Term Management Plan in response

Despite the U.S. and China trade war and European politicalto events of fiscal 2018.

instability in fiscal 2018, major world economies maintained

Above all else, it was the repeated alcohol-related incidents

moderate growth. As a result, it was a fairly good year forthat created the urgency for us to rebuild the foundationinternational air travel and international air freight demandof safety and sense of security. In addition to ensuring

JAL achieved an increase in both revenues and profits over

implementation of measures to prevent recurrence ofthe previous year in fiscal 2018. However, our businessalcohol-related incidents and similar acts, we will rebuild

is founded on safety and sense of security, and the trust

the foundation of the company, including our corporateof customers and society. That is why we remain vigilant

culture and human resources development, in line within operations by asking ourselves whether our strong

advice received from the in-house Verification Committee,

performance is not concealing a laxity or latent issues, or

which verified these issues in depth.

whether we can view our positive results as a true reflection

At the same time, it is essential that we quickly restore theof the JAL Group.

trust of our customers and the general public.

The progress of our three management targets for fiscal

To achieve this, we have decided to expedite

2018—Safety, Customer Satisfaction, and Finance—isimplementation of the current JAL Group Medium Termdetailed below.

Management Plan for Fiscal Years 2017–2020 and accelerate

Business Activities and Strategy

JAL Group Medium Term Management Plan
- Rolling Plan 2019: Positioning and Aspirations

Message from the President

JAL REPORT 2019

Progress of the Medium Term Management
Plan

initiatives to achieve the JAL Vision and Grand Design, thecompany profile we aspire to achieve in ten years’ time.

ESG Management

3 management targets

JAL Target

SafetyI was appointed President one year ago but fiscal 2018 was

Chitose Airport. This was the first time we had experienced

a year of many problems for management and business.

the closing of two major airports at the same time. It was a

Receiving a Business Improvement Order in response toyear we were reminded of the significant impact of natural

alcohol-related incidents was very regrettable and caused

disasters and the threat they pose to the air transportationa serious loss of trust from our customers and the generalbusiness. We would like to offer our best wishes to all thosepublic. Then there was the incident in May, where engine

affected by the disasters.

trouble on JAL flight 632 resulted in engine parts falling to

The incidents at Kansai International and New Chitose

the ground near Mashiki Town in Kumamoto Prefecture,

airports were not just natural disasters but led to secondaryand caused grave concern to nearby residents. While Julyor human disasters, when the bridge collapsed and powerbrought heavy rains across Western Japan, September saw

outages occurred, which expanded and prolonged the

Typhoon Jebi strike Kansai International Airport and force

effects of the situation. We are now more aware than everits closure, and the Hokkaido Eastern Iburi Earthquake,of the importance of preparing for natural disasters andwhich resulted in a large-scale power outage at New

predicting and preventing secondary disasters.

Realize“Zero Aircraft Accidents”
and“Zero Serious Incidents”

Customer
Satisfaction
Achieve the world’s top
customer satisfaction
by FY2020

FinanceAchieve “10% or above
operating profit margin”
and“9% or above ROIC*2(Return on Invested Capital)”

10

FY2018 Results

Aircraftaccidents

1

Seriousincidents

1

incident

incident

Domestic

NPS*1(Net Promoter Score)
Compared to FY2017
initial results

Operatingprofit margin
Return on
Invested Capital(ROIC)+1.3

PointsInternational

+2.2
11.8
9.5

Points%%

Review of FY2018• Aircraft Accident (June 2018): Cabin attendant fractures left
leg due to sudden turbulence during cruising.
• Serious Incident (May 2018): Aircraft suffers engine trouble
after takeoff and metallic parts fall from engine while
returning to departure airport. Enforced countermeasures
such as shortening inspection intervals.
• Improved use of database and internal audits to speedilygather information, and launched new practices.
Responses to a Business Improvement Order and Business
Improvement Advisory• Incorporated tighter drinking management with reviewed
alcohol inspection criteria in the Safety Management System.
• Set up an in-house Verification Committee to identify
essential problems and consider corrective action.

Financial Data/ Corporate Information

Looking Back at Fiscal 2018

Indicator• Domestic flights (▲0.4pt from FY2017-end result): Trended up
in FY2018 but dropped from end of OCT when drinking
incident occurred.
• International flights (+0.2pt over FY2017-end result):
Evaluation of Japanese passengers declines as with domestic
flights, but on winning SKYTRAX 5-STAR rating, evaluation of
non-Japanese passengers improved.
• Operating profit margin (▲0.8 points year on year)• ROIC (▲0.6 points year on year)• Due to upfront investments and expenses to handle thedevelopment of airports in metropolitan area in fiscal 2020,
the operating profit margin and ROIC dropped. Nevertheless,the “10% or above operating profit margin” and “9% orabove return on invested capital (ROIC)” targets wereachieved.

*1 A performance indicator that measures the customers’ intention to recommend to others.
*2 A performance indicator that measures profit that a company generates from capital invested for business activities.
Return on invested capital (ROIC) = Net operating profit after tax (NOPAT) / Fixed assets, including future rental expenses under operating leases

11MESSAGE FROM THE PRESIDENT

2. Dramatically improving services

contributions to society and we felt it would lead to

1. Development of airports in Tokyo metropolitan area,

improve our services so that we can provide a stress-free

The following are examples of important initiatives torestoring public trust and increase corporate value.

attracting foreign visitors to Japan, revitalizing regional

travel experience to all our customers and personalized

achieve the SDGs and how they relate to our businesses.

We will implement Rolling Plan 2019, contribute toJapanservices to each and every one of them. During the period

achieving the government’s target of welcoming 40 million

Coinciding with Tokyo 2020, metropolitan airports areof the Medium Term Management Plan in particular, we will

1. Environment

foreign visitors to Japan by 2020, and support the successful

undergoing a broad expansion of capacity. As an official

work to improve comfort and convenience by deploying our

There is no more time to waste with regard to the problem

delivery of the Olympic and Paralympic Games Tokyo 2020

airline partner of Tokyo 2020, JAL will contribute to the

new flagship Airbus A350 aircraft on domestic routes andof global warming. The air transportation business emits(Tokyo 2020). Furthermore, we will further drive initiatives

success of the Games and prepare for business expansion inrealizing the concept of JAL SMART AIRPORT.

large amounts of CO2 due to its reliance on fossil fuels.

to create new value, develop human resources, and solveinternational passenger operations in particular.

social issues.

While assisting to meet the government’s target of 40

3. Tackling social issues

extreme urgency of this problem. The JAL Group began

We will solidify the foundation of our organization, makemillion visitors in 2020 and making preparations to enter an

The world and the JAL Group are facing increasingly

using its aircraft to take atmospheric observations in 1993

preparations for fiscal 2020, and accelerate initiatives to

era of 60 million visitors in 2030, it is essential that efforts

diverse and complex social issues. The Group’s businessas part of the CONTRAIL Project. By continuing our work

achieve the long-term targets specified in the Grand Design

are made to attract foreign visitors to regional Japan and tois air transportation, which has a major impact on theon that project, we have taken a leading role in relation toto ensure that we achieve the Medium Term Management

revitalize regions so that they are ready to accept them. We

environment and society, and therefore, we must deal withthis issue. We have also been developing operational andPlan.

will comprehensively connect all our businesses includingthese issues with a sense of ownership.

maintenance procedures for reducing fuel consumption,international and domestic passenger operations, cargo andIn the past, the Group tackled social issues individually, but

and as part of our commitment to developing alternative

mail operations and other businesses, and develop overall

going forward, we will take a more concrete approach tofuels, we invested in September 2018 in Fulcrum BioEnergy,

strategies to achieve these targets.

integrated efforts in line with the broad social challenges

Inc., a U.S. sustainable aviation fuel company.

these plans aim to fulfill expectations of customers, regions
and communities, improve services and make greater

As the needs of our customers become more diverse, wemust take advantage of new technologies and dramatically

ESG Management Toward Achievement of
SDGs

Message from the President

JAL Group Medium Term Management
Plan - Rolling Plan 2019: Priorities

We decided to expedite achievement of targets because

From the perspective of sustainable business, we feel theBusiness Activities and Strategy

defined in the Sustainable Development Goals (SDGs). We
JAL REPORT 2019will also have to make efforts to achieve the SDGs as a

2. Diversity and Inclusion“business.” Therefore, we will re-examine our businesses

The air transportation business is one that has traditionallyfrom that perspective and incorporate this approach in our

promoted the advancement and active participation of

future business plans.

women. Lately, we have also seen greater representationof women in pilot and aircraft engineer roles, and with
ESG Management

women currently accounting for 49.8% of the JAL Group’s

Rolling Plan 20192017 – 20182021 onwards

Restoring public trust and increasing corporate value
Financial Data/ Corporate Information

Meet the expectation of customers, regions and society

Accelerate ongoing initiatives

Accelerate the realization of the “Grand Design”

FY2020Business Environment

Expand networks
Innovate better products and services
Expand business domains
Human resources and technology

Development of airports inmetropolitan area
• 40 million inbound passenger
target• Olympic and Paralympic GamesTokyo 2020

FY2027 Target

•

Grand
DesignRebuilding Safety and Sense of Security
Inspect JAL Group thoroughly from a safety perspective and reshape the company

1213

MESSAGE FROM THE PRESIDENT

Considering future growth of inbound demand, regional

our business considerably.

Japan tourist destinations also make a strong contribution

Female participation has proven that leveraging theto international passenger operations. The JAL Group,

individuality of each employee to achieve diversity creates

which operates at many airports and offices across Japan,

new value. In future recruitment plans, we intend to further

aims to contribute to community-based development andaccelerate Diversity and Inclusion through an even more

revitalization that is genuinely needed by the region.

diverse workforce, including not only women but also

In regions with dramatically shrinking populations inpeople with disabilities and foreign workers. We are alreadyparticular, we should focus on fundamental issues to achieve

feeling a strong positive effect in the workplace, with asustainable cities and communities, such as human resources

more open atmosphere in frontline divisions and a greater

development and exchanges.

Message from the President

workforce, new female perspectives and energy are driving

commitment to work. We will continue developing humanresources to create vibrant work environments and improve
competitiveness for the JAL Group.
3. Human Rights

We have decided to bring forward Rolling Plan 2019 one

rights of a range of stakeholders. In our Code of Conduct,

year and implement initiatives for fiscal 2020, the final year

With the development of airports in metropolitan area,

established in July 2019, we specify our efforts to developof the JAL Group Medium Term Management Plan for Fiscal

the air transportation business will experience a temporarya corporate culture that respects the human rights of all

Years 2017–2020. In other words, while finishing off thisincrease in competition as flight numbers increase sharply.

Recent innovations in technology will not only change

stakeholders, and commit ourselves to incorporating humanMedium Term Management Plan, we are also establishing a

Despite this, we envision a steady increase in air travel

the way people work but also dramatically change therights due diligence mechanisms into our business processes.

new Medium Term Management Plan for implementation

demand across the Asia Pacific region and a comparatively

way people create value. More than ever, I think the

In accordance with this policy, the JAL Group aims tofrom fiscal 2020. Particularly important in the new plan isquick return to a tight supply and demand situation. In

future will put to the test not only human capabilities,

conduct highly effective human rights initiatives as a trusted

the creation of a concrete blueprint for realizing our Grand

this environment, we will work steadily to improve ourbut human character and human nature. This also applies

member of society.

Design, which are long-term targets which was outlined incompetitiveness and achieve sustainable business growth.

to organizations and companies, which are groupings ofthe current plan.

While serving all air travel markets as both a full service

people. I would like every employee of the JAL Group

4. Regional Revitalization

During the period of the new plan, effects of Japan’s

carrier and low-cost carrier, we will expand our global

to become a person respected by society, and for our

In light of the size of volatility within international

declining population and aging society will appear, andnetwork by making full use of partnerships with global

Group itself to become a company composed of respectful

passenger operations, the importance of stable domestic

advances in AI and other technological innovations will beairlines.

employees.

passenger operations is huge, but domestic passenger

felt. Therefore, we must consider business strategies thatOn the other hand, growth in the air transportation business

Now and always, the Group’s greatest strength and asset is

operations are dependent on vitality in regional Japan.

focus on human resources more than ever before.

also means increased volatility risks, which is a feature ofits service capabilities. The heart of our services will makethis business that is greatly impacted by social conditions.

great contributions in a range of areas in the future. I would

We will also have to meet a new range of service needs

like to build a company that creates services and innovations

in response to the creation of a tourism-oriented country,

that protect and enrich lives and society. We need to free

an increase in inbound demand, regional revitalization,ourselves from of the traditional concept of a “full service

diversifying markets and other changes. In view of thesecarrier” and instead grow together as a “super full service

assumptions, we strongly believe that we need to enhanceprovider” that enriches lives.

services and expand businesses in areas other than theWith this picture of the future in mind, we remain steadfast

air transportation business. We will therefore tackle new

to our commitment to rebuild the foundation of safety andbusiness domains created through new technologies.

sense of security. We aspire to become “the world’s mostFrom the long-term perspective, establishing concrete

preferred and valued airline,” never forgetting the support

targets related to achieving the SDGs by 2030, andwe have received from society. We will do our utmost to live

incorporating them into our business strategies will

up to the expectations of our stakeholders.

contribute to business expansion and development and the

I would appreciate your continued support.

Transform JAL
into a truly global
airlineCreate new values
one step ahead ofcompetitors

Achieve sustainablegrowthAs a Japanese carrier, we will leverage Japan’s
uniqueness and strengths, many of which are
acclaimed around the world, and further expand ourbusiness in global markets. We aim to become anairline that is recognized and supported bycustomers in both Japan and around the world. To
accomplish this, we will promote diversification ofvalues and human resources, and adapt flexibly andspeedily to global changes.

We will continue to embrace new challenges and be
one step ahead of competitors in the industry. We willcontinuously work to create relevant and inspiringvalue offerings. To accomplish this, we will treat eachand every customer encounter as unique, and provide
a unparalleled travel experience by combining humanresources and technology.

Being in a competitive and volatile industry,
we will continue our focus on balancing
growth and stability. To accomplish this, wehave set dual goals of both high profitability
and financial stability. We will actively invest
in future growth, distribute profits tocustomers, shareholders and staff, andcontribute to regions and society.

Within this 10-Year Grand Design period, we will
• Serve over 500 major cities in the world• Have 50% of revenue from overseas
sales for international passenger
operations• Professionals who can dynamicallyaccommodate multi-cultural anddiversified markets and environments

14• Provide a stress-free travel experience
for all our customers• Create new businesses and services that
stimulate air travel demand• Adopt new technology to improve
quality and productivity, and assign
optimal human resources tovalue-added business fields•Maintaining the profit margin targetof 10% or above, achieve Operating
Revenue 2 trillion yen / operating
profit 250 billion yen / market
capitalization 3 trillion yen•Maintain safe operations and leaddevelopment of the aviation industry•Actively contribute to tackling social
issues such as SDGs

Financial Data/ Corporate Information

To continue to be “the world’s most preferred and valued airline” in order to realize the JAL Group Corporate Policy,
we will maintain flight safety and strive to achieve the following goals through the joint efforts of every staff who supports the “Wings of JAL”:

Future of the JAL Group

ESG Management

JAL REPORT 2019

operate our business with due consideration to the humanBusiness Activities and Strategy

As an airline with global operations, it is critical that we

Establishing a New Medium Term
Management Plan

creation of a sustainable society.
We are also steadily promoting a number of initiatives in
the current Medium Term Management Plan that head in
the direction of the new Medium Term Management Plan.
In other words, the new plan will become the starting
line and “seed” for growth, and will present a concreteroad map toward the Grand Design and an evolved Grand

Yuji Akasaka

Design.

Representative Director,
Executive President

15

HISTORY OF THE JAL GROUP

1951-2010

2011

2012

1951

Rebirth of JAL

August:Establishment of Japan Airlines

April: Commences operations
with a new “Tsurumaru” logo
April: Commences a joint
business with American Airlines

February:
Lists on the first section of anumber of stock exchanges

JAL’s new“Tsurumaru” logo
(foreground)

January:
Files for reorganization
proceedings under the Corporate
Reorganization Act

April: Inaugurates the Boeing 787-8 on the
new Tokyo (Narita) = Boston route
September: Relists on the first section of
the Tokyo Stock Exchange
October: Commences a joint business with
British Airways
December: Inaugurates Tokyo (Narita)=San
Diego route

2016

2017

2014

April: Commences ajoint business withFinnair

2018

2015

2017

November: Inaugurates
Tokyo=Dallas/Fort Worthroute

December: CONTRAIL Atmospheric Observation
Project receives the Environment Minister’s Award for
Global Warming Prevention Activity in the International
Contribution Category

September: Starts the JAL
Nadeshiko Lab

June: JAL SKY SUITE named Best BusinessClass Airline Seat worldwide at Skytrax’s
2013 World Airline Awards
July: Launches Narita=Helsinki route2012

August:JAL flight 123 accident

2010

2013

2015

JAL Nadeshiko Lab

September: Launches Narita=Melbourne route
Launches Narita=Kona route

2018

2016

December: Launches
Dokokani Mile service

Delivery of JAL’s first Boeing 787

January: JAL and JAC
receives MLIT Award for
Promoting Barrier Free
Measures

October: Commences a joint
business with Iberia

For
Formoremoredetails,
details,pleaseplease refer
refer toto JAL’s
JAL’sHistory
Historyonline
onlinehttps://www.jal.com/en/outline/history/
http://www.jal.com/en/outline/history/

FY20181,487.2

Operating Revenue(Billions of yen)

FY2011
1,204.8

FY2012
1,238.8

FY2013
1,309.3

FY2014
1,344.7

FY2015
1,336.6

ESG Management

JAL REPORT 2019

1985

2014

Business Activities and Strategy

1970

2011

2013

Message from the President

Since its establishment, the JAL Group has developed its business to meet the needs ofthe times.
Following bankruptcy in 2010, the Group was given the opportunity to restructure, andsince then has been progressing steadily focused on the goals of delivering unparalleledservice to customers and contributing to the betterment of society.

FY2017
1,383.2
FY2016
1,288.9

Financial Data/ Corporate Information

FY2018 Topics
April: Awarded fourth place, 2018 Top 10 Airlines - World, andfirst place, Best Airline - Japan (second consecutive year) from
TripAdvisor® Travelers’ Choice™ awards
May: Opens JAL Innovation Lab
July: Certified as 5-Star Airline and Best Economy Class Airline Seat by
Skytrax
September: Signs comprehensive partnership agreement with Garuda
Indonesia
Receives Grand Prize in Ikuboss Award 2018, the first in thetransportation industry

October: Starts code sharing with Garuda Indonesia
Starts code sharing with Vietjet Air
JAL STEAM SCHOOL and Dokokani Mile receive 2018 Good Design
Award
Receives Award for Excellence in Corporate Disclosure - Industries Transportation from the Securities Analysts Association of Japan
Certified as a Gold company in the PRIDE Index for LGBT initiatives(third consecutive year)

November: Launches JAL Global WALLET
Receives Most Consistent Winner award for on-time performancefrom Cirium
Receives Asia Pacific Airline of the Year 2018 award from airline
think tank CAPA
Receives Jisa Biz award for promoting staggered commuting fromthe Tokyo Metropolitan Government
January (2019): Establishes JAL Business Aviation Co., Ltd. businessjet company
Recognized by Cirium as the best Asia-Pacific Major Mainline Airline
in 2018 for on-time performance (seventh consecutive year, ninth
win)
Establishes Japan Airlines Innovation Fund

16

February: Launches Haneda=Manila route
Starts code sharing with Fiji Airways
Starts code sharing with Vistara
Starts code sharing with Aeromexico
March: Establishes ZIPAIR international medium- and long-haul lowcost carrier
Launches Narita=Seattle route
Seven companies of the JAL Group selected in White 500 categoryof 2019 Certified Health & Productivity Management Outstanding
Organizations Recognition Program
Receives second prize in the Advanced Category, 2019 J-Win
Diversity Awards
Selected as a Fiscal 2018 Tokyo Sports Promotion Model Company

17

VALUE CREATION PROCESSTo realize the JAL Group Corporate Policy and continue to be “the world’s most
preferred and valued airline,” we use the Group’s management resources for businessdevelopment, bringing together the individual strengths of the JAL team, to offer newvalue to customers and society.
Safety is the basis of existence of the Group, and the JAL Philosophy and the amoeba
management system support our value creation.

Medium- and Long-term Targets

JAL GROUPCORPORATE POLICY

Achieve the Grand Design*

Transform JAL into a truly
global airline

On-time operations

Percentage of revenue from overseas sales ininternational passenger operations:

Message from the President

Quality
Provided to
Customers

Cities serviced:

500

Production capital
Aircraft to meet a wide range of needs

235

Intellectual capital
Accumulated operational know-how
Total hours on drills and training:

Human capital
Diverse human resources withconsiderable experience
Consolidated employees:

34,003

Airports serviced:

95

Natural capital
Limited natural resources
As of March 31, 2019

SafetyOffers services
adapted to thenature of the
cargo in the air
freight and airmailtransportation
sectors

Maintenance

Back Offices

Ensure aircraftsafety throughpreventive
maintenance

Plans the finest
services and supports
frontline staff todeliver service
excellence

FlightOperations
Provides customers
with safe and highquality flights

Cabin
Attendants
Provides a refreshingand inspiring customer
experience in flight×
Create new values one stepahead of competitors
Providing a stress-free travel
experience for all our customers

The JAL GroupWill:
Pursue the material
and intellectual
growth of all our
employees;

Creating new businesses and services
Assign optimal human resources tovalue-added business fields

Deliver
unparalleledservice to our

Achieve sustainable growthcustomers;

Operating profit margin : 10% or above
Operating Revenue: 2 trillion yen

andOperating profit: 250 billion yen

Total market capitalization : 3 trillion yen

Contribute to development of
the aviation industry

Increase corporate

Financial Data/ Corporate Information

Global network

JAL
Philosophy

Convenie nce

Social capital

Provides quality
customer
service to meetcustomer needs.

Cargo & Mail

AmoebaManagement
SystemProfessionals who actively participate
in a diversifying industry

ESG Management

2.4 million hours/year

Reservations& Sales

Supports safe,
secure andcomfortable air
travelC o mfo rt

JAL REPORT 2019

Number of Group aircraft:

AirportsM e d iu m Te rm M a n a g e me n t P lan

1.16

trillion yen
Equity:(Equity ratio: 57.4%)

50%

Business Activities and Strategy

Financial foundation for growth

Saf et y an d Sen se o f S e c ur i ty

Financial capitalBusiness
Strategies=

Key Management
Resources

value andcontribute to theContribute to solving social issues
including SDGs

betterment ofsociety.

* Grand Design: A business plan with numerical targets to be achieved by FY2027

18

19

JAL GROUP’S BASIC STANCE ON VALUE CREATION

Safety and Sense of Security

Committee*2 has been established as a committee under theGroup Council for Safety Enhancement General Meeting to

Safety Charter

maintain and strengthen coordination on safety initiatives

The JAL Group has created a Safety Charter as a code ofamong divisions and Group airlines.

As recommended by the in-house Verification Committee

Safety Advisory Group

System (SMS)In August 2005, the JAL Group established the Safety

To ensure a high level of safety, management, Corporate

Advisory Group, comprising a panel of five experts with

Safety & Security and each division implement andextensive knowledge and experience in human factors,organically link their PDCA safety cycle to ensure proper

analysis of failures and defects, organizational management

functioning of the SMS.

and culture, and safety to provide the Group with wideranging advice and recommendations on safety from anManagement

Divisions

The Group Council for Safety
Enhancement General Meeting receives
reports on achievement of safety targets,
safety audit results, progress of safetymeasures, occurrence of serious
accidents and problems, and status of
preventive measures and measures,decides necessary action and gives
instructions as management toexecute them.

Divisions facilitate operation of
the SMS at the division level andreport status of operation andimprovements to management
and Corporate Safety & Security.
Corrective action is taken basedon results of implementing the
PDCA cycle and with instructions
from management andCorporate Safety & Security.

Plan

Safety: The protection of lives.

the Safety Charter and further clarified the definition

Action Check

Plan

Do

employees and inspections at 11 locations centered on Flight
Operations and Cabin Attendants divisions of Japan Airlines
and Group airlines, and follow-up meetings with Groupmanagement, and the in-house Verification Committee.

Professor Emeritus, University of Tokyo, Representative ofHatamura Institute for the Advancement of Technology

Shinichi Kamata

Professor Emeritus, National Defense Academy ofJapanwith safety as the main priority in all organizations, allprofessionals to ensure a safe operation on every flight with

employees have engraved in their minds the new Safety

the best of our knowledge, skills and abilities.

Charter as they work to rebuild safety and sense of security

To accomplish this, we will act according to the following

for JAL.

principles.

Corporate Safety & Security
Corporate Safety & Security facilitates operation of the SMS at the Group level.
Corrective action is taken based on findings, instructions from management andreports from divisions, Corporate Safety and Security reports status of operation andimprovements of the SMS to management, identifies issues in each division andgives instructions on improvement.

Shigeru Haga

Senior Technology Advisor, Research Institute forSocial Safety, Professor Emeritus, Rikkyo University

Akinori Komatsubara

Professor, Faculty of Science and Engineering,
Waseda University

Fiscal year 2018 in retrospect
Passing on an austere safety culture and cultivating safety

As a result of inappropriate alcohol-related incidents byawareness

copilots and cabin attendants since May 2018, the MinistryGroup, all Group airlines including Japan Airlines manage• Always check and confirm; never rely on assumptions.

On August 12, 1985, JAL flight 123 crashed on the ridges ofof Land, Infrastructure, Transport and Tourism (MLIT) issued

safety according Group shared policies confirmed at the• Promptly communicate information without omission toensure safety.

Mount Osutaka and 520 precious lives were lost. To reaffirm

administrative dispositions and administrative instructions,• Deal with problems quickly and appropriately without
underestimation.

the importance of safety and to instill lessons learned in ourthat is, a Business Improvement Order and a Businessminds, we established the Safety Promotion Center in April

Improvement Advisory related to Securing Safety in Air

2006. To date, more than 240,000 people inside and outside

Transportation. As a scheduled air transportation operator,

the Company have visited the center.

we understand the extremely grave nature of the situation

Safety Management System

The JAL Group continuously conducts Safety Awarenessthat caused a serious loss of trust from customers andJAL

Education based on the Three Actuals Principle (the actual

society. We express our deepest apologies and are aware

place, objects and people) to ensure that lessons learned

that drinking problems are serious problems that affectfrom past accidents are passed on and that employees

safety. We are therefore making Group-wide efforts toGroup safety management system
To maintain uniform and high levels of safety across the JAL

Group Council for Safety Enhancement General Meeting.*1
In addition, the Group Operational Safety Promotion

Group Companies
Chairman

Executive
President
Special Committee
on Alcohol-related
Measures

Chairman*3

Specialcommittees on
alcohol-related
measures ineach division

Group Council *for Safety
Enhancement
General Meeting

1

JAIR, JTA, JAC, RAC, HAC

Members

SafetyGeneralManagerPresident
SafetyGeneralManager

General Manager,
Corporate Safety& Security

Chairman

GeneralManager,
FlightOperations

GeneralManager,Engineering &Maintenance

GeneralManager,
Cabin
Attendants

GeneralManager,
AirportGeneral Manager,
Operations

Manager, Flight
Operations
SafetyPromotion

Manager,Engineering &MaintenanceManagement

Manager, Cabin
Attendants
SafetyPromotion

Manager,
StationPlanning

Manager,
Operations
Safety & Quality
Promotion*Group
Operational
Safety Promotion
Committee
GeneralManager,
Cargo &
Mail
Manager,Business
Affairs

Safetycommittees ineach division

2

Members

prevent recurrence within our SMS.

what can and must be done to realize safety by ascending* For more details on the background to this drinking problem and measurestaken, please refer to the Message from the President.

the ridges of Mt. Osutaka, the site of the JAL 123 accident

Executive
Officer of
SafetySafety committees(names vary by company)
Special committees on
alcohol-related measures(names vary by company)

maintain a high level of safety awareness. Employees learn*3*1 Council responsible for maintaining flight safety throughout the Group, and promoting safety management, according to the Group’s principles and policies.
*2 Committee placed under the Group Council for Safety Enhancement General Meeting responsible for increasing safety in air transportation of the JAL Groupby maintaining and strengthening coordination on safety initiatives among divisions and Group airlines.
*3 Committees responsible for managing alcohol-related risks of the JAL Group.

(the actual site), seeing aircraft debris at the Safety

The JAL Group establishes yearly safety targets according toPromotion Center (actual objects), and meeting people

the JAL Group Medium Term Management Plan for Fiscal

who experienced the accident (actual people) by watching

Years 2017–2020. Although we aimed for zero aircraft

news footage of the accident and video interviews. In fiscal

accidents and zero serious incidents in fiscal year 2018, one

year 2018, 1,909 employees attended the Safety Seminar

aircraft accident and one serious incident occurred. Again,

for New Employees, 375 employees participated in thewe apologize to those affected for any inconvenience or

Safety Promotion Seminar and 209 employees, in the Safetyconcerns caused.

Seminar for New Managers.

Details of this aircraft accident and serious incident are

Financial Data/ Corporate Information• Comply with rules and strictly follow standard operatingprocedures.

ESG Management

JAL REPORT 2019

Yotaro Hatamura

Action Check

We take to heart our mission and responsibility as safety• Stop immediately when safety concern arises.

20

pointed out issues to be addressed through dialogues with

Kunio Yanagida (Chair) Non-fiction writer, critic

Action Checkcontinuity for the JAL Group.

awareness and rebuild safety as a professional organization

Do

Do

This is the commitment and basic foundation of businessand positioning of safety. To achieve the Group sharedPlan

provided valuable advice and recommendations andSafety Advisory Group Members

Safety Charter

established to examine alcohol-related incidents, we revised

objective specialist’s viewpoint. In fiscal 2018, the members

PDCA Cycle as Part of the SMS

Business Activities and Strategy

conduct based on the Group’s basic stance on safety.

Continuous improvements through the Safety Management

Message from the President

To continue to be “the world’s most preferred and valued airline” and realize the JAL
Group Corporate Policy, we use the Group’s diversified capital for business development,
bringing together the individual strengths of the JAL team, to offer new value to society.
Safety is the utmost priority for the Group. In any and all situations, we will ensure safeand reliable air travel for our customers. For this reason, all members of the Group, fromthose directly involved in flight operations to those involved in business operations, will
apply the best of their of their knowledge, technologies and capabilities to their jobs assafety professionals.

available on the following page.

21

JAL GROUP’S BASIC STANCE ON VALUE CREATION

Data on Incidents

with investigations and will implement necessary measures.

The JAL Group undertakes active disclosure of safety data so• A general inspection of high pressure turbine rotor blades onthat customers can put their confidence in our services.

Cabin attendant on JAL flight 514 injured due to turbulence

JAL Philosophy
Basic stance

Fiscal 2018 initiatives

engines of all 35 JAL Boeing 767 aircraft installed with the same

As we stand on the start line of revitalization, we deeply

To deepen our understanding of the JAL Philosophy and put

engine type were examined with a borescope, and no problems

reflect and regret the significant inconvenience caused

it to practice, we conduct JAL Philosophy Education seminars

were found.

to many people, and at the same time, we are filled withthree times a year for everyone engaged in JAL products

gratitude for being granted the last chance to rebuild theand services. Facilitators are selected from various divisions,• The interval of borescope inspections of high-pressure turbine(June 24, 2018)

rotor blades on this engine type were shortened from every 400

company. We are resolved to part with the past and create asuch as Cockpit Crew, Cabin Attendants, Engineering &On June 24, 2018, JAL flight 514 (New Chitose Airport toflights to every 200 flights.

brand new JAL.

Maintenance, Airports and Sales. Education seminars are“Have we left matters to others?”

conducted in the United States, Europe, Asia-Oceania andwhile cruising, causing a cabin attendant to fall and sustain

dirt and wash away any particles that could cause metal“How conscious of profits have we been?”

China using Japanese or English teaching materials.

injury. A medical examination revealed that she sustained acorrosion.

“Have we dealt with customers with deepest feelings of

In addition to JAL Philosophy Education, Leader Workshops

sincerity?”

are held once a month for directors and Vice Presidents, andTokyo International Airport) encountered sudden turbulence

fractured left leg. On the same day, the event was rated an• The insides of engines are being washed with water to remove• Seven engines using high-pressure turbine rotor blades
manufactured around the same date as the malfunctioned

Based on these reflections, we found it necessary to change

three times a year for organization leaders to encourageof Land, Infrastructure, Transport and Tourism (MLIT). Noneengine were unloaded from aircraft.

the awareness of every employee and established themindset change from the leaders down.

JAL Philosophy as the Group shared mindset, values andIn December 2018, we held our eighth JAL Philosophyof the passengers were injured.
RAC flight 804 experiences runway incursion at landing

attitude expected of all persons engaged in JAL products

Presentation Meeting, where 10 employees or groups were

Board, MLIT to clarify the cause. JAL is fully cooperating(June 14, 2018)

and services.

selected from among 400 applicants to give presentations

with investigations and will implement necessary measures.

On June 14, 2018, RAC flight 804 (Miyako Airport to Naha

As we study, understand and practice the JAL Philosophy

on the theme, “How to learn, understand and apply the JAL

The following measures are being taken.

Airport) was cleared for landing by air traffic control (ATC),as the shared criteria for decision-making in our everyday

Philosophy.” The JAL Philosophy Presentation Meeting will

• Cabin attendants: Guidance on “flexible response to thebut clearance was cancelled when another aircraft crossed

work, it will bind the minds of everyone who supports thecontinue as a venue to share examples of how to apply theservice plan when turbulence is expected” and “responses tothe stop line and entered the runway during approach.

“Wings of JAL” and drive us forward toward our ambitious

philosophies including failures and concerns and to seriously

turbulence” were added to the regular safety training for cabin

The RAC flight continued approach according to ATCgoal of becoming “the world’s most preferred and valued

focus on putting it into practice.

attendants.

instructions, was cleared for landing and landed safely.

airline.”We will conduct initiatives that promote wider application

None of the passengers or crew members were injured.

of the JAL Philosophy as we aim to realize the Corporate

improvements have been made to automatically download pilot

The event was rated a Serious Incident by the Civil Aviation

Policy that states that we will “deliver unparalleled service

reports (PIREP) on turbulence to ground systems.

Bureau, MLIT because it corresponded to “a situation

to our customers” and “contribute to the betterment ofprescribed in Civil Aeronautics Law Enforcement Regulations

society.”• Flight Dispatchers: To improve work efficiency, system• Cockpit crew: To prevent injury due to turbulence, a regulation
was established to put absolute priority on maintaining safety

Article 166, Paragraph 4 (Serious Incident).”

in the cabin in the Seat Belt Sign Policy, clearing stating that the

As no problems have been pointed out against theCompany will fully support the captain’s decision on the use of

JAL Group as of date, this case is not included in fiscal

the seat belt sign to protect the safety of passengers and cabin2018 results of management goals in the Medium Term

attendants.

Management Plan.

ESG Management

JAL REPORT 2019

Investigations are under way by the Japan Transport Safety

Business Activities and Strategy

Aircraft Accident by the Civil Aviation Bureau of the Ministry

Message from the President

Aircraft accident (1 incident)

The following measures are being taken.

Investigations are under way by the Japan Transport Safety
Board, MLIT to clarify the cause. JAL is fully cooperating

Air Turn Back of JAL flight 632 after takeoff (May 24, 2018)with investigations and will implement necessary measures

On May 24, 2018, JAL flight 632 (Kumamoto Airport to*1 Aircraft accident
A situation arising from the operation of an aircraft and resulting in
fatal or serious injury, an aircraft crash, collision, or fire, damage to theaircraft during flight requiring major repair, or other situation classified as
an aircraft accident by the Ministry of Land, Infrastructure, Transport andTourism.
*2 Serious incident:
An incident not amounting to an aircraft accident, but where arecognized danger of an accident occurring was present, such as runway
excursion, an emergency evacuation, fire or smoke on board, abnormal
depressurization, encounter with abnormal weather conditions, orother situation classified as a serious incident by the Ministry of Land,
Infrastructure, Transport and Tourism.

Tokyo International Airport) experienced engine trouble
with its left engine while climbing after takeoff andreturned to Kumamoto Airport. Engine parts fell to
the ground near Mashiki Town, Kamimashiki District inKumamoto Prefecture. A post-arrival inspection revealed
damage to the turbine and other parts in the rear of theengine. The event was rated a Serious Incident by the Civil
Aviation Bureau, MLIT.

Leader Workshops

Investigations are under way by the Japan Transport Safety

JAL Group Safety Report (only in Japanese)

Board, MLIT to clarify the cause. JAL is fully cooperating

The JAL Group Safety Report is published yearly inaccordance with the Civil Aeronautics Act (Article111-6: Publication of Safety Reports by Domestic Air
Carriers). The report presents safety initiatives andother relevant data on six JAL Group airlines in areadily accessible form.
WEB

22

Financial Data/ Corporate Information

Serious incident (2 incidents)

The eighth JAL Philosophy Presentation Meetinghttps://www.jal.com/ja/flight/safety/report/

23

MEDIUM TERM MANAGEMENT
PLAN - ROLLING PLAN 2019

JAL GROUP’S BASIC STANCE ON VALUE CREATION

Amoeba Management System
Fiscal 2019 initiatives

The amoeba management system is a business management

Up till now, we have focused on operating and instilling thesystem that promotes “management by all” by dividing

amoeba management system, but to ensure future growth

operations into the smallest units and presenting results ofand promote human resources development through thiswork in organization in an understandable way. It is based

system, we will further refine our business managementon the idea that “business management should involve

through “management by all” while developing humanMedium term revenue and profit targets

every employee and not management alone. “Throughresources. We will also review the current amoeba

Our projections for fiscal 2019 are 1.563 trillion yen in

depreciation method change is substantially higher at 180“management by all,” the capabilities of every employees

management system with a focus on creating mechanisms

revenue and 170 billion yen in operating profit.

billion yen.

are consolidated to conduct sound and flexible corporatethat more clearly visualize achievements and increase effects

Although we expect a decline in profit at the operating

In fiscal 2019, we will continue to focus on achieving ourmanagement.

as we aim to realize muscular management system throughprofit stage, this is attributable to a depreciation expense

management goals and an operating profit of 180 billion

efficient use of management resources.

increase of roughly 10 billion yen due to the change in theyen, which is one of the targets of our Medium Term

depreciation method of aircraft components from fiscal

Management Plan, earlier than planned.

Benefits of introducing the amoeba management system
Rigorous profitability management

clarified the roles and responsibilities of each organization,

We will pursue initiatives to continue and deepenand enabled us to identify revenue and costs of each unit

improvement of hourly profitability, unit revenue andand visualize achievements and profitability of each unit.

productivity of each division and Group company. We

As a result, members in each unit have developed a sense

will also reinforce cost control according to changes inof responsibility over figures and feel more motivated andthe market environment and fluctuations in revenues tocreative in their work attitude.

maximize profitability and improve risk resilience.

2019. The operating profit forecast in real terms prior to theBusiness Activities and Strategy

The introduction of the amoeba management system has

Message from the President

In February 2019, the JAL Group announced the JAL Group Medium Term Management
Plan - Rolling Plan 2019. JAL will strive to restore public trust and increase corporate
value by rebuilding safety and sense of security and meeting the expectations of all
stakeholders including customers, regions and communities.

Basic stancean annual plan for revenues and costs (Master Plan) andManagement by all

implements a monthly management cycle (PDCA) to

We will work to bring together individual strengths,

accomplish the annual plan. The monthly management

increase execution capabilities to achieve targets, visualize

cycle requires each unit to set action targets at the start ofmanagement data more easily, and draw creativity andeach month for the coming month based on the current

initiative from every employee to achieve targets. We

environment. After business results for the month arewill also devote more energy ton nurturing leaders with

Revenuereleased, the difference between the target and result

management awareness to lead staff.

(JPY billion)

According toJapanese accounting standards

annual plan prepared at the start of each fiscal year,

We will work as a team to implement muscular managementmonthly targets are set, which facilitates prompt responses

by improving profitability of each Group division andto changes in the environment. Operating a monthly

company, make efficient investments, improve asset

management cycle at each level of activities enables all staff

utilization, and optimize inventories to achieve efficient use

to participate in management.

of management resources.

results and projections, issues and measures are reported(JPY billion)

by General Managers of divisions and presidents of relatedcompanies at the Group Earnings Announcement Session.
The session is attended by around 160 participants, including
the President, all directors, presidents of major related

Fuel/FX
Markets

the Corporate Policy.

FY2020Grand
Design■：Other■：Cargo andMail revenue■：Domestic
Passengers revenue■：International
Passengers revenue

1,383.2
310.0

1,487.2

1,563.0

328.4

343.0
106.0

100.0

92.0

1,600.0

518.2

528.0 *1

539.0

462.9

530.6

575.0

11.8

(11.5)

12.6

Operating profit

JAL Group management with the common aim of realizing(Target)2,000.0

After each division confirms its results and targets, businesscompanies and observers, who hold earnest discussions on

Plan
FY2019■：Operating profit▲：Operating profit margin■：Operating profit
before depreciation
method change*2(in brackets)●：Operating profit
margin before
depreciation
174.5
method change*2(in brackets)(11.3)

Financial Data/ Corporate Information

Efficient use of management resources

Result
FY2018

According to previous planis analyzed, and reasons for the difference are clarified
and used to create next month’s plan. In addition to the

Result
FY2017

ESG Management

JAL REPORT 2019

In the amoeba management system, every unit prepares

250.0

10.9

176.1

170.0

(180.0)(180.0)Singaporekerosene

USD/bbl

67.8

83.9

90.0

Dubai crude oil

USD/bbl

54.9

69.0

70.0

70.0

FX rateJPY/USD

111.2

110.5

115.0

115.0

90.0

*1 Reflects the change of the settlement adjustment method for domestic sectors on international itineraries from FY2018.
*2 The depreciation method is changed to a new method in which assets are classified to each components, for example, based on economic lives ofcomponents, such as aircraft fuselage, engines and cabin interior, and each component is depreciated separately.

Group Earnings Announcement Session

24

25MEDIUM TERM MANAGEMENT PLAN - ROLLING PLAN 2019

Focus Point 1
Expand Networks

Topic

ZIPAIR Established as Japan’s First International Medium- and Long-haul Low-Cost Carrier

Background to establishment of ZIPAIR
ZIPAIR will meet diversifying customer needs and serve

enormous business opportunities. The additional flight slots at Haneda and Narita airports

demand of price-sensitive customers on international

destinations on JAL Group’s route network as a JAL Group

combined will bring an increase of approximately 100 flights per day. On the other hand,medium- and long-haul routes is expected to grow. The

airline that delivers different values from those of a fullthe capacity increase is expected to intensify competition among airlines and produce

JAL Group will actively utilize the improved functions ofservice carrier.

dramatic changes in the business environment.

Narita International Airport and contribute to achieving the

In such an external environment, we will divide our passenger business portfolio fromJapanese government’s target of 60 million foreign visitors

fiscal 2020 into separate business domains based on routes and pricing to meet theto Japan per year by fiscal 2030.

diversifying needs of our customers. With our full service carrier business maintaining

While refining its full service carrier business, the Group has

steady growth, we will continue efforts to improve our competitiveness in the high-invested in Jetstar Japan, which operates on domestic andend traveler market and achieve our targets in the Ground Design of serving 500 majorinternational short-haul routes. To further meet the needs

cities worldwide and achieving 50% of revenue from overseas sales in our internationalof customers with diversifying values, we have establishedpassenger business.

ZIPAIR to operate on medium- and long-haul routes

In the low-cost carrier (LCC) business, which is a growing business domain, we havealongside Jetstar Japan. By organically leveraging these two

established ZIPAIR to tap medium- and long-haul international markets and preparations

carriers, we hope to create new demand.

Changes in LCC Passenger Traffic on International Routes(Millions of passengers)
20

(%)
25
21.7

18
18.9

16
14
12

15

13.5

10

are in progress to launch services. We are also strengthening coordination with our LCC
What ZIPAIR aims to achieve8routes. In this way, we are building the optimal passenger business portfolio through

ZIPAIR targets price-sensitive customers on international

6business expansion and cooperation with our partner airlines.

medium- and long-haul routes that are expected to4

increase, with the aim to become a new airline that offers

2values sought by customers with diversifying values. Service0

on May 14, 2020, and between Tokyo-Narita and Seoul on
July 1, 2020 with preparations under way for services to

18.74

9.8
15.06

7.1
5.2

0.4
0.18

0.9
0.44

1.5

2.2

0.66 1.10

9.67

3.2
1.56

6.09
2.91

5

4.10

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
LCC international passengers (left axis)

100

LCC international share (right axis)

Source: Civil Aviation Bureau (MLIT) - Calendar year statistics

ESG Management

JAL REPORT 2019

partners on the increasingly competitive domestic routes and short-haul international

launches are planned between Tokyo-Narita and Bangkok

20

Business Activities and Strategy

Managing Executive Officer
General Manager of Corporate Strategy
Planning

As travel needs and values have become diversified,

Message from the President

Tadao Nishio

The development of airports in Tokyo metropolitan area scheduled in fiscal 2020 will offer

North America.
Passenger Business Portfolio from FY2020

Passenger Business Portfolio from FY2020
Stability

High

Growth

LCC partners

Domestic
Flights

26

Price
range

Medium- and long-haul LCC[Maintenancemanagement]

High

Short

Financial Data/ Corporate Information

Full Service Carrier

Low
International Flights

Long

27

MEDIUM TERM MANAGEMENT PLAN - ROLLING PLAN 2019

Focus Point 2
Innovate Better Products and Services

Focus Point 3
Expand Business Domains
As part of the Grand Design, the JAL Group aims toto provide services in airport handling, maintenance, crewin fiscal 2020. In this environment, JAL aims to provide aname a few, to realize our concept of JAL SMART AIRPORT

stimulate air travel demand, and maintain flight safety andtraining and cargo handling, and contribute to reaching the

comfortable travel experience combined with personalized

from 2020.

lead development of the aviation industry. To accomplish

government’s inbound demand targets and to revitalizing

and timely services to realize stress-free travel for all

Furthermore, maintaining stable operations is our basic

this, we are creating new businesses that complement our

regional Japan.

customers.

mission, the premise of for all business activities of thecore full service carrier business. We do not intend to simply

In the area of travel and transportation, we are working to

JAL has ordered 18 new Airbus A350-900 aircraft*1, boasting

JAL Group. We are pursuing various initiatives such as

diversify our businesses, but instead are implementing co-establish new transportation methods, including businesscutting-edge technology, and the first JAL A350-900 entered

flight scheduling optimization and use of standby aircraft

creation initiatives with partner companies in areas where

jets and drones, stimulate air travel demand, and develop

service on a domestic route (Tokyo-Haneda and Fukuoka)

to improve quality of on-time operations. We are also

JAL Group strengths can be leveraged, such as its know-

airport infrastructure.

on September 1, 2019. The environmentally-friendly A350

strengthening our disaster response capacity by revising

how and customer base in the air transportation business.

In the area of new market exploration, we are combining

provides passengers with enhanced comfort and quiet

and multilingualizing our Business Continuity Plan (BCP)*2,

Specifically, we are targeting three areas—airline businesses,

our customer base with our partners’ know-how to develop

cabins through the latest low noise engines and cabin

including swift flight operations recovery plan taking into

travel and logistics and market development.

new business models in Fintech, digital marketing and otherpressure and humidity equivalent to nearly ground level.

account recent natural disasters.

In the area of airline-related business, an increasing number

fields.

of airlines is flying to regions across Japan, triggered byThrough these businesses, we aim to create new value andthe increase of inbound demand. We will leverage themaximize our own corporate value.

In ground services, we will install new self-check-in machines*1 13 large-sized Airbus A350-1000 are on order.
*2 Response measures to ensure business continuity in the event of unexpected situations.

Business Activities and Strategy

and self-baggage drops and use facial authentication, toMessage from the President

A total of 40 million overseas visitors to Japan are expected

operational know-how we have accumulated over the years

JAL REPORT 2019

Business Portfolio

Business Portfolio

Travel and transportation

Market exploration

ESG Management

Airline-related business

JAL’s customer base

JAL’s know-how

JAL × Partners

Stimulate air travel
demandFinancial Data/ Corporate Information

AirportGround handling

FintechBusiness jet
Cargo and mailCrew training

MaintenanceSupersonic aircraft andspace development
Drones for transportation

Digitalmarketing

Airport business

Airbus A350 First Class (domestic routes)

28

29

MEDIUM TERM MANAGEMENT PLAN - ROLLING PLAN 2019

Focus Point 4
Human Resources × Technology

Topic

Contributing to 2020 and Society

Japan will be in the global spotlight in 2020 as it hosts the Olympic and Paralympic Games Tokyo 2020. As an Official Airline
the use of new technologies across national and industrial

Partner of Tokyo 2020, we will contribute to the success of the Games and create a unique JAL legacy to realize the Tokyo 2020

accommodate cultural diversity and actively participate in aborders. In January 2019, we also established the Japan

Games Vision of “Sport has the power to change the world and our future*.” We are focusing particularly on the following

diversifying world. We will improve quality and productivity

Airlines Innovation Fund to more flexibly and speedily drive

two initiatives to achieve this.

by combining our know-how and technologies. By assigningcollaboration and co-creation with domestic and overseas* Tokyo 2020 Games Vision (website of the Tokyo Organising Committee of the Olympic and Paralympic Games)

the optimal human resources to value-added business fields,

startups that have cutting-edge technologies and businessWEB

the Group aims achieve sustainable growth.

models.

As part of these efforts, we opened the JAL Innovation

Going forward, the JAL Group will continue to combine

Lab in 2018 as an open innovation base. From here,

its human resources, one of its greatest strengths, andwe created the Lab Alliance in collaboration with NTT

advanced technologies to realize innovation and accelerate

Communications, NTT DOCOMO, KDDI, IBM, SAP, CTC,

growth.

Nikkei and other companies, where we are promoting

https://tokyo2020.org /en /games /vision /Attracting more foreign visitors to Japan

Realizing the JAL SMART AIRPORT concept

The Japanese government has set the annual inboundLooking ahead to 2020, we are installing the latest facilities

tourist target of 40 million by 2020, and 60 million by 2030.

and equipment including new self-check-in machines, self-

As Tokyo 2020 is attracting worldwide attention, now isbaggage drops, and new boarding pass readers for domestic

an excellent opportunity to showcase the attractions offlights at Haneda Airport and will progressively expand

regional Japan. To contribute to these targets, the JALthem to all major airports in Japan. For international

Group will provide opportunities to experience rural Japan.

flights at Narita and Haneda airports, we will introduce

Specifically, we are planning a Visit Regional Japan for Freetechnologies to enable facial authentication at check-in

Campaign (tentative name) for foreign visitors. By travelingand baggage check-in counters, boarding gates and otherto regions across Japan through this campaign, we would

locations through joint efforts with airport management

like to cultivate motivation to visit again and inspire evencompanies.

more international tourists to visit Japan from and after

Regarding service, we will provide seamless service of

2020. By bringing visitors to various destinations in Japan,

providing customers with timely information on their

we will also be contributing to regional revitalization.

booked flights, boarding and other details by email andBusiness Activities and Strategy

JAL REPORT 2019

Platform for Innovation Creation

Message from the President

The JAL Group is developing professionals who can

ESG Management

smartphone apps, and JAL staff will offer personalized
serviced to every customers with tablets.

Create innovation

Through these initiatives, we aim to help create airports
where every customer can enjoy stress-free travel

NEW

NEW

Japan Airlines
Innovation Fund

Partners

Lab Alliance

Idea & Action

Financial Data/ Corporate Information

Technology & Data

experience.

Innovation Lab

PoC*1

Human
Resources

Employee’s wisdom and aspirations on“This is what I want to do or be”

Embody the JAL Philosophy
NEW“Wings of Creation”*2

Lab members*3*1 Proof of Concept*2 An intrapreneur audition program*3 In-house system of activities at the Innovation Lab where the skills, knowledge and specializations of employees are utilized.

30

31

FINANCIAL STRATEGY
We will strategically allocate capital to increase corporate value, while maintaining afirm financial structure as well as high capital efficiency at the same time.

Financial Strategy in the Medium Term
Management Plan - Rolling Plan 2019

I have been newly appointed as CFO since April 2019.

of at least 50%. We have achieved a shareholders’ equity
ratio of around 60%, showing the progress we have madein creating a solid financial base. We have stepped forward
to the next stage, considering the improvement of capitalefficiency that includes the management of appropriate

growth for a long time. In the highly competitive airline

2017 to 2020, we have set a financial target of at leastlevel of cash and deposit amounts on hand. Therefore, ourindustry, my mission is to implement our financial strategies

9% ROIC (Return On Invested Capital), as a measurement

basic policy is to strategically allocate capital to increasethat lead to our further growth and value creation throughof investment efficiency to check its contribution incorporate value, while maintaining a firm financial structure

my experience and judgement that have been developed by

the enhancement of corporate value, together with anand high capital efficiency.

engaging in the strategic route planning as JAL Group’s core

operating profit margin target of 10% or higher for every

We are targeting a Single A Flat credit rating or higher

business.

year in order to achieve high profitability. We are also well(issued by a Japanese credit agency) to support the strong

We will strategically allocate capital to enhance corporateaware of the need to improve capital efficiency, aiming tofunding capabilities. Our high capital efficiency and a firm

value, while maintaining the high level of profitability andachieve a ROE (Return On Equity) target of 10% or higher atfinancial structure were highly evaluated by a Japanesesolid financial structure that we have been working hard to

the same time.

credit agency, Rating & Investment Information, Inc. andbring to the current outstanding levels. Moreover, we willIn the Grand Design, based on a stable profitability and athe outlook of JAL’s rating was improved to positive in May

build trust with our customers, shareholders, society, staff

firm financial structure, we will aim for a sales turnover of

2019. We will continue to strive for a Single A Flat credit

and all other stakeholders through proactive communication

2 trillion yen, an operating profit of 250 billion yen andrating.

to ensure orchestration with all the stakeholders.

total market capitalization of 3 trillion yen through making

Investment in additional aircraft and preparatory costs will

growth investments actively, while emphasizing profitability

rise in the fiscal year 2019 for the purpose of preparation

with a target of operating profit margin of at least 10%.

for capacity expansion in the fiscal year 2020. Moreover, we

To achieve the above indicators and the Grand Design, we

expect temporary supply-demand imbalance will occur inwill implement financial strategies, while maintaining a firm

the fiscal year 2020. As a result, we assume there will be afinancial structure and improving asset efficiency and capital

temporary drop in ROE and ROIC. However, we will aim to

efficiency at the same time.

return to the target level ROE of 10% or above and ROICInternational air travel demand and international air freight
demand remained strong in the first-half of the fiscal year

ESG Management

In the Medium Term Management Plan for Fiscal YearsBusiness Activities and Strategy

JAL REPORT 2019

I engaged in strategic route planning for the JAL Group

Review of the Fiscal Year 2018

Message from the President

My Role as the CFO of the JAL Groupof 9 % or above through continuing profit growth andthrough increasing inbound passenger demand, backed up

Improve asset efficiency and capital efficiency

by moderate economic growth. Although it slowed down in

In the previous JAL Group Medium Term Management

the second-half of the fiscal year, it still remained on a path

Plan for Fiscal Years 2012 to 2016, we had placed a priority

Strategical capital allocation to increase corporate valueof growth in general. On the other hand, many naturalon increasing equity capital amounts and building a solid

We aim to maintain cash and deposit amounts on handdisasters struck Japan in 2018. Despite them, domestic

financial base that would establish a firm financial structurefrom the perspective of stable operation and to treat

air travel demand remained to be robust due to special

and high resilience to risk. We targeted operating profit

any exceeding amounts as additional capital that can be

discount fares to aim recovery of leisure demand. The JAL

margin of 10% or above and a shareholders’ equity ratio

allocated. The appropriate level of cash and deposit on

appropriate capital allocation.

Financial Data/ Corporate Information

Group recorded higher revenues and operating profits thanthe previous year through strong air travel demand.
From February to March 2019, a new check-in system wasprogressively introduced to airports in Japan. The passenger

158

service system renewal project, in which we invested 80

Strengthen financialbase of Corporate
Pension Fund ▲80
Strategic growthinvestment line ▲50

billion yen and spent six years, was finally completed. This
new system generates yield management with greater

Free cash flow*・
Debt utilization,
etc.

330

precision. The effects of the new system appeared earlier

2.6 months’
worth ofrevenuethan our plan.

Capital allocation

Shareholder
returns

2.6 months’
worth ofrevenue(Unit : JPY bn)

Hideki Kikuyama
Director, Senior Managing Executive Officer
General Manager of the Finance &Accounting Division

32

Cash & deposits
projection at theend of FY 2018

Cash & deposits
Projection at theend of FY2020*Free cash flow = Cash Flow from operating activities + cash flow from investing activities*Forecast in Rolling Plan 2019 (February 2019)33

FINANCIAL STRATEGYFY2019〜20 311bn yen (planned）＋

Medium- and long-haul LCC

210bn yen

23〜bn yen

Smart airports, improved
revenue management, etc.
FY201859bn yen

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

intend to build a relationship of trust with our investors

At the same time, we continuously strive to improve capitalthrough more direct communication not only between themefficiency through monitoring a total return on equity ratio,

and the CEO or CFO, but also senior management of each

which is calculated by dividing the sum of total dividends

business. In addition, we collect information from meetings

paid out and share repurchases by shareholders’ equity. We

with investors such as the topics discussed and questions

make its efforts to maintain this ratio at approximately 3%

raised, and report back to the Board of Directors.

or above.

Our proactive IR approach was highly evaluated and wewere honored with the 2018 Award for Excellence inCorporate Disclosure in the Transportation Industry by the

Total Shareholder Return History (FY2012〜FY2019)(JPY Bn)
250.0

(%)
60

25.1

25.0

25.1

29.4

2016

2017

investment. The additional 40 billion yen is for investment

seasonality and possible declines in cash flow, in the event

for aircraft to strengthen our international passengerof an economic crisis as severe as the global financial crisis

business, which will lead our growth.

in 2008.

As of today, we will allocate about 23 billion yen to the

Net profit Attributable to owners of parent

We will strategically allocate the additional capital

mid- and long-haul LCC "ZIPAIR Tokyo" from the Strategic

Dividend Payout Ratio*1

consisting of the free cash flow to be generated and

Growth Investment Line. The remaining amounts will be also

excessive cash and deposits on hand for further allocation.

used to enhance corporate value through an extraordinary

We plan to use interest-bearing debts to fund growthincrease of competitiveness or return.

20.0
37.7

amount of capital required for normal operations, including

18.9

29.0

total investment, 480 billion yen will be used for growth

32.3

operating revenue. To reach this amount, we considered the

2012

2013

2014

0

2015

33.7

32.3

Total Dividends

30

To Our Shareholders and Investors

20

Flight safety is the essential foundation of the JAL Groupand we will steadily thrive to rebuilt and maintain concrete2019 (FY)(Forecast)safe operations. In the fiscal year 2020, the airport capacity

Share Repurchasein Tokyo will be expanded and the Olympic and Paralympic

Total Return Ratio*2

Games Tokyo 2020 will be held. As inbound passenger
demand is expected to increase continuously, along withthese big events, the airline industry in Japan is a growing
industry with big opportunities.
Therefore, we will set a new medium term management
plan initiated from the fiscal year 2020 to realize our long-

Enhancement of Shareholder Returns

Appropriate Risk Management

its financial base, reducing debts relating to JAL retirement

We regard shareholder returns as one of our most important

Airlines are exposed to various risks in their operations.

capital markets and communication with our stakeholders,

benefits, and proactively mitigating potential financial risk.

management matters. Our fundamental policy is to actively

We are steadily working to strengthen the Group’s risk

we plan to apply International Financial Reporting

implement shareholder returns through continuous andresilience. Our policy is to conduct business operations

Standards (IFRS) from the fiscal year 2020. The JAL Group

Capital investment plan

stable dividends and flexible share repurchases, while

focused on profitability rather than business scale. For

will courageously challenge this major business opportunity

For our capital investment plan, we will make growth

securing internal reserves for making investments forexample, for international passengers, we select new routesof the development of airports in metropolitan area ininvestments, such as state-of-the-art aircraft or IT system,

corporate growth in the future and changing businesswith profitability as our first priority and optimize our2020. To ensure its success, we will strategically allocate ouractively to generate new cash flows and then enhanceenvironments and to build a strong financial structure. For

cabin configuration. Also, to enhance our network, we willcapital strategically and enhance shareholder returns incorporate value. In principle, capital investment will be

the fiscal year 2019 and the following years, we will focus

expand alliances with partner airlines globally.

order to increase corporate value with its clear financial andconducted within operating cash flow and we will ensure

on “Total Return”, which combines dividends and share

Moreover, we use derivatives and other tools to mitigate

capital policies.

there is always sufficient free cash flow to fund dividends

buybacks.

risks which have a major impact on the financial

I hope this message gives our shareholders and investors afor our shareholders. In Rolling Plan 2019, we plan to

In order to maintain a stable dividend level despite theperformance of airlines, such as those related to fluctuations

better understanding of the financial strategies of the JAL

increase the total investment to 700 billion yen, during theupcoming effective tax rate increase, we will decide thein fuel prices and exchange rates. As a result, we have beenGroup and raises your expectation toward the increase of

fiscal years 2018 to 2020, 40 billion yen up from 660 billion

dividend per share level, considering its continuity, stability

able to eliminate most of the market risks over a three-year

the JAL Group’s corporate value and shareholder returns, astime span.

we grow into the future.

effectively for extraordinary growth. By the first half ofthe fiscal year 2019, approximately 80 billion yen will be

Financial Data/ Corporate Information*1 Dividend payout ratio=Total dividends/Net profit attributable to ownersof parent**2 Total return ratio=（Total amount of dividend + Amount of share
repurchase）/Net profit attributable to owners of parent**FY2013〜2018 net profit attributable to owners of parent excludes effects
of deferred income tax

utilize the 50-billion yen strategic growth investment line

term goal, the Grand Design, after reviewing our initiatives
and accomplishments by then. Moreover, to improve
international comparability of financial information in

injected to the Corporate Pension Fund for strengthening

34

investors.

40

10
2018

will continue to further improve disclosures in quantity and

ESG Management

JAL REPORT 2019

100.0

yen during the same period in the Rolling Plan 2018. Of the

50.0

50

44.5

hand is equivalent to approximately 2.6 months of annual

Securities Analysts Association of Japan in October 2018. We
quality to realize constructive dialogue with markets and

49.2

47.7

200.0

150.0

investments, while ensuring financial stability. We will also

Business Activities and Strategy

Ground・IT, etc.

about our management plan and financial results. We

stakeholders.

Will be determined

179bn yen

the quality of information content provided at briefings

periodic profit and allocating capital among all of its

114.0

FY2018make it easier for them to evaluate us, we have improved

approximately 35% to 50% through appropriately sharing

38.3

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

Underconsideration

paid out and the total amounts of the share repurchases, of

150.8(vs previous plan +40)

To provide investors a clearer picture of our business and38.3 20.0

490bn yena total payout ratio, which combines the total dividends

Message from the President

Aircraft

Building Trust with Our Investors ThroughClose Communication

position and other factors. As a result, we seek to achieve

135.4

50bn yenflexibly consider share repurchases, considering its financial

38.7 20.0

Strategic growthinvestment line

164.1

480bn yen

Investments
to achieve
extraordinary
growth33.2 30.0

Growth investments

Generatenewcash flow

174.4

＋40

approximately 35%. In addition, we will proactively and43.5

220bn yenvs previous planand predictability with reference to a payout ratio of

149.0

Replacement
investments

700bn yen(vs previous plan +40)

166.2

Total

171.6

FY2018〜2020

35

HUMAN RESOURCES STRATEGY
We create work environments that support motivated and active participation of all
employees, and implement initiatives from a long-term perspective

commitment to creating a company where employees work

Using Technology to Streamline Workhappily and enthusiastically with motivation. To achieve this,Health and Awareness Reform, the Foundation
for Individual Workplace Motivation

technology-based operating process innovation to

To enable all employees to be motivated at work, aChanging demographics is a social trend that requires

free people from mundane work and creating work

foundation comprising health and awareness reform must

attention when developing a long-term human resources

environments where people can focus on creative andfirst be created.

strategy. Japan’s declining population and aging society

professional work that cannot be replaced by automation.

We have continuously promoted health management,

are particularly important issues affecting the Group’s

In fiscal 2017, we introduced Robotic Process Automationin which we established and addressed priority issues inoperations. Though happening at different times, all jobs

(RPA) and automated a number of operations. Whileaccordance with our JAL Wellness 2020 health promotion

are at risk of labor shortages. In addition to developing

operations that were automated are still limited, there haveplan and produced results. However, these initiatives

human resources across the entire aviation industry, thebeen cases where use of RPA for simple tasks has freed ourwere mainly directed at the organizational level and notpillar of our initiatives is to promote diversity, which includes

employees from data counting tasks that previously took

necessarily the individual level. Accordingly, we will takesenior employees and foreign workers, and implementing

several days to complete. We will widely share informationa new approach to health management, such as adopting

technology-based operating process innovation.

on these examples within the Group and increase

the data health approach and using broad-ranging data toachievements in this field.

meet the individual health needs of each employee,

Currently, specialist staff are in charge of RPA , but theRegarding awareness reform, we introduced JAL OODA*

speed in work progress and delivery is limited, needlessin fiscal 2018 to develop independent-minded humanto say. Therefore, we have established a so-called end-

resources. In the initial fiscal year, we held workshops led byuser computing system for workplaces to independently

a mentor where five or so mentees conducted any activity

operate IT systems and have their members promote RPA ofthey wished without having to produce results. We also held

To promote diversity, we have implemented measures thatworkplace tasks. We are looking to senior employees to lead

mentoring management training sessions for advanced-

allow all employees to actively participate in the workplace

this movement.

grade management. Going forward, we will continue to

Nurturing Professionals to Achieve True
Diversity

regardless of their personal attributes. However, we believe

expand JAL OODA initiatives, including collaboration witha diversity of attributes alone is not enough. Going forward,

activities by volunteer employee groups, and cultivate a

it will become increasingly important for every one of ourculture of independency while working in teams.

diverse employees to display a high level of expertise in* JAL OODA is JAL’s original OODA loop (Observe, Orient, Decide and Act),
designed to promote organizational and individual independency.

their work. When each member of a group consisting of a

ESG Management

To support the creation of new value, we are driving

initiatives from a long-term perspective.

Business Activities and Strategy

JAL REPORT 2019

we not only deal with immediate issues but also implement

Message from the President

At the core of the JAL Group’s human resources strategy is awide range of attributes has diverse expertise, that group
Financial Data/ Corporate Information

will improve its capabilities and will survive in a rapidlychanging world.
For this reason, our human resources strategy includes
the nurturing of professionals. Following a career path,these people will acquire the solid expertise needed tolead our organization forward. In this way, we can nurture

Goal of human resources strategy (Slogan)
Nurture the individuality of each staff who supports
JAL’s Wings into value creation

professionals who will remain active at work into theirsenior years.
In an era when millions can expect to live for a century, so
it is important to create work environments where senior
employees remain highly motivated at work. In addition
to developing systems for staff to feel secure in their jobs,
this includes mechanisms for managers, for example, toacquire the ability to actively participate even after years

Takuya Oda
Executive Officer, General Manager of
Human Resource Management36

in a management position. In that sense, our initiatives tonurture professionals and promote the active participationof senior employees are closely related.
(For more details on Diversity & Inclusion, please refer to page 61)

4 Commitments

1. Highly aspiring organizations
Build challenging organizations torealize value creation

2. Power of individuals
Encourage expression of individuality in an
atmosphere of mutual respect

8 initiatives (Action)(1) Nurture leaders who promote innovation(2) Create a group of professional to realize value
creation(3) Nurture global human resources(4) Promote diversity(5) Complete workstyle innovation leading to growth

3. Job satisfaction and high productivity
Build mentally and physically healthy, highly motivating
and productive work environments
4. Practice the JAL Philosophy
Practice the JAL Philosophy more intensively to achieve individualand organizational targets(6) Promote health management(7) Promote JAL Philosophy(8) Penetrate JAL OODA

37

JAL GROUP BUSINESS ACTIVITIESInternational Passenger Operations

traffic increased 6.3%, revenue passenger kilometers grew

between Japan and Hawaii and remote islands other thanOn the other hand, LCCs continue to enter the Japanese

6.3%, and the load factor reached a record high of 81.3%.

Oahu. At the same time, we will steadily capture repeaters

External operating environment of international passenger

market and intensifying competition is expected. There

Furthermore, in addition to improving revenue

by offering new styles of travel that cater to individual

operations

is also the risk of a major decline in air travel demand

management backed by high load factors, we also increased

needs.

The world’s major economies such as Japan and the U.S.

due to global economic trends with concerns of risingfuel surcharges, resulting in an increase in revenue per

In order to aggressively capture inbound demand on

have been affected by U.S.-China trade friction and politicalprotectionism, natural disasters, adverse weather, terrorist

passenger to 39.3 billion yen. While minimizing flightinternational routes, which is expected to grow continuously,

uncertainty in Europe, but have maintained a steady,attacks, regional conflicts, war, and the outbreak andcancellations caused by typhoons and earthquakes and their

we will strive to enhance our competitive advantage inmoderate growth. Demand for international air travel andspread of diseases. As international passenger operations is

impact on leisure demand, the passenger service systemoverseas markets. By providing products and services thatinternational airfreight has also remained generally strong.

vulnerable to global trends, we will continue to keep watchthat was updated in November 2017 operated steadily

meet the needs of not only Japanese passengers but also

Crude oil prices, which affect JAL Group’s fuel purchasing

on the external operating environment.

and produced positive results, such as greater revenue

foreign passengers, we were awarded the world’s top 5-Starmanagement precision and increased revenue from overseas

airline rating in 2018 by Skytrax. The preference indicator of

costs and international passenger and international cargo
Fiscal 2018 results

online sales channels. As a result, international passenger

foreign passengers has also improved. We will continue tocrude oil production and expectations of U.S.-China trade

In international passenger operations, we saw bothrevenue increased 14.6% year on year to 530.6 billion yen.

provide better products and services, increase our presence

discussions, making the outlook unclear.

strong outbound demand and strong inbound demand,

The Japanese government has set a target of attracting 40

with inbound demand reaching 31.19 million in 2018 and

Future strategy

to achieve the JAL Vision goal of 50% of revenue frommillion overseas visitors to Japan in 2020, the year of the

surpassing the 30 million mark for the first time. In order

We see the development of airports in metropolitan area inoverseas sales in international passenger operations.

Olympic and Paralympic Games Tokyo 2020, and to achieve

to meet growing demand, we expanded seat capacity

fiscal year 2020 as a tremendous business opportunity andthis, public-private partnerships are in progress. In 2019,by revamping cabin configurations and also supply byplan to actively expand supply. In addition to the new Tokyo-

the G20 Osaka Summit and the Rugby World Cup JAPAN

operating flights year round on routes introduced in fiscal

Narita=Bengaluru route and Tokyo-Narita=Vladivostok

will be held, giving rise to expectations of an increase inyear 2017 (Tokyo-Narita=Kona, Tokyo-Narita=Melbourne,

route, we will continue to expand our network and revamp

inbound demand. In 2020, the development of airports inand the second flight between Tokyo-Haneda=London)

cabin configurations to increase seat capacity. As a result,metropolitan area is scheduled, offering an opportunity for

and increasing seasonal flights (Tokyo-Narita=Guam, Tokyo-

available seat kilometers on international routes is expectedsignificant growth in international passenger operations.

Narita=Bangkok, Kansai=Honolulu). As a result, available

to increase roughly 13% year on year in fiscal year 2020 (upTherefore, we regard 2019 as an important year for making

seat kilometers rose 6.0% over the previous year, passenger

15% over fiscal year 2018). To build an optimal network

overseas through active sales promotions, and endeavorBusiness Activities and Strategy

JAL REPORT 2019

revenues, are fluctuating due to OPEC’s decision to reduce

Message from the President

preparations.

while controlling aircraft numbers and fixed costs, we

Passenger Revenue*(JPY Bn)
Revenue Passengers(1,000)YoY

530.6(524.4)+14.6%(+13.3%)

9,128

+6.3%

(JPY Bn)•Flight cancellations due totyphoons and earthquakes
and impact on leisure demand•Stable outbound demand (+)•Strong inbound demand (+)
+29.2

▲0.8

competitor is expanding supply, we will soon launch a joint
business with Hawaiian Airlines, and expand our network

530.6

+6.0%

Revenue Passenger Kilometers(MN passenger km)

44,659+6.3%

L/F (%)

81.3%+0.3ptRevenue per Passenger*1*2(JPY)

58,136(57,453)+7.8%(+6.6%)

11.9(11.7)+7.8%(+6.6%)

462.9

9.7
(9.5)

•Net unit price (+)•Change in revenue proration rule fordomestic sectors in international
tickets (+6.2 Bn)•Fuel surcharge (+)

Unit Revenue・Load Factor (L/F)

Demand projections and capacity planas FY2018=100

FY2017

Revenue perpassenger

Passenger
traffic

Factors of changes in revenue
per passenger (estimate)

Impact ofdisasters*5

FY2018JAL ASK
115

-0%
+6%

+1%

JAL ASK
103

Route
Demandcomposition mix (+)(none)

FX, etc.

Change of Net unit pricerevenueproration rule

Total demand*

L/F

+8%

FY2018
Fuel surcharge

Unit revenue
Exclude FSC and FX,
as FY2018=100

+1%

+8.2%
(+6.9%)*1 Effect of change in revenue proration rule for domestic sectors ininternational tickets excluded in figures in brackets*2 Revenue per passenger = Passenger revenue / Revenue passengers*3 Yield = Passenger revenue / Revenue passenger kilometers*4	Unit revenue = Passenger revenue / Available seat kilometers

Financial Data/ Corporate Information

54,925

Unit Revenue*1*4(JPY)

worldwide as early as possible. On Hawaii routes, where our+67.7 Bn(+14.6%)+39.3

Available Seat Kilometers(MN seat km)

Yield*1*3(JPY)

to achieve the JAL Vision goal of serving 500 major cities

Change in International Passenger Revenue

FY 2018
1

ESG Management

will promote partnerships with other airlines and strive
International Passenger Operations

Total

FY2019FY2020

FY2021 onwards

FY2018FY2019FY2020

FY2021 onwards* Demand of full service carrier for the routes both outbound from /inbound to Japan*5 Effects arising out of heavy rain in July in Western Japan, typhoon from
July to September and the earthquakes in Hokkaido in September

38

39JAL GROUP BUSINESS ACTIVITIESDomestic Passenger Operations

revitalize regional economies.

In products and services, we offered enhanced inflight

In route operations, we will introduce the new A350 aircraft

services such a wider selection of video program channels

in September 2019 and launch services on the Tokyo-

Fiscal 2018 results

in inflight Wi-Fi services and new inflight satellite television

Haneda=Fukuoka route. The new aircraft will be equipped

operations

As we were affected by flight cancellations and a decline

aboard JAL SKY NEXT-configured aircraft. From 2016, aswith First Class, Class J and Economy Class with all seats

While we face changes in the macro environment such asin leisure demand due to damages from high waves bypart of our project to expand and improve facilities, weand interior designs renewed and installed with a personala declining working-age population in Japan, there are

Typhoon Jebi at Kansai International Airport in September

renovated the Diamond Premium Lounge and Sakura

monitor to offer inflight entertainment for every passenger.

also projections of new growth due to expectations ofand the 2018 Hokkaido Eastern Iburi Earthquake, we quickly

Lounge at Itami Airport in March to offer greater relaxation,

In products and services, we will extend reservation andmoderate economic development in the lead to the Olympic

adjusted supply and demand by quickly shifting aircraft to

comfort and functionality in spacious areas. As a result,purchasing periods of domestic tickets from September

and Paralympic Games Tokyo 2020 and increasing inboundroutes with strong demand such as to Kyushu and strived todomestic passenger revenue rose 1.9% year on year to 528

2019, making it possible to book and purchase airline tickets

tourists. The Rugby World Cup will be holding games

improve profitability. We further expanded routes operated

billion yen.

330 days in advance. In conjunction with our renewed

throughout Japan in 2019, bringing more foreign visitors towith the Embraer 190 centered on Osaka-Itami Airport

Japan who will not only stay in major metropolitan areas

routes and expanded services of Boeing 737-800 aircraft

but also travel to regional cities. Therefore, the need for

installed with JAL SKY NEXT cabin interiors on Okinawa-

Future strategy

trips without any fuss or stress.

transportation is expected to continue to increase.

Naha routes operated by Japan Transocean Air. By increasing

On domestic routes, strong business demand and increased

From FY2020, we will advance initiatives for realizing

In addition to rising inbound visitor numbers, the use ofseat capacity, available seat kilometers increased 1.1% year

leisure demand including inbound demand are expected

our concept of “JAL SMART AIRPORT” at major airports

air travel for business and leisure is also rising in Japan.

on year, passenger traffic rose 2.4%, revenue passenger

to produce strong total demand growth centered on major

in Japan, where new technologies will be used to reduce

Total demand is expected to continue to grow, centeredkilometers grew 2.2%, and the load factor reached a recordroutes from Haneda. While expanding supply to meet andwaiting times at the airport. From 2020, we will implement

on major routes departing from Haneda. We will increasehigh of 72.5%. To restore leisure demand to Hokkaido andsteadily capture growing demand, we will further improvethese initiatives at major airports in Japan, further

supply comparable to the growth of total demand, steadily

contribute to the restoration of disaster areas, we offeredconvenience and comfort. The cutting-edge Airbus A350-

improving the convenience and comfort of domestic travel.

capture demand, and take various steps to offer greater

Support Sakitoku special reduced fares and sold travel

900 and the domestic-configured Boeing 787-8 will be

Against the background of the Olympic and Paralympic

convenience and comfort.

products such as Hokkaido Support Discount and Let’s Go

put into service on domestic routes from the fall of 2019.

Games Tokyo 2020, we will also support efforts to attract

Due to the opening of new routes by our competitor,

with JAL Hokkaido Recovery Discount. Further, for inboundThrough the introduction of new aircraft, we plan to

the growing number of inbound visitors to regions acrossthe operating environment is expected to intensify. As

tourists, we offered reduced time-limited domestic discountincrease available seat kilometers on domestic routes byJapan and expand the traveling non-resident population.

a company that has operated in the skies of Japan forfares called the JAL Japan Explorer Pass on routes between

approximately 3% year on year in fiscal year 2019 and by

many years, JAL has gained the trust of customers and will

Hokkaido and the Kansai area (Kansai, Itami, and Nanki

approximately 1% year on year in fiscal year 2020. Whilecontinue to contribute to realizing safe operations andShirahama) to restore leisure demand.

expanding supply, we will also maintain and improve unit

Message from the President

domestic flight reservation web page in May 2019, we will
do our best to provide greater convenience when planning

Business Activities and Strategy
ESG Management

JAL REPORT 2019

External operating environment of domestic passenger

revenue and load factors.
Domestic Passenger Operations
FY2018YoY

528.0(534.3)+1.9%(+3.1%)

Revenue Passengers(1,000)34,859+2.4%

Available Seat Kilometers(MN seat km)

36,116+1.1%

Revenue Passenger Kilometers(MN passenger km)

26,195+2.2%

L/F (%)

72.5%+0.7ptRevenue per Passenger*1*2(JPY)

15,149(15,328)▲ 0.5%(+0.7%)

20.2(20.4)▲ 0.2%(+0.9%)

14.6(14.8)+0.8%(+2.0%)

Yield*1*3(JPY)
Unit Revenue* *
(JPY)

1 4

*1 Effect of change of revenue proration rule for domestic sectors ininternational tickets excluded from figures in brackets*2 Revenue per Passenger = Passenger Revenue / Revenue Passengers*3 Yield = Passenger Revenue / Revenue Passenger Kilometers*4 Unit Revenue= Passenger Revenue / Available Seat Kilometers40+9.8 Bn (+1.9%)(JPY Bn)•Increase in individual
passengers (+)
518.2

as FY2018=100•Flight cancellation due to typhoons andearthquakes and impact on leisure demand
+16.4

▲4.0

JAL ASK
104▲2.6

Revenue perpassenger

Passenger
traffic

Impact ofdisasters*5

Demand ofTrunk Routes
to/from Haneda

Unit revenue
Exclude FSC and FX,
as FY2018=100

JAL ASK103

528.0

Total demand(including LCCs)•Increase in revenue per passenger
due to increased sales of business
fares, etc. (+)•Change of revenue proration rule fordomestic sectors in international
tickets (▲6.2 Bn)
FY2017

Unit Revenue・Load Factor (L/F)

Demand projections and capacity plan

Change in Domestic Passenger Revenue

FY2018FY2018FY2019Financial Data/ Corporate Information

Passenger Revenue*1(JPY Bn)

FY2020

FY2021 onwards

L/F

FY2018FY2019FY2020

FY2021 onwards*5 Effects arising out of heavy rain in July in Western Japan, typhoon from
July to September and the earthquakes in Hokkaido in September

41

CARGO AND MAIL BUSINESS / OTHER BUSINESSESJAL GROUP BUSINESS ACTIVITIESJAL Group Airlines

J-AIR Co., Ltd. (J-AIR)

Cargo and Mail Business

Other Businesses

J-AIR, JAL Group’s principal member airline covering
Review of fiscal 2018

JALPAK Co., Ltd.

(Itami) and operates 232 daily flights on 36 routes (roughly

In fiscal year 2018, JAL’s Cargo and Mail Division worked to

In fiscal year 2018, JALPAK strove to expand its lineup of

JAL Group’s regional network provides air links to regional

30% of these flights are on JAL Group domestic routes).

maximize cargo business profitability, increase the value ofhigh-quality added-value products and increase sales ofcities and outlying islands as an airline with close ties with

Over the past few years, the company has introduced

transportation services, expand into new business domains.

dynamic package products. Although we conducted timely

each region. We will continuously contribute to regional

the new Embraer 190 with a Class J cabin and has been

In international cargo operations, we strengthened partnerships

sales promotions to increase sales, higher sales prices from

economies by introducing new, comfortable aircraft,

expanding its network. It plans to operate the Japan-madewith foreign airlines, such as launching an European cargohigher fuel surcharge and increased competition resulted

providing a highly convenient network and high-quality

Mitsubishi SpaceJet from 2021 and continue growing as asales partnership with Azerbaijan-based Silk Way West Airlines

in a 3.9% year on year decline in the number of overseas

services, expanding the non-resident population andcompetitive regional airline. Communicating the appeal ofand undertaking Japanese global sales agent (GSA) operations

travelers handled to 222,000. The number of domestic

communicating the charms of regional Japan.

regional Japan and the Japan

for Vietnam-based Vietjet Air Cargo. We also partnered withtravelers handled remained strong despite natural disasters,

brand, J-AIR will continue

the Yamato Group and started a new project, offering total

rising 6.8% year on year to 2,718,000, partly attributable

Japan Transocean Air Co., Ltd. (JTA)

moving forward together withservice from export and import procedures for fresh Japanese

to demand prompted by the 35th anniversary of the Tokyo

Since its establishment in 1967 to connect Okinawa’s main

the people of the regions it

agricultural and fishery products to local sales in order to expand

Disney Resort and high demand for travel to the Okinawa

island and outlying islands, JTA has worked with integrity toserves.

sales channels to Japanese producers and contribute to enrichingregion. With regard to inbound demand, JALPAK expanded

the lifestyles of French consumers.

the Visit Japan Package to Thailand and also to Australia inmaintain safe operations and aviation security for 52 years.
Hokkaido Air System Co., Ltd. (HAC)

In domestic cargo operations, we introduced new simplified cold

July and to Singapore in December. As a result, operating

history. In addition to connecting Okinawa's main island

Established in September 1997 to provide convenient air

insulated containers, providing refrigerated transportation forrevenue (prior to intercompany transactions elimination)and outlying islands, JTA operates 70 daily scheduled flights

links to destinations across Hokkaido, HAC celebrated its

fresh foods even during the summer, and captured demand forincreased 4.0% year on year to 182 billion yen.

on 12 routes between Okinawa and Haneda, Chubu, Kansai,

22nd anniversary in 2019. The airline currently has a fleet

new fresh food cargo.

In fiscal year 2019, JALPAK will strive to enhance the range

Komatsu, Okayama and Fukuoka respectively with a fleetof three SAAB 340B aircraft, which operate 26 daily flightsof 12 Boeing 737 aircraft. As a JAL Group airline, JTA offers

linking Hakodate, Kushiro, Rishiri Island and Misawa withhigh-quality service with a touch of Okinawa culture. The

Okadama Airport in Sapporo and Okushiri with Hakodate

airline is also doing its part toAirport. HAC will continue to focus on flight safety tosupport the regional economy

maintain support from Hokkaido residents, while striving

by widely promoting Okinawa

to attract more individual and group passengers andas an appealing destination forbusiness travelers. HAC will

tourists.

also do its part to support theeffort to create value that exceeds customer expectations.
JALCARD., Inc.

ESG Management

Sales

Purchaser

Store sales and wholesaling

In fiscal year 2018, the addition of the JAL Card SuicaCLUB-A Gold Card to the product lineup in July andmembership campaigns resulted in an increase inmembership of 4.5% year on year to 3,579,000. The increase

Yamato GroupJAL Group
domestic and international ground air transportation,transportation, product proposals
product promotion
Chronopost (French domestic transportation)

(

)(

)

in users of the new option to pay the annual membershipfee with mileage, which was launched in fiscal year 2017,
and new initiatives such as using LINE to introduce members

its 36th anniversary in 2019, operates flights on 18 routes

Ryukyu Air Commuter Co., Ltd. (RAC)

mainly to outlying islands in Kagoshima Prefecture such as

A regional airline celebrating its 34th anniversary in 2019,

Growth strategy reflecting the external environment

led to positive results in the Japan Customer Satisfaction

the Amami Islands, which have been designated as Japan’s

RAC provides convenient connections to outlying islands

External environmental factors which have a major impact

Index (JCSI) survey of credit card companies; 1st place in34th national park. The cutting-edge ATR42-600 turboprop

in the Okinawa region. Based at Naha Airport on the main

on international cargo operations include additional slots atthree indicators including loyalty and the recommendation

was introduced to routes in 2017 and the new “Amami

island of Okinawa, the airline operates between 41 and 43

Narita and Haneda airports as a result of the developments

intention rate, and 2nd place in the remaining 3 indicators.

Islands Hopping Route” was established in July 2018 todaily flights on 12 routes, with connections to nine islands.

of airports in metropolitan area scheduled in 2020. Fiscal

Further, JALCARD enhanced data marketing, renewed callfurther support the regional network as the “Wings of the

From April 2018, RAC began offering a year-round service

year 2019 is positioned as a year of preparation for thecenters, and thus improved the system for providing services

Region.” In addition, JAC is expanding a cooperative project

for the first time with its five DHC8-Q400 Cargo-Combi

years 2020 onwards. While additional slots represent

to meet customer needs. As a result, operating revenue (prior

to share aviation technologies with other companies. As anaircraft (Q400CC). Making maximum use of the features

business opportunities, an increase in supply is expected to

to intercompany transactions elimination) increased by 6.1%

initiative beyond the JAL Group, JAC has lent ATR sharedof the Q400CC, such as its jet-equivalent cruising speed,bring intensifying competition and dramatic changes in theyear on year to 19.4 billion yen.

business aircraft to Amakusa Airlines since June 2018. JAC

high level of cabin comfort, and double the cargo space of

operating environment.

In fiscal year 2019, JALCARD will continue to embrace thewill continue to grow andstandard models, RAC is improving convenience for outlying

In domestic cargo, we will update business processes

challenge of providing values expected by customers. We

develop together with theisland residents and tourists and using the expanded cargo

by shifting to paperless manifests and developing awill further pursue customer satisfaction by providing timely

region, aiming to become acapacity to transport fresh seafood and agricultural products

reservation portal site. We will strive to offer customers

and stress-free services, and endeavor to offer new andvalued and trusted airline offrom the islands at higher

greater convenience in terms of both reservations andattractive products and services.

the region.

speeds and in larger volumes

transportation. The introduction of the A350, planned

to promote local industries

in September 2019, will change the supply- demandand contribute further to theenvironment, and therefore, we will accelerate development

region.

and sales initiatives and expand into new business domains.

Financial Data/ Corporate Information

42

Regional producers andbusiness owners
Governments (national, prefectural, etc.)

Transportation

further, respond to diverse customer values in a determined
ISSE

routes linking the Amami Islands. The airline, which marks

Ask for cooperation
with product proposals

Importing and wholesaling

Hokkaido.

Export /importImporter

JAC was established to initially operate flights on four

Product purchasing-export

economy and communities in

Productsales

brand values and promoting sales of package products, andFranceExporterJapan Air Commuter Co., Ltd. (JAC)Japan

Production–shippingdevelopment of the regionalof value-added products to contribute to improving JAL

Producer

JAL REPORT 2019

It maintains a record of zero fatalities in the company’s

Business Activities and Strategy

regional routes, is based at Osaka International Airport

Revitalize Regional Economies

Message from the President

Using JAL Group’s Strengths to Maintain Vital Air Links and43

VALUE PROVIDED BY JAL GROUP—COMMITMENT TO QUALITY
The JAL Group declares its commitment in the Corporate Policy to deliver unparalleledservice to our customers, and aims to provide the world’s best on-time performance,
comfort and convenience with top priority on safety.

2018 World Airline Awards. In June 2019, JAL was the firstJapanese airline to receive the World’s Best Economy Class
Award, which is presented to airlines excelling in overall

IATA Operational Safety Audit (IOSA)To ensure flights are comfortable and enjoyable, the JAL

assessment of Economy Class. JAL also received the Bestfor IOSA* renewal in February and March 2018, and received

Group values the customer’s perspective. We work to

Economy Class Airline Seat Award for the third consecutive

To rebuild safe and sense of security, we are working tocertification from the International Air Transportation

improve both “hard” and “soft” services in order to deliver

year and our fourth win. At the TripAdvisor® Travelers’eliminate safety risks caused by alcohol consumption and

Association (IATA) in June 2018.

enhanced high-quality services.

Choice™ Awards 2019, JAL was named first place for thepromote measures to prevent objects from falling off

IATA member airlines are required to renew their IOSA

On international routes, we renovated our First ClassBest Airline in Japan for the third consecutive year andaircraft. We are also working to detect and solve Group-

registration every two years. Japan Airlines has continually

Lounge at Narita International Airport, and at Honolulu

took fifth place in the Top 10 Airlines in the World. We

wide issues relating to injuries and safety disruptive conduct

renewed since 2004 and Japan Transocean Air since 2010.

Daniel K. Inouye International Airport, renovated Sakura

will continue to create products and services that meetat the airport and in flight to ensure sense of security for

J-AIR renewed its registration since its first IOSA registration

Lounge located in the Main Building and opened a newdiverse customer needs and offer the spirit of Japanese-styleevery customer.

in 2016.

Sakura Lounge. In inflight meal service, we introduced thehospitality in order to provide the world’s finest quality of

The next renewal audit is planned for February 2020.

JAL Luana Style service of styling your own meal time andservice.

Elimination of safety risks caused by alcohol consumption
behavior that affects flight safety caused by alcohol

JAL REPORT 2019

Business Activities and Strategy

Japan Airlines, Japan Transocean Air and J-AIR were audited

We regard drinking as a safety issue and will eliminate

Message from the President

Safety and Sense of Security

Comfortmenu for Business Class on flights from Japan to Hawaii. In* IOSA is an international safety audit program for confirming the effectivefunctioning of safety management systems of airlines.

addition, we are developing special inflight menus such as
vegetarian meals and Hindu vegetarian meals to cater toconsumption. Specifically, we will eliminate the effects ofdiverse needs. Furthermore, we are continuing to expand

drinking on safety by implementing alcohol consumption

routes operated with JAL SKY SUITE-configured aircraft

measures, monitoring the situation through internal audits,

designed to evoke a “one class higher” feel.

and raising awareness among all employees.

On domestic routes, we have improved a host of services
such as renovating lounges at Osaka Itami Airport andopening a new Sakura Lounge at Okayama Momotaro

off aircraft

Airport. We improved connectivity to our complimentary

As flight routes are planned to pass over the city centerinflight Wi-Fi service, increased video programs to 70

due to the development of airports in metropolitan area,channels, and introduced live television programs. Going

we are further promoting measures to prevent objects

forward, we are planning to introduce new Airbus A350

from falling off aircraft. While improving daily inspections

aircraft that offer quiet cabins and personal monitors andand implementing swift measures through collection andpower outlets in every seat as we endeavor to provide

analysis wide-ranging information on irregularities, we will

ESG Management

Further promotion of measures to prevent falling objects

Certified as 5-Star Airline by Skytrax

greater comfort in flight.
Transport safety management assessment

Through these initiatives, JAL was recognized for the world’s

aircraft manufacturers.

In fiscal year 2018, three of the six JAL Group airlines, Japanfinest quality and received the 5-Star rating at the Skytrax

Airlines, J-AIR and Ryukyu Air Commuter, underwent a
Efforts to ensure sense of security for every customer

Transport Safety Management Assessment conducted by the

In addition to flight safety, we will address a broad range

Secretariat of the Minister of Land, Infrastructure, Transportof safety issues including customer injuries and safety

and Tourism. The assessment, applicable to all transportation

disruptive conduct in order to restore customer trust andoperators including air, rail, sea and vehicular operators,

provide greater ease of mind. We will also use safety

checks the operation of company-wide safety management

management methods to help resolve issues such as quality

systems, identifies areas that need improvement, and offers

control of inflight meals.

advice. JAL uses assessment findings as reference to conduct

The JAL Group also uses third-party audit and assessment

original initiatives.

Named, Best Airline - Japan for the third consecutive year at TripAdvisor
Travelers’ Choice Awards

Financial Data/ Corporate Information

promote measures in cooperation with other airlines andprocesses to maintain and improve safety.
(For more details, please refer to the JAL Group Safety Report)
WEB

https://www.jal.com/ja/flight/safety/report/(Japanese only)

Sakura Lounge Hale at Honolulu Airport

44

Special inflight menus offering new vegetarian meals

45

VALUE PROVIDED BY JAL GROUP — COMMITMENT TO QUALITY

Passing the Baton to Maintain the World's top On-time Operations

We feel that JAL Group’s extensive route network is one

One basic factor of quality for public transportation

Reservations and ticketing

Airportof our greatest strengths and an important factor when

operators is on-time operations with safety as top priority.

customers choose to fly with us. In addition to offering

The times in our flight schedules represent our products androutes and flight schedules that meet the needs ofour commitment to customers and society. The basic value

Trained personnel provide accurate
reservation and ticketing services andinform customers of the departure timeand other necessary information.

customers and society, we will provide highly convenientoffered by an airline is to fly to destinations according toSeat assignments for passengers
traveling in groups and passengers
requiring assistance are checked inadvance to ensure smooth boarding thenext day.

products and services that appropriately fulfill customer

scheduled times. To provide this value, we strive to ensureneeds at every stage of the customer journey until arrival atseamless communication between many divisions, from

Spot-in

Maintenancethe destination.

reservations, airports, cargo, maintenance, flight operations,

On domestic routes, we launched the new Amami Islands

cabin attendants, sales and other support divisions to Head

Aircraft marshallers guide aircraft to theproper parking spot after landing.

Hopping Route (Tokunoshima-Okinoerabu-Naha) operated

Office planning divisions.

by Japan Air Commuter. On international routes, we

As a result, we were recognized and awarded by Cirium, aAircraft engineers inspect approximately
50 check items to detect dents andother damage on arrival aircraft. They
take necessary action based on reports
of problems or malfunctions fromcockpit crew.

launched new services between Tokyo-Haneda and Manila

company that analyzes on-time performance of airlines andand between Tokyo-Narita and Seattle, and increased flightother indicators, as the Best Mainline Airline in the Asia-

frequency between Tokyo-Narita and Moscow. We are also

Pacific region (seventh consecutive year, ninth win) for on-

expanding partnerships with global airlines to achieve ourtime performance of domestic and international flights

target of serving 500 cities worldwide.

operated in calendar year 2018. We were also recognized

We also improved our frequent flyer program with regard

by Flight Global as the Most Consistent Winner in theto award tickets for JAL Mileage Bank members, such

Major International Airline category and Asia Pacific Major

as introducing JAL international award ticket PLUS and

Mainline Airline category as an airline with the best on-

extending reservation acceptance of domestic award tickets

time arrival performance in the past five years (2013–2017).

to one day prior to departure.

The JAL Group will continue to ensure the safe operation

The JAL Group remains firmly committed to deliveringof every flight and provide the world’s top on-time

a refreshing and inspiring travel experience throughperformance.

Day before

Before andafter arrival

Check-inBusiness Activities and Strategy

On-time Operations

Message from the President

Cabin cleaning and loadingof cabin service goods

Check-in personnel perform boarding
procedures of passengers and baggage
and provide information on the boardinggate and boarding time.

Beforedeparture

Personnel quickly clean seats andlavatories, and tidy and replenish cabin
service goods such as blankets, pillows
and inflight magazines to create acomfortable cabin environment.

FuelingCatering

The appropriate amount of fuel is loaded
depending on weather conditions,the number of passengers and crew
and cargo weight. Environmental
considerations are given to avoid waste.

To provide safe and secure inflightmeals, attention is paid to hygiene andmeals are delivered on time.

Security checkpoints

Boarding gate

Cooperation from passengers to prepare
for inspections in advance ensuressmooth and strict security checks tomaintain aviation safety.

Airport staff share passenger information
with cabin attendants before boarding
begins. They assist passengers to ensuresmooth boarding such as announcing
the order of boarding by types ofpassengers.

ESG Management

JAL REPORT 2019

Convenience

unparalleled service to all our customers.

Flight dispatch

Load control Baggage andcargo loading

Various information affecting operations
such as weather information and airport
conditions is gathered and provided
to cockpit crew for determining theappropriate altitude, flight course andflight method.

Baggage and cargo are loaded
accurately and speedily according toa detailed plan based on data on thenumber of passengers, the size andweight of baggage and cargo, etc.

Cockpit crew

The ceremony to launch Narita=Seattle route
Best Mainline Airline in the Asia-Pacific region
Most Consistent Winner award (2013–2017)

After receiving reports from the
cockpit crew on the previous flight andmaintenance conditions from aircraft
engineers, cockpit crew conduct briefing
with cabin attendants, and strive to achieve
on-time departure and safe operations.

Cabin attendants

Inflight

Baggage claim
Passengers are asked not to pickup someone’s baggage by mistake.
Baggage is returned quickly to ensure asmooth end to the trip.

46

Financial Data/ Corporate Information

Pre-departure

ArrivalCabin attendants aim for on-time
departure by showing passengers totheir seats and making sure baggage
is stowed appropriately. They provide
attentive service to ensure a comfortableflight for every passenger.

Welcoming passengers at
the arrival gate
Connecting passengers are informed of
the shortest route to reach the boardinggate of their next flight. Passengers
requiring assistance when disembarking
are given support.

47

RISK MANAGEMENT
Basic Stance

Risk Management System
Board of Directors

Council, the Risk Management Committee is headed by
the General Manager of General Affairs, and comprises

three categories: (1) operational risks associated withleaders of relevant departments. Its role is to conduct

aviation safety, aviation security and other issues related

administrative work in support of the Risk Management

to air transportation; (2) corporate risks associated with

Council, including any preparations that will contribute to

management in general, excluding risks related to air

decision making and implementation of the decisions made.

PresidentGroup Operational Safety Promotion Committee

Risk Management Council

Group Council for Safety Enhancement General Meeting

Risk Management Committee

Safety Management
Security Management

Information Security Committee

Financial Risk Committee

Corporate Risk, Operational Risk, Strategic Risk

Group Operational Safety Promotion Committee

Exercises, reviews, education and training are conducted

The Information Security Committee is headed by the

The Group Operational Safety Promotion Committee isincrease the crisis management awareness of every employee.

We have established the following six committees in order

General Manager of General Affairs and the General

headed by the President of Japan Airlines and comprises

to identify, analyze and assess existing risks and implement

Manager of IT Planning, and comprises leaders of relevant

executive officers and presidents of Group airlines

appropriate measures to mitigate those risks.

departments. The Committee conducts activities specific toappointed by the Safety General Manager and Chairman.

information management, upgrades information security

The role of the Committee is to ensure safety for the Groupmeasures, and strives to reduce corporate risk.

as a whole and promote safety management by establishing

To respond to specific risks that threaten our ability to fulfill

key policies related to safety management, clarify the status

our responsibilities as a public transportation operator suchas pandemic influenza, unidentified infectious diseases ortransportation; and (3) strategic risks associated withbusiness operations that may have a material impact on

1-1. Information Security Committee

corporate revenues and expenditures.

regularly for each type of disaster or purpose in order toBusiness Continuity Plan (BCP)of corporate activities and review organizations, systems

The Financial Risk Committee is chaired by the Generaland measures, as necessary.

and primarily comprises General Managers of divisions

Manager of Finance and Accounting and includes the

responsible for managing frontline departments.

President, Executive Vice President and leaders of relevantGroup Council for Safety Enhancement General Meetingin emergency situations based on guidelines established in

The Council takes responsibility for overall risk management

departments.

Organized as a committee under the Group Council

collaboration with regulatory bodies and other relevant

encompassing operational risks, corporate risks and strategic

The Committee identifies financial risks appropriately andfor Safety Enhancement General Meeting, the Groupinstitutions. The BCP covers basic matters such as policies andrisks to stabilize Group-wide management activities. It also

strives to facilitate improvements in corporate management.

Operational Safety Promotion Committee maintains andprocedures necessary to ensure the safety of JAL Group staff

functions as a venue for reporting on progress, sharing

More specifically, it conducts regular simulations of financial

strengthens collaborative, safety-related measures among

and their families and maintain air transportation operations

information and making decisions on various mattersconditions and checks the content. In the event of a major

departments, divisions and Group airlines with the aim ofessential to the Group, including reservations, informationsuch as establishment of JAL Group Basic Policies on Risk

financial crisis, large-scale disasters or other major risk-enhancing the safety of Group air transportation operations

provision, payments and settlements. It is reviewed regularlyManagement, regular risk assessments, and implementation

generating events that the Committee determines will

as a whole. The Committee comprises the General Manager

and revised as required to improve its application.

of measures when risks eventuate.

have a serious, quantifiable impact on the JAL Group, it willof Japan Airlines Corporate Safety & Security (who serves as

During the outbreak of Ebola hemorrhagic fever in Westcalculate the estimated financial impact and deal with the

Chairperson), leaders of departments responsible for Japan

Africa in 2014, we activated our BCP regarding responses

risk jointly with the Risk Management Council, as necessary.

Airlines safety management administrator appointed by theto pandemic influenza or unidentified infectious diseases.

1. Risk Management Committee
Organized as a committee under the Risk Management

earthquakes, we have established a business continuity
plan (BCP) that enables us to continue business effectively

Chairperson, and the Safety Manager or Safety Director of

We coordinated our actions with relevant government

each Group airline.

bodies, developed necessary systems and added the Policy

ESG Management

JAL REPORT 2019

2. Financial Risk Committee

The Risk Management Council is headed by the President,

Business Activities and Strategy

Risk Management Council

Message from the President

The JAL Group manages risks by dividing them into

Promotion of Safety and Security

for Handling the Ebola Virus Disease (International Flights)
to our BCP. In fiscal 2018, we reviewed regulations related to

Principal Business Risks

Strategic Risk

Risks related to the external operating environment, including
the international climate and economic trends (examples)• Substantial reductions in demand for air travel due to trends in the global economy, natural disasters andadverse weather conditions, wars and conflicts, terrorist attacks, infectious diseases, and other events• Intensified competition from major airlines, low-cost carriers, bullet train services, and other means oftransportation• Changes in partnership environments, such as alliance mileage

Market risk (examples)• Fuel price volatility• Exchange rate volatility• Capital and financial market
trends• JA L Group credit ratingchanges• Delayed aircraft deliver y due totechnic al, financial, and otherreasons at aircraft manufacturers• Other problems that could impact
fleet plans

IT system and customer data
handling risk (examples)• Flaws in computer programs• Computer viruses and cyber-attacks• Large-scale failures in power systems, communication
networks, and other infrastructure that support IT systems• Leaks of personal information

Flight safety risk (examples)

Disaster risk (examples)• Aircraft accidents• Safety issues related to the sameair c r a f t t y p e o p e r a t e d b y t h eGroup or to codeshare flights• Airport closures due to major earthquake or volcanic
eruption, etc.
• Damage to key facilities due to fire or terrorist attack, etc.
• Outage of information systems and operational control
capabilities

Operational Risk

48

Aircraft risk (examples)

Financial Data/ Corporate Information

Crisis Management(For more details and example measures for each risk, please refer to pages 92–93)

earthquakes and expanded our strategies and BCP to include
a potential earthquake below Tokyo in particular.

When risks (operational risks) associated with aviation safety,
aviation security and other issues related to air transportation
eventuate, or when such risks are suspected or confirmed,
Corporate Risk

Regulatory and litigation risk (examples)• Changes in laws and regulations of countries serviced• Changes in bilateral aviation agreements and otherinternational arrangements• Tightening of corporate social responsibility andregulations related to the global environment• Filing of litigation

Personnel and labor
relations risk (examples)

we report quickly (within a target of 15 minutes) to the

Information Security Measures

Integrated Operation Center (IOC). The JAL Group determines

The JAL Group fell victim to a data security breach in

the applicable crisis management level according to the

September 2014. Hackers attacked the JAL Mileage

situation, from Phase I to Phase III, and responds appropriately.

Bank’s systems and gained illegal access to the customer

In Phase III, a Head Office crisis management team and a local

information management system. We deeply regret thecrisis management team situated in the disaster-affectedinconvenience and concern caused to customers andarea, headed by the President or Executive Vice President,

all those affected by this incident. In response, we areare mobilized and teams rapidly implement crisis systems.

strengthening information security as a top priority issue
and taking steps to prevent recurrence.

Normal level

Risk
eventuates• Shor tages of personnel with thequalifications and skills required tooperate aircraft• Collective strikes or other labor disputes

Business continuity
targetTarget recovery time
Crisis system response
Crisis management

Business continuity
BCP

Specifically, information security measures were moved
up ahead of schedule to build a robust system to detectand monitor increasingly sophisticated and complex cyberattacks, while preventive measures are being continuously

Return to normal

upgraded to the highest level.

49

FINANCIAL AND NON-FINANCIAL HIGH LIGHTS
Financial Data (As of March 31, 2019)■ Operating profit (Billions of yen)
■ Net profit attributable to owners of parent (Billions of yen)
Operating profit margin (%)
13.4%

15.7%

13.2%

9.5 %

49.2 %

ROIC*1

12.6%

Total return ratio*2

11.8%

174.4

149.0

170.3
174.5
164.1

14.0%

176.1
150.8

135.4

10.7%

12.7%

10.1%

149.0

We have been achieving an operating profit
margin of 10% or above continually, whileemphasizing profitability.

20.3%

We have been achieving ROIC of 9% or aboveby focusing on investment efficiency to enhance
corporate value.

52.7%

53.4%

56.2%

10.3%

13.6%

9.7%

9.1%

972.0
776.4

38.7 20.0

38.3 20.0

2015

2016

2017

2018 (FY)261.1△199.2

110.3

101.3

Customers and communities

2016

2017

2018 (FY)

We strive to improve asset efficiency and capitalefficiency, and have been achieving ROE of 10%
or above.

EBITDAR margin*7

21.5 %

2014

2015

2016

2017

2018 (FY)

Equity ratio reached approximately 60%.
Having built a strong financial structure, we will
maintain the current level.

2014

253.1
△207.2

2015

281.5

296.7

△215.5△180.1△186.3201620172018 (FY)

We ensure there is always sufficient free cash
flow to fund dividends for our shareholders
through high profitability and cash flow
generation ability.

292.7

2014

24.0%

22.2%

321.1
286.2

2015

2016

23.8 Non fuel% efﬁcient

59.3
%

64.3
%

70.1
%

76.2
% Fuel-

2015

2016

2017

2018 (FY)

ratio

0

2018 (FY)

57.6
%

2014

efﬁcient
ratio

Cities serviced
International

From fiscal 2017, the JAL Group has used
Net Promoter Score (NPS)* as a performancethe aim of achieving the world’s top customer
satisfaction. By serving 500 cities worldwide, as
targeted in the Grand Design, the Group will350

+1.3pt+1.7ptCustomer evaluations and opinions are shared

402

343

+2.2pt+2.0ptMedium Term Management Plan.

0pt
0pt
2017
Start of period

2018 (FY)2017

02018 (FY)2017

Targeting 500 cities from end of fiscal 2017contribute to expanding the travelling nonresident population among regions.

* A performance indicator that measures the customers’ intention to recommend to others.

Human rights, Diversity and Inclusion

Average monthly overtime and rest
day work hours per employee*

In 2014, JAL Group top management■ Average monthly overtime and rest day work hours per employee
Ratio of annual paid leave taken

declared our commitment to diversity.
company where everyone can work in

84.0%

85.5%

11.4

12.0

89.5%

a positive atmosphere regardless ofgender, age, nationality, race, religion,

86.0%

Ratio of female managers■ Female managers

15.1％
756

7.9

8.5

2017

2018 (FY)

15.6％
799

Ratio of female managers
16.3％ 16.3％

16.8％

846

853

882

2016

2017

2018 (FY)disability, sexual orientation, or otherpersonal attributes.
2015

Governance
22.1%

305.4

2017

The JAL Group has established

21.5%
320.1

2018 (FY)We maintain a high level of profitability and soldfinancial structure. We will strategically allocate
capital to enhance corporate value.

50

29.9
%

2016

2014

2015

* Japan Airlines only

■ EBITDAR (Billions of yen)
EBITDAR margin (%)
21.8%

2017

35.7
%

Financial Data/ Corporate Information

2015

2016

NPS*
Domestic

Since then, we have aspired to be a
2014

2015

40.7
%

37.5

312.3

1,060.3

40

2014

42.4
%

60

80.6%

20

¥110.3 billion
61.8

82.2%

measures in all aspects of its business.

internally to improve products and services with

105.1

80

84.6%

and protect the environment throughindicator for customer satisfaction in the

57.4%

843.0

it must strive to reduce that impact

We will focus on “Total Return”, which
combines dividends and share repurchases. For
the total return ratio, we will aim at a range ofapproximately 35% to 50%.

■ Cash flow from operating activities ■ Cash flow from investing activities*6
Free cash flow (Billions of yen)

1,165.1

18.1%
13.3%

57.2%

2014

Free cash flow

■ Shareholders’ equity (Billions of yen)
Shareholders’ equity ratio (%)

21.5%

13.7%

2018 (FY)

Shareholders’ equity ratio

ROA*5 (%)

12.8%

2017

33.2 30.0

2016

57.4 %ROE*

4

ROE (%)

2015

85.1%

ESG Management

JAL REPORT 201913.6 %

2014

86.6%

32.3%

43.5

2018 (FY)2017

the environment and understands that

70

29.4%

25.1%

25.0%

90

150.8

135.4

37.7

2016

44.5%

164.1

100

of its air transportation business on

Business Activities and Strategy

2015

49.2%

9.5%

25.1%

2014

The JAL Group recognizes the impact

47.7%
174.4

Fuel-efficient aircraft share

CO2 reductions
CO2 emissions per revenue ton kilometer (vs. fiscal 2005)

Net profit attributable to owners of parent (Billions of yen)
Total dividends (Billions of yen)
Share repurchase (Billions of yen)
Payout ratio (%)*3
Total return ratio (%)

ROIC (%)

209.1
179.6

Environment

Message from the President

11.8 %

Operating profit margin

Non-Financial Data

*1 ROIC (Return on Invested Capital) = NOPAT/Average Fixed Asset (incl. Future Rental Expenses under
Operating Leases) at beginning and end of a fiscal year
*2 Total return ratio = (Total amount of dividends + Amount of share repurchases) / net profit
attributable to owners of parent (excluding effects of deferred income tax)
*3 Payout ratio = Total dividends / net profit attributable to owners of parent (excluding effects ofdeferred income tax)
*4 ROE (Return On Equity) = (Net profit attributable to owners of parent) / (Average of shareholder’sequity at beginning and end of a fiscal year)*5 ROA (Return On Assets) = (Operating profit) / (Average of total assets at beginning and end of a fiscalyear)*6 Excluding deposits and withdrawals from deposit accounts*7 EBITDAR Margin = EBITDAR / Operating Revenue
EBITDAR=Operating Profit + Depreciation and Amortization + Aircraft Leases

committees for corporate governance,
nomination of candidates for director
positions, selection of executive
officers, and determination of director
remuneration to achieve strong
management oversight based onhighly transparent management. The
majority of committee members are
independent external directors.

Composition of each committee
Chairman
Corporate GovernanceCommittee
Nominating Committee
Personnel Committee
Compensation Committee

Officers Disciplinary Committee

External director

Internal director

51

ESG MANAGEMENT APPROACH
Positioning within the Medium Term
Management Plan

D&I*1), and Governance.

Establishment of the JAL Group Code of Conduct

Initiatives to achieve the SDGs
Based on the ESG management approach, the JAL Group has

an air transportation operator and become a company thatbegun defining specific KPIs and progress management in

To achieve the SDGs, the JAL Group Code of Conduct,

society can put their confidence in by proactively solving

four areas to achieve the SDGs by 2030, while maintaining“Commitment to Society” was established as concretesocial issues.

flight safety.

behavioral guidelines to be observed by all officers

Therefore, we have included our resolve to “contribute

Furthermore, we are committed to raising awareness of theand employees to achieve the SDGs. The 10 principles

to resolving social issues” such as the SDGs in our 10-

SDGs internally and externally. We will fulfill our corporateof the UN Global Compact*3 and Charter of Corporate

Year Grand Design, starting from the new Medium Term

mission to deepen understanding of the importance ofBehavior of Keidanren (Japan Business Federation)

Management Plan for Fiscal Years 2017 to 2020.

these initiatives by more people and contribute to thewere used as reference.

Specifically, we have incorporated ESG management

development of a sustainable society.

Acting in line with this Code of Conduct is a way

perspectives in our Medium Term Management Plan,of practicing the JAL Philosophy and realizing theidentified four areas of focused activities: Environmental,

Corporate Policy.

Conduct
To shape the Code of Conduct as behavioral guidelinesof the JAL Group, we develop policies, codes and actionplans that lead to steady implementation of the Code
PDCA cycle.
At the same time, the Group will deal with social needs
and issues by strengthening its check function throughEnvironmental

Grand Design

Social(Customer andCommunity)

SocialMedium Term
Management
Plan

ESG
management
perspectives(Human Rights
and D&I* 1)

Governance

Promotion Framework
The JAL Group holds CSR Committee meetings to contributeto the realization of a sustainable society. The Committee
initiatives, sets KPIs, checks progress and considers action
policies in relation to the 14 priority issues in the abovetable, and improves and promotes each initiative.
Meetings were held every six months up till fiscal year 2018,

Corporate Brand Promotion Council(2) Safe and comfortable work environments
5. Mission and responsibility as a member ofsociety(1) Contributing to regional revitalization
through our business(2) Responsibility as a company that plays arole in social infrastructure(3) Responsibility as a corporate citizen
6. Passing on the precious earth to the next
generation (global environment)(1) Global environmental preservationand dialogue

JAL Group Corporate Policy(1) Reinforcing compliance(2) Preventing corruption(3) Fair business relations with business
partners(4) Free and fair competition(5) Management of personal information andintellectual property(6) Eliminating relations antisocial forces

JAL Group Code of Conduct
Preamble

President(human rights and labor)

7. Fair business practices

1. Safety

Promotion Framework

implements the PDCA cycle effectively to establish(2) Prohibiting insider trading
4. Respect for human rights and job satisfaction(2) Disclosure of environmental information• Thorough compliance• Proactive disclosure and accountability• Robust risk management

Board of Directors(1) Information disclosure and dialogue

initiatives• Achieve active participation and healthmanagement for diverse human resources• Train and produce female leaders• Build a sound* 2 supply chain*1 Diversity & Inclusion: Application and creation of different experiences and perspectives on accepting differences*2 A state of achieving environment considerations, fair business practices, and respect for human rights, etc.

3. Trust with stakeholders

Financial Data/ Corporate Information

2020

communication with external stakeholders.

• Reduce greenhouse gas emissions• Reduce waste• Reduce noise• Lead global aviation safety• Enable air travel for everyone• Expand inbound travel to create atourism-oriented country• Support regional revitalization across Japan• Develop products and services that are
trusted by customers

2. Pursuit of customer satisfaction

ESG Management

JAL REPORT 2019of Conduct, and disclose results and issues to establish a

Priority Issues

1. Safety

Business Activities and Strategy

Policy development associated with the Code of

Initiative Areas

JAL Group Code of Conduct(1) Respecting human rights and diversity

Social (Customer and Community), Social (Human Rights and2030

Message from the President

The JAL Group aims to fulfill its social mission and role as

2. Pursuitof customer
satisfaction

3. Trust withstakeholders

4. Respect for humanrights andjob satisfaction

5. Mission andresponsibility as amember of society

6. Passing on the precious
earth to the next generation(global environment)

7. Fair businesspractices*3 The United Nations Global Compact is aframework for participating businesses
around the world to implement the Ten
Principles in the areas of human rights,
labor, the environment and anti-corruption.
The JAL Group has been a signatory to the
Global Compact since December 2004.

JAL Philosophy

but to further drive ESG management, the frequency of
meetings has been increased to quarterly from fiscal 2019.

52

CSR Committee

53

ENVIRONMENT
Environmental Management

Tackling Climate Change
CO2 Emissions reduction target and progress

Operational methods and other measures

Aircraft renewal to fuel-efficient aircraft

The JAL Group recognizes the considerable impact of its air

At the general assembly of the International Civil Aviation

In addition to “Eco Flight” activities in daily operations by

Renewing aircraft to fuel-efficient aircraft such as thetransportation business on the environment, and is working

Organization (ICAO) convened in 2010, two aspirational

cockpit crews with top priority on safety, we are conducting

Airbus A350 and Boeing 787 can reduce CO2 emissions by

to reduce that environmental impact and protect the

global CO2 reduction goals were agreed on for thevarious activities in workplaces, such as reduction of

approximately 15-25% per aircraft. The JAL Group will

environment through a range of measures in all aspects ofinternational aviation sector: 2% annual fuel efficiency

aircraft weight and regular engine washing to improve fuelcontinue to renew its fleet to more fuel-efficient aircraft

its business activities.

improvement, and carbon neutral growth for international

economy.

under a plan to further reduce its CO2 emissions.

With this awareness, we included “Passing on the precious

flights from 2020 onwards. Additionally, at the generalSpecifically, we are implementing CO2 emission reduction

earth to the next generation” in the JAL Group Code ofassembly convened in 2016, the Carbon Offsetting andinitiatives through the cross-organizational Fuel-Saving

Share of Fuel-efficient Aircraft in JAL Group’s Fleet

Conduct.

Reduction Scheme for International Aviation (CORSIA)

Project and implementing the PDCA cycle to monitor and100％

was adopted. The scheme obliges airlines operating

share progress in order to achieve our goal.
50％

average CO2 emission level of 2019 and 2020. Airlines
We are implementing our emissions reduction targets inthree phases—short term, medium term, and long term.

CO2 reduced infiscal year 2018

The JAL Group’s short-term target is to reduce CO2 emissions
fiscal 2005 level by fiscal 2020.

(1) Global environmental preservation initiatives
The JAL Group complies with laws and regulations
and strives to respond to climate change, effectively
use limited resources, prevent environmental
pollution, reduce noise, and preserve biodiversity to
reduce impacts of operations on the environment.
In addition, we pursue the development ofenvironmentally-friendly technologies to solve
environmental issues, in coordination withstakeholders.

To achieve this short-term target, we have steadily(2) Disclosure of environmental information and dialogue
The JAL Group actively discloses environmental
information, maintains dialogue with stakeholders
and expands environmental preservation initiatives
to society.

carbon offsetting according to the CORSIA.

Regularmaintenance

Reduced18,700 tons

Group by a dedicated department under the control of thedaily flights and renew aircraft to fuel-efficient aircraft such
While parked

Reduced800 tons

Before departure

Reduced7,600 tons

At takeoff

Reduced7,400 tons

During descent

Reduced37,900 tons

At landing

Reduced
6,500 tons

While taxiing

Reduced
5,500 tons

as the Airbus A350 and Boeing 787 under a plan. As a result,CO2 emissions in fiscal 2018 were 1.6% lower than theprevious year. As of the end of fiscal 2018, we have reduced
emissions by 19.4% from the fiscal 2005 level.
For our medium-term target, we aim for carbon neutral
growth from 2020 onwards, which we will achieve by
For our long-term target, we are considering setting an
Transport Association (IATA) target of “a 50% reduction in
total CO2 emissions in 2005 by 2050.”【CO2 削減の推移】

CO2 Reductions

110%
CO2/RTK (vs. FY2005)

100%

We are currently rebuilding a system of observation,
aggregation and management of environmental data. The

FY2018 80.6%

90%system will collect environmental impact data such as CO2
80%emissions from business activities, but also indirect emissions

operating according to international standards (ISO 14001).

54

2020

2018

2016

2017

2014

2015

2012

2013

2011

2010

2008

2009

2006

Group, including all business units and business offices, and2007

We are also considering building a unified EMS of the JAL

Targetof 77.0%

70%

2005

and supply chain emissions.

2019emissions, waste and water usage, including not only direct

64%

70%

76%

80%

81%

Fuelefficient
aircraft

2016
2017
2018
2019
2020 Fiscal
year-end
Fuel-efficient aircraft: A350, 787, 777, 737-800, E170/190
Actual figures to fiscal year 2018; plans from fiscal year 2019

Engine water washing
We regularly wash aircraft engines to remove dust andother small airborne particles stuck inside the engines tomaintain and improve, fuel economy.
Reduced use of auxiliary power unit (APU) (closed cabinshades exercise)
Closing window shades blocks out sunlight, lowers cabin temperatures,and reduces use of air-conditioning. This shortens the operating timeof the APU at the rear of the aircraft, and reduces CO2 emissions.
Lightened aircraft weight
The amount of water loaded onboard aircraft is being
optimized based on past usage records to reduce aircraft
weight.

aggressive target, taking into account the International Air

responsible executive officer. Progress of specific activities isconfirmed at quarterly meetings of the CSR Committee.

Other

Ascent with early acceleration
Ascending after takeoff while accelerating from an earlier
point is effective for reaching cruising altitude earlier inthe flight and reducing fuel consumption. Therefore, JAL is
actively utilizing this approach to reduce CO2 emissions.

Financial Data/ Corporate Information

JAL Group environmental activities are conducted across the19%

implemented measures to reduce fuel consumption during

Building a promotion framework and Environmental
Management System (EMS)

20%

0%

throughout the world are working to achieve these goals.

from aircraft to 23% per revenue ton kilometer below the24%

ESG Management

JAL REPORT 2019

We sincerely accept the fact that our air transportation
business impacts the environment significantly. To fulfill
our responsibility of passing on the precious earth to thenext generation, we raise awareness of every employee
and preserve the environment in every aspect.

internationally to purchase or otherwise trade CO2 emissions
rights from 2021 onwards for any amount exceeding the30%

Business Activities and Strategy

JAL Group Code of Conduct[Commitment to Society]
Passing on the precious earth to the next
generation (global environment)

36%

Message from the President

Basic stance

Reduced air resistanceSetting flaps at shallow angles and delaying the timing forlowering the wheels and flaps, while maintaining safety,
is being conducted to minimize air resistance in flight andreduce CO2 emissions.
Reverse thrust measures
When certain conditions are met to allow the aircraft tostop safely, the engines’ reverse thrusters, which are used todecelerate when landing, are deployed at minimum output(idling) to reduce CO2 emissions.
Engine out taxi–use of only one engine on the ground
When taxiing to parking spots, our cockpit crews shut down
one of the aircraft’s two engines to reduce CO2 emissions,only when specified conditions are met.

55

ENVIRONMENT

Use of Sustainable Aviation Fuel(SAF)
Japanese domestic initiatives

JAL also launched a project to turn used clothing into SAF

In September 2018, JAL formed a strategic partnership withThe Japanese government established the Committee forover the Internet, social media and other channels to invite

reduce CO2 emissions by using less fuel. However, to achieve

the Japan Overseas Infrastructure Investment Corporation

the Study of a Process Leading to Introduction of Bio Jet

everyone to donate their used clothes.

further reductions in emissions, it is necessary to look at

for Transport & Urban Development (JOIN) and Marubeni

Fuel for the Olympic Games and Paralympic Games Tokyochanging the actual fuel used.

Corporation to invest in Fulcrum BioEnergy, Inc. in2020 as part of efforts to achieve domestic SAF production

With this in mind, Europe, the U.S., and other countries

California, U.S.A. This was the first investment by a Japaneseahead of Tokyo 2020. As a member of the committee,

around the world have been developing and using SAF incompany in a general waste-based SAF manufacturing

JAL will use domestically produced SAF for flights during

practical applications, with full-scale use expected to startbusiness.

2020. As a member of the All Japan Team, it will also

from 2030.

Fulcrum has developed a process to manufacture SAF fromconnect stakeholders and develop supply chains, fromThe JAL Group also is following this trend by making

general waste, which normally goes to landfill, that meet

manufacturing to use of SAF to expand use of Japan-madeconcrete investments, using SAF for scheduled services, andthe fuel standard of ASTM International, an international

SAF by 2030.

disseminating information to become a leading airline instandards organization. Its first production plant is currently

the use of SAF.

under construction in Nevada, with operation to start in

Publicizing SAF to increase use

2020. The company has plans to construct multiple plants as

The JAL Group is employing a range of channels to publicize

Using SAF for JAL flights

well, including one already announced for Indiana. All this

SAF and further increase general awareness.

JAL has a record of SAF use, including conducting Asia’s

made Fulcrum one of the companies most likely to achieve

This includes articles about SAF in its inflight magazine

first test flight using SAF produced from non-edible

mass production of SAF.

SKYWARD and PR magazine Ashita no Tsubasa (“Wings offeedstocks in 2009, and using SAF to fly from Chicago

For this reason, the JAL Group is working to build a closer

Tomorrow”), where topics on SAF are raised to present its

O’Hare International Airport to Narita International Airport

relationship with Fulcrum and using Fulcrum’s SAF in its

significance and mechanisms, and JAL Group’s hopes for thein November 2017 and from San Francisco International

flights from North America and other areas to reduce CO2

future.

Airport to Haneda International Airport in January 2019. In

emissions.

Message from the President
Business Activities and Strategy

JAL REPORT 2019

Investment in U.S. SAF manufacturer
For many years, the airline industry has been working to

Activities about the utilization of SAF
WEB

http://www.jal.com /ja /csr/biojet/(only in Japanese)

June 2019, when JAL took delivery of a new Airbus A350,
the maiden flight from the Airbus plant at Toulouse, France,
to Haneda International Airport was powered by SAF.

ESG Management

Project to turn used clothing into SAF
In October 2018, JAL launched a project to convert cotton
clothing, collected from customers across Japan, into

Fulcrum BioEnergy’s
SAF
manufacturingCollection andpre-processing
process

domestically produced SAF.
During the campaign in 2018 (about three months), around
50 companies helped collect approximately 250,000 pieces ofof general
waste

Financial Data/ Corporate Information

clothing.
With technical support from the Green Earth Institute Co.,

Gasification and elimination of
impurities
Note. Plant under construction (as of
May 2019)

Fulcrum’s SAF plant under construction in Nevada (May 2019)

Synthetic gas (SAF extract)
Note. Plant under construction(as of May 2019)

Project to turn usedclothing
into SAF
Phase1

Phase2

Ltd., and using a bioprocess technology developed by the
Research Institute of Innovative Technology for the Earth(RITE), the project started converting the used clothing into
SAF in February 2019.

Phase3Phase4Flying on
SAF!
Flying on SAF!

56

SAF manufacturing plant in Nevada (artist’s impression)

Clothing collected withthe support of JEPLAN,
Inc.

Sugar solution is madeafter the saccharificationof cotton fibers.

Corynebacterium used
to convert and condense
sugar solution into alcohol(isobutanol)

A catalytic reaction of
alcohol (isobutanol)
creates SAF (Photo: Koatsu
Chemical Industries, Ltd.)57CUSTOMERS AND REGIONSENVIRONMENT

Response to the Energy Conservation Act

Detection of forest fires

The JAL Group has established a target of reducing average

Regional Revitalization Activities

Tourism promotiona habitat to many species of fauna and flora, absorbs CO2

JAL Group’s business activities are supported by exchanges

for the creation and promotion of unique regional content,

annual per-unit energy consumption by at least 1% forgases on the Earth. To cooperate in containing forest fires,of people and goods between regions and coexist withformulation of inbound strategies, and development ofground facilities. For the fourth consecutive year since 2016,

we began reporting in 2003 forest fires detected while

those regions However, these regions face numerous

tourism infrastructure.

we received an S Class good business operator classification

flying over Siberia.

problems, such as depopulation due to a shrinking

The vast Russian Siberian taiga (coniferous forest zone),

To increase the nonresident population, we provide support

We will support regions in increasing the value of regional

Noise Reduction

why we are striving to use our business activities to solve

specialties, developing products, expanding sales channels,

problems faced by regional communities driven by our

conducting promotions, and energizing local industries.

The JAL Group is taking active steps to reduce noise nearpolicy to pay attention to the needs of regions, think andairports.

work collaboratively, and build the future of regions to

Promotion of lesser known regions

Effective Use of Limited Resources

Specifically, we are committed to “reduction of noise atcontribute to the development of a sustainable society.

In our promotion of lesser-known regions, which we began

source” and “noise abatement operational procedures”

Specifically, recognizing that connecting regions with thein May 2011, we discover the allure of individual areas,

The JAL Group promotes the 4Rs (Reduce, Reuse, Recycle,

which are principal elements of the Balanced Approach,world is a contribution unique to JAL, we are energizing

serve food from those areas in inflight meals, and promote

Refuse) in all business processes in line with the JAL Group

adopted by the International Civil Aviation Organization

regions by enhancing regional attractiveness and value,

regions through various JAL Group media each month.

Environmental Policy to achieve a recycling-based society.

(ICAO), that airlines should follow. The ratio of ICAO

and helping expand consumption through the circulation

We continue to conduct activities such as abolishing printed

Chapter 4 standard compliant aircraft is 100%, and the ratio

and transportation of people and goods, domestically andCollaboration

manuals for cockpit crew, recycling beverage cans andof ICAO Chapter 14 standard compliant aircraft is 38%.

internationally.

We collaborate with other companies and organizations

newspapers from aircraft cabins and offices, and reusing

As part of our noise abatement operational procedures,Among these activities are measures aimed at bringing

with the same drive to revitalize regions to hold events,

air cargo packing materials in recycled plastic products. As

we follow noise abatement procedures at take off, and at

foreign visitors to regions. Even though the economic

create travel products, expand sales channels for regionala Group, we aim to achieve a ratio of final disposal rate of

Haneda Airport and Itami Airport in particular, which are

benefits produced by inbound visitors has been tremendous,

specialties, and revitalize regions.

at least 2% for industrial waste generated from domestic

close to residential areas, we operate under even tighter

there are still many regions that have problems in increasing

offices.

procedures.

the duration of stay or attracting repeaters. We are taking

As part of water-saving and recycling efforts, the JAL Group

During landing, we operate with reduced flap, delayed flap

steps to realize sustainable regional growth backed by theis committed to reusing the large volumes of pure waterand idle reverse and other noise abatement procedures. At

increase of foreign visitors and energize regional economics

that are used in washing parts.

San Francisco International Airport and Kansai International

to bring smiles to residents, such as increasing repeaters

Airport, we also follow continuous descent operations (CDO),

by creating added-value and developing environments towhich dramatically reduce noise and CO2 emissions.

welcome visitors.

Conservation Act), which is administered by the Ministry of
Economy, Trade and Industry.

JAL REPORT 2019

Environmental Pollution Prevention
JAL Group companies in Japan manage hazardous chemical
substances and strive to reduce amounts handled andreleased, according to the Act on Confirmation, etc. of

ESG Management

Regional industry support

concentration of population in the Tokyo area. This isBusiness Activities and Strategy

population, aging population, falling birthrate, andunder the Act on the Rational Use of Energy (Energy

Message from the President

in the Business Operator Classification Evaluation System

We believe that one of the most important aspects ofregional revitalization measures is their continuity. We

Using Aircraft to Address Climate Change
CONTRAIL Project Atmospheric Observations

do not implement short-term measures, but instead
continuously carry on measures from a medium- and longterm perspective.

The JAL Group began atmospheric observations in 1993

Environment and Promotion of Improvements to thewith the Meteorological Research Institute and the Nikko

NEW JAPAN PROJECTManagement Thereof (PRTR Law).

Foundation (currently JAL Foundation), which became theThrough the NEW JAPAN PROJECT, launched in 2015, we

Specifically, engines used on JAL Group aircraft comply withcurrent CONTRAIL Project in 2005 with the addition of the

not only promote popular local delicacies through our

all regulations and ICAO CAEP6/CAEP8 standards stipulated

National Institute for Environmental Studies (NIES) andinflight magazine, inflight videos, and inflight meals on

by NOx regulations (applicable standards vary according to

JAMCO Corporation. Through the project, greenhouse gas

domestic flights, but also use the expertise and networks

the type certification period).

data collected by scheduled international flights is publisheddeveloped by the JAL Group to promote flows of goods andby the NIES and used in research studies globally. In 2018,

people to regions through tourism promotion and regional

we conducted 1,424 observations and 37 samplings using

industry support. Our aim is to realize sustainable regional

Biodiversity Initiatives

JAL aircraft. The published data was used in three peer-

development and create new demand for air travel. We will

reviewed papers, nine international institute presentations,bring energy to regions and their residents by discovering

Protecting the Red-crowned Craneand six domestic institute presentations. In March 2019,and creating hidden regional resources, commercializing

The JAL Group is taking steps to protect the red-crowned

the CONTRAIL Project was awarded the 1st Japan Open

them, and selling them. Through this, we hope to connect

crane, one of Japan’s designated protected species. Once

Innovation Prize, Minister of the Environment Award.

regions, people, and goods.

Financial Data/ Corporate Information

Release Amounts of Specific Chemical Substances in thea year since 2016, volunteer JAL Group staff have helped
maintain the crane’s feeding grounds in Tsurui Village,WEB

http://japan.jal.co.jp/index.html(only in Japanese)

Hokkaido.

58

59

HUMAN RIGHTS, DIVERSITY & INCLUSIONCUSTOMERS AND REGIONS

Nurturing the Next Generation

Diversity & Inclusion

JAL will continue to fulfill its role as a company responsible

This program, which only JAL could carry out, provides

Basic stance

Promoting understanding for LGBT

for Japan’s air transportation infrastructure by providing

opportunities for children to make new discoveries and have

In 2014, JAL Group top management declared their

The JAL Group has established a system that applies the same

support to affected areas in relief and recovery phases after

new learning experiences, prompting them to think aboutcommitment to diversity. Since then, we have aspired

benefits for employees married to same-sex partners undera disaster.

their own futures, the future of our earth, and the future of

to be a company where everyone can work in a positive

law to employees (and their partner and families) registered as

the environment.

atmosphere regardless of gender, age, nationality, race,

opposite-sex partners as defined by the company.

ethnicity, religion, social class, disability, sexual orientation,

We also participate in LGBT-related events and seminars to

Post-disaster phase–Relief phase
JAL cooperates with a network of government

JAL SORAIKU®

gender identity, career or other personal attributes.

contribute to promoting understanding of LGBT in and outsideorganizations, regional public organizations, NGOs, andIn 2013, we reorganized the various workshops and classes

Leveraging diverse ideas generated by diverse individuality,

the company.

NPOs in the transportation of relief supplies and volunteers

offered to young people as a united next-generation

we will promote value creation, provide unparalleled service

In recognition of these initiatives, Japan Airlines Co., Ltd.

to disaster stricken areas. We aim to support the flow of

educational program, which we have implemented since

to our customers, and contribute to the betterment of

was awarded the highest GOLD rating for the third year in apeople and goods and contribute to a swift recovery of the2016 under the name JAL SORAIKU®. Our target is for asociety.

row in the PRIDE Index, an evaluation index established byaffected areas.

total of one million people to participate between fiscal
years 2016 and 2020.

July 2018 heavy rains

2018 Hokkaido Eastern
Iburi Earthquake

5,000,000 yen

5,000,000 yen

Charity miles

45,016,500 yen

16,016,000 yen

Employee donations

3,478,788 yen

1,453,385 yen

Emergency relief
supplies (including
relief service flights)-

31 flights, 112 tons

Free flights
Free transportation
Dokokani Mile489 people-

1.2 tons-

2,452,000 yen(To Central Community
Chest of Japan)-

Recovery phase
In addition to providing economic support to affected areas
such as promoting industrial development and tourism

and other sexual minority-related initiatives implemented by

The JAL Group have been increasing career opportunities

corporations and other organizations.

for female employees and has set the target of 20%

JAL SORAIKU Participants®

female managers in the JAL Group and at least 15% female

Fiscal year

Number of participants

FY2016

152,323

organizational managers in JAL by the end of fiscal year

FY2017

191,300

2023.

FY2018

197,469

Our efforts have primarily focused on improving work
environments, strengthening human resources development

Content of JAL SORAIKU®

and nurturing the corporate culture. In fiscal year 2018, we
abolished core time from our flextime system, introduced•JAL Factory Tour—SKY MUSEUM•JAL Paper Plane Classes•JAL Sky Eco Classes•JAL Career Talk for Students•JAL Safety Demonstrations by Cabin Attendants•JAL Job Interview Simulation for Students•JAL STEAM SCHOOL

demand, we feel that providing emotional support to theWEB

http://www.jal.com /ja /csr/soraiku / (only in Japanese)annual paid leave on an hourly basis, and eliminatedimpression-based evaluation in the new personnel
evaluation system.
As of March 31, 2019, there were 13 female directors and882 female managers (ratio of female managers: 16.8%).

Group photo at Tokyo Rainbow Pride 2019

Cultivating global human resources
In fiscal year 2018 we established the new Global Promotion

Opportunities for people with disabilities
The JAL Group also takes a positive approach to promoting

responsible for reviewing the organizational operating

the active involvement of employees with disabilities.

with prefectural governments and conduct recovery support

system, and recruitment, development and assignment of

We promote their employment, develop worker-friendly

training in which employees travel to affected areas and<JAL Factory Tour—SKY MUSEUM>

human resources necessary for globalization. Employees inenvironments such as providing training opportunities withlisten to those who experienced the disasters first-hand.

JAL Factory Tour—SKY MUSEUM is run at the JAL

the Japan region centered on young mid-management staff

consideration to characteristics of each disability, and holdWe have also created relief donation tours, part of theMaintenance Center adjacent to Haneda Airport. The tours

will be provided more work experience and interactions inseminars to increase understanding of disabilities. We areproceeds of which are donated to affected areas, to bringare free and give visitors the opportunity to learn about

different cultures through overseas postings and internships

also expanding our range of activities, such as opening amany customers to these areas and assist with their recovery

various types of jobs in an airline and observe aircraftat overseas companies. Employees in overseas regions

new coffee shop “SKY CAFE Kilatto” run by staff with mild

through travel.

maintenance services at close distance. The SKY MUSEUM

will have more opportunities to learn about the company

intellectual disabilities in Tennozu Building, JAL Head Officeattracted over 140,000 visitors in fiscal year 2018.

through training and work experience in regions otherin addition to those at Haneda and Narita offices, and athan their place of employment. We are also taking steps

massage room “Largo” run by visually impaired employees<JAL Paper Plane Classes>

to develop a Group shared foundation to more firmly instillat Haneda.

JAL Paper Plane Classes are held by approximately 1,700

cross-border personnel transfers and exchanges.

JAL has also been a member of ACE* since September 2016

JAL Group staff volunteers, who are certified instructors by

and is participating in industry, academia and government

the Japan Origami Airplane Association. In fiscal year 2018,

partnerships.

Financial Data/ Corporate Information

Office in the Human Resources Strategy Department,

assist with publicity of regional products in collaboration

residents is also our important duty. Based on this idea, we

ESG Management

JAL REPORT 2019

Relief donations

voluntary organization “work with Pride” concerning LBGT
Career opportunities for female employees

Business Activities and Strategy

Fiscal 2018 Support Activity Results

Message from the President

Support for Disaster Relief and Recovery Efforts

48,081 people centered on elementary school students
participated in these classes. A total of 2,895 people took
part in qualifying competitions at 34 locations throughout
Japan for the JAL Origami Plane National Competition, inAt the antenna shop of Iwate Prefecture

60

which competitors try to maintain the longest flight times
with their paper airplanes.

* ACE is short for Accessibility Consortium of Enterprises, which aims to develop a new employment model for people with disabilities that
contributes to corporate growth. Activities include seminars for human resources management and employees with disabilities and publicationof educational booklets to increase awareness, develop role moles and provide recommendations to management and society.

61

HUMAN RIGHTS, DIVERSITY & INCLUSION

JAL seeks to cultivate a climate where employees withworking even after retirement if they wish. At JAL,

time limitations due to parenting, nursing care or other

Basic stanceModern Slavery Act Statement

roughly 80% of retirees continue to play an active

obligations can work in a fair manner and become a

To realize the JAL Group Corporate Policy, we are promoting

In accordance with the provisions of Section 54(1) ofrole in various workplaces (as of March 31, 2019). By

company where all employees can participate.

respect for human rights by practicing our behavioral

the UK’s Modern Slavery Act, the JAL Group discloses

improving opportunities and working terms for continued

We feel that increasing work efficiency and productivity

guidelines in the JAL Philosophy. Having a correctstatements on steps taken to prevent modern slavery andemployment, we will pass on know-how to the younger

will generate more free time for employees to refresh

understanding of human rights is essential to eliminate

human trafficking in the JAL Group and its supply chains.

generation using the experience and knowledge of seniorthemselves physically and mentally and to achieve self-

discrimination based on gender, age, nationality, race,

We consecutively disclosed our second statement in fiscal

employees accumulated over many years of service.

development, and that feeding back their experienceethnicity, religion, social class, disability, sexual orientation,

year 2018 and to assist in updating the content, we held ato values to the company will lead to corporate growth.

gender identity, career and other personal attributes.

workshop, engaging the services of an external speaker and

Therefore, we are taking measures to encourage employees

Therefore, we are securing time to deepen understandinglawyer.

Health Management

to take annual paid leave under a plan and to optimize

and increase awareness of human rights through internal

At the workshop, in addition to legal matters relating to thework hours.

training seminars, such as Seminars for New Employees andModern Slavery Act, we gained an in-depth, comprehensive

Basic stanceIn fiscal year 2018, the average annual paid leave taken

for New Managers.

understanding of the UN’s Guiding Principles on Business

The driving force to becoming the world’s most preferred

was 17.2 days, or 86% of the total entitlement, while theand valued airline is the vitality of every JAL Groupaverage monthly overtime total was 8.5 hours (excluding

Respect for human rights stipulated in the Code of Conduct

issues at companies, initiatives by various stakeholders, such

employee. That vitality is dependent on their physical andgeneral JAL staff on shift work). The actual average for

Based on the view that respect for human rights is a

as NGOs and investors, and corporate valuation.

mental health. We regard the health of our employees andtotal work hours* in fiscal year 2018 was 1,874 hours,

universal value and is consistent with the realization of theGoing forward, the JAL Group will continue working totheir families as the basis of life for every individual and aagainst a target figure of 1,850 hours, representing a 98.7%

Corporate Policy, the JAL Group has stipulated “Respect

prevent modern slavery and human trafficking, while

precious asset for JAL.

achievement of the target.

for human rights and job satisfaction (human rights andenhancing our knowledge of the laws and guidelines oflabor)” in the Group’s Code of Conduct in order to fulfill its

other countries.

on the JAL Wellness 2020 health promotion program, led
by the Chief Wellness Officer (CWO). Specifically, the JAL

Monthly average overtime and rest day work hours per employee

composed of directors, holds discussions and makes decisions

Ratio of annual paid leave taken

on health matters, while wellness leaders play the central
role in activities at the workplace level, complemented by asupport system comprised of executive officers.

84.0%

89.5%

85.5%

86.0%

12.0

11.4

7.9

Workstyle Innovation

8.5

We continue to move forward with a range of initiatives toinnovate workstyles and create a basis for all employees to workwith motivation. Innovations include the use of IT tools that give

FY2015FY2016FY2017FY2018* Japan Airlines Co., Ltd. only

people more freedom in workstyles, improvements to offices
and work environments, the introduction of “workation,”“bleisure” and other programs to encourage employees to takelong vacations, and improvement of teleworking to promote
flexible workstyles.

Modern Slavery Act Statement
WEB

https://www.jal.com /en /csr/modern-slavery-act.html

JAL Group Code of Conduct: Commitment to Society
Respect for human rights and job satisfaction(1) Respect for human rights and diversity
The JAL Group is committed to fulfilling its
responsibility to respect the human rights of all
people. This means that we respect all stakeholders
including customers and everyone who works for the
JAL Group, do not discriminate based on gender, age,national or regional origin, race, ethnicity, religion,social status, disability, sexual orientation, gender
identity or other attributes, and respect diversity sothat everyone can exercise their originality. We also
conduct ourselves in a way so that we do not cause
harm to anyone or become involved in human rights
violations in our business activities. Regarding respectfor human rights, we will always address any issues,
publicly disclose the current situation, and continue
to make improvements through human rights due
diligence* conducted in accordance with our Human
Rights Policy.

Financial Data/ Corporate Information

Basic stance

responsibility to respect human rights of all stakeholders.

ESG Management

Wellness Promotion Committee, chaired by the CWO andand Human Rights through case study of human rights
Business Activities and Strategy

JAL REPORT 2019

Health management in the JAL Group is promoted based* Total work hours (annual) = standard number of work days per year x
standard number of work hours per day (8 hrs.) + overtime and rest day
work hours – [(number of days of annual leave + number of days of
special leave + number of days of work absence) x standard number ofwork hours per day (8 hrs.)]

Message from the President

Optimizing work hours

The JAL Group has a program for employees to continue

Promotion framework* A process to preemptively identify, prevent and mitigate any adverse
impacts that our business activities may have on human rights

In fiscal year 2018, we launched initiatives using AI and robotics
to speed up work process reviews and integrate common tasks.

(2) Highly rewarding work environments
The JAL Group takes steps to continuously be anorganization that ambitiously embraces challenges
and creates value. In addition, through healthcare
management and continuous workstyle innovation,
we create work environments that are healthy andsafe, both mentally and physically, where employees
find work rewarding.

Carrying on from the previous year, in fiscal year 2019, we willfurther expand communication spaces that spark cross-section
communication for value creation activities and for workstyleinnovation with increased work efficiency.

SKY TERRACE communication space in the Tennozu Building

62

Respect for Human Rights

Reemployment of senior employees(For details of supply chain initiatives, please refer to the section starting on P.77)

63

HUMAN RIGHTS, DIVERSITY & INCLUSIONCORPORATE GOVERNANCE

Initiatives in Fiscal Year 2018

Initiatives in Fiscal Year 2019

Basic Stance on Corporate Governancegovernance system that results in a high level ofIn fiscal year 2018, the JAL Group identified issues at each

In fiscal year 2019, we will deal with issues in order of

The JAL Group aims to contribute to society through its

achieve accountability.

stage of the value chain by business.

priority. Since the first half of fiscal year 2019, we havebusiness operations. As the leading company for safety in

The Board of Directors has established corporate

Further, while referring to issues raised by NGOs andbeen working on three issues of particularly high priority:

Japan’s transportation sector, we will provide unparalleledgovernance that adheres to the Fundamental Policies ofcivil society, and reflecting the opinions of specialists, weestablishment of grievance mechanism, prevention ofservice to our customers while maintaining flight safety,

Corporate Governance as important policies in accordance

assessed the impact of issues identified using a plot graphinfringement of the right to work of foreign workers inthe basic foundation of the JAL Group. We also endeavor

with the Companies Act and relevant laws and regulations,with b(1) severity of potential human rights impact on one

Japan; and initiatives to prevent human trafficking.

to fulfill our economic responsibility of making profits by

and reviews it at least once a year.

providing high-quality products through fair competition

For the Fundamental Policies of Corporate Governance andaxis. We then clarified high-priority human rights issues andGrievance mechanismand fulfill our corporate social responsibilities.

the Corporate Governance Report, please refer to the JAL

countermeasures.

In fiscal year 2019, we will continue to review operating

In line with this thinking, we have established the JAL

website.

results of hotlines in the Group, and progressively open

Philosophy in accordance with the JAL Group Corporate

hotlines for customers and workers such as suppliers in

Policy and will make speedy and appropriate decisions.

the supply chain. We will also address human rights risks

At the same time, we will strive to establish a corporate

Important Human Rights Issues Identified in the Air
Transportation Business

Issues directly related to JAL

at suppliers through cross-section collaboration including
procurement departments and product and service planningdepartments.

• Involvement in humantrafficking by using aircrafts

Preventing infringement of the right to work for foreign
workers in Japan• Infringement of right towork in a healthy and safe
environment• Infringement of right to accessto redress measures (including
right to redress for harassment
from customers and suppliers)

where all employees can work with motivation regardless• FY2012 JAL formulates Fundamental Policies of Corporate Governanceof nationality. When accepting foreign workers applying• FY2015 Corporate Governance Committee establishedthe new “specified skilled worker” visa, we will create an• FY2015 New Management Committee established to clarify separation of oversight and executive functions

environment that ensures job satisfaction as well as fulfilling• FY2015 Authority over matters subject to resolution of the Board of Directors delegated to executive function.

standards.
Human trafficking prevention initiatives

LowHigh
Likelihood of human rights impact

In fiscal year 2019, we will provide education on theprevention of human trafficking, centered on divisions that
could potentially be the scene of human trafficking andIssues occurring among suppliersHigh • Involvement in forced labor• Involvement in forced/childlabor at developing country
subcontractor and suppliers

Severity of potential human rights impact• Involvement in damage to health • Involvement in damage tohealth of, or infringementof, or infringement of right of,of right of, local residents
local residents through release ofthrough release of chemicalchemical substances or polluted
substances or polluted water
water from company facilities
from oil/mining sites• Involvement in violence to local
residents

establish procedures to prevent human trafficking with

• FY2015 Board effectiveness evaluated (questionnaire format)• FY2015 Discussions begin on succession planning for senior management positions• FY2016 Number of External Directors increased from 2 to 3
• FY2017 New remuneration system introduced for officers, including performance-linked remuneration and sharebased remuneration• FY2017 JAL formulates Training Policy for Directors and Audit & Supervisory Board members

reference to measures considered by international agencies.

• FY2017 Board effectiveness evaluated (independent organization engaged to conduct 3rd assessment using aquestionnaire and interview format)(For details of supply chain initiatives, please refer to the section starting on P.77)• FY2017 Succession plans formulated for the President and other company leaders (compliance with the Corporate
Governance Code)Financial Data/ Corporate Information(including foreign technicalinterns, specified skilled workers
and foreign students) atdomestic subcontractor

Evolution of Improvement of JAL’s Corporate Governance System

The JAL Group will take steps to develop environments

ESG Management

JAL REPORT 2019

Severity of potential human rights impact• Forced labor (including
specified skilled workers andforeign students)• Damage to health of local
residents through releaseof chemical substances or
polluted water from company
facilities

https://www.jal.com /en /outline /governance /Business Activities and Strategy

High

WEB

Message from the President

axis; and (2) likelihood of human rights impact on the othermanagement transparency, increase corporate value and• FY2018 Compliance with the revised Corporate Governance Code• FY2019 Risk Management Council established (oversight function of the Board of Directors strengthened)• FY2019 Board effectiveness evaluated (4th assessment using knowledge and experience gained from third party
organization, anonymous questionnaire format)• Infringement of right towork in a healthy and safe
environment• Involvement in infringementof right to work in a healthyand safe environment
at developing country• Infringement of right to accesssubcontractor and suppliers
to redress measures (including
right to redress for harassment • Involvement in infringementfrom customers and suppliers)of right to residence of local
residents or indigenous people• Involvement in infringement
by farmland development/oilof the right to privacy of local
and mineral mining etc.
residents

LowHigh
Likelihood of human rights impact

64

65

CORPORATE GOVERNANCE

Board of Directors and Directors

Directors

Board of Directors

ensure that they are aware of their responsibilities,

To build a corporate governance system that results inunder the Board of Directors. External Directors make up the

The Board of Directors ensures strong management oversight

including the “fiduciary duty of loyalty” and the “duty ofhigh management transparency and strong management

majority of each of the committees, ensuring independence

based on a high level of management transparency throughensuring prudent management.” The term of office is set

monitoring, various committees have been establishedfrom JAL’s executive management.

Legal considerations are explained to the Directors toat one year to confirm their accountability each fiscal year.
The Company has also introduced a remuneration system

their remuneration, and makes important decisions.

for Directors (excluding External Directors) based on soundTo separate the management oversight function andfinancial incentives designed to promote sustained growth.

executive function, the Board appoints a Director who

External Directors are appointed from among persons withdoes not serve concurrently as an Executive Officer asvast knowledge and experience in various fields to ensure
diversity. Those who do not qualify as highly independent
as defined by the “Standards for Independence of External

External Directors provide advice on JAL’s management andDirectors” established by the Company are not appointed.

proper supervision of the execution of duties from practical

Furthermore, one External Director among the External

and multilateral perspectives.

Directors is appointed Lead Independent External Director

To carry out efficient decision-making, the board may

to improve coordination with the Audit & Supervisory Board

delegate decision-making concerning matters set forth inmembers and internal divisions.

the Administrative Authority Criteria Table to the President

For the standards used in determining the independence

pursuant to Regulations for Kessai (written approval)of External Directors, please refer to the JAL Group’sand Administrative Authority approved by the board.

Fundamental Policies of Corporate Governance.

(FY2018)

Committee

Corporate GovernanceCommittee

Chairperson

Board
memberNumber ofmeetings

Functions

Key Topics of Discussion by the Board of Directors

concerning management issues by the Board of Directors
and the President.

• Reviews of corporate governance and establishment of

The Board of Directors has established the Corporate

response policies

Governance Committee, comprised of the Chairperson• Decision of directors, including oversight of successionof the Board and External Directors, which reviews the

Eizo Kobayashi

Masatoshi Ito

Eizo Kobayashi

Yuji Akasaka

Eizo Kobayashi

Yoshiharu Ueki
Masatoshi Ito
Sonoko Hatchoji

Yoshiharu Ueki
Yuji Akasaka
Eizo Kobayashi
Sonoko Hatchoji

Yoshiharu Ueki
Yuji Akasaka
Masatoshi Ito
Sonoko Hatchoji

Yoshiharu Ueki
Eizo Kobayashi
Masatoshi Ito
Sonoko Hatchoji

Yoshiharu Ueki
Yuji Akasaka
Masatoshi Ito
Sonoko Hatchoji

3

7

3

2

2

The Corporate
Governance Committee
inspects initiatives
under the JAL Group
Fundamental Policies ofCorporate Governance atleast once a year, conducts
analyses and evaluations
to verify whether they
contribute to sustainablegrowth and enhancementof corporate value in themedium to long term,and provides necessary
recommendations andreports to the Board of
Directors.

When submitting
a proposal to theGeneral Meeting of
Shareholders concerning
the appointment ofcandidates to thepositions of Directorand Audit & Supervisory
Board member, theNominating Committee
makes a comprehensive
judgment of thepersonality, knowledge,
ability, experience andperformance of thecandidate in response toinquiries from the Boardof Directors and reportsback to the board.

The Compensation
Committee discusses
matters concerning theamounts of compensation
paid to Directors,
Executive Officers andAudit & Supervisory
Board members based onrequests from the Boardof Directors and reportsback to the board.

When appointing or
dismissing an Executive
Officer, the Board of
Directors consults the
Personnel Committee
and takes the Personnel
Committee’s response
into account before
making a decision.

Any disciplinary action
imposed on Directors
or Executive Officers
is determined by the
Officers Disciplinary
Committee.

• Deliberations andrecommendations
regarding board
effectiveness• Candidates for the
positions of Directorand Audit & Supervisory
Board member• Officer remuneration(basic remuneration,
annual incentives, longterm incentives)• Structure of Executive
Officers• Disciplinary actions
against officers• Revision of theFundamental Policies ofCorporate Governancein accordance with
updates to the
Corporate Governance
Code• Responses to the
Corporate Governance
Code and to theevaluated board
effectivenessplans for the President and other company leaders

Fundamental Policy of Corporate Governance every year. The• Establishment and progress management of medium- to

Committee evaluates Board effectiveness in terms of board

long-term strategies

composition, culture, oversight, board operations, discussions• Establishment and review of capital policy, including

on management strategies and dialogue with shareholders,shareholder returns

takes appropriate action and discloses its findings.

• Risk management system, including monitoring of
responses to events• Decision and oversight of other important execution ofdutiesCorporate Governance System

Key topics of
discussion in
FY2018Financial Data/ Corporate Information

Personnel Committee

Officers Disciplinary
Committee

ESG Management

JAL REPORT 2019

The Management Committee has been established forcontributing to appropriate and flexible decision-making

Nominating Committee

Compensation
Committee

Business Activities and Strategy

Chairperson, and an appropriate number of three or more
External Directors who qualify as highly independent.

Message from the President

the election of candidates for the positions of Director, Audit& Supervisory Board member and Executive Officer, decides

Establishment of Various Committees

General Meeting of Shareholders
Appointment/Dismissal

Appointment/Dismissal

Board of Directors
Appointment/Dismissal/
Instruction/Delegation of Authority

Recommendation

ReportAdvisory

Executive President

Corporate GovernanceCommittee
Nominating Committee

Management
Committee

Compensation Committee

Recommendation

Personnel Committee
Officers
Disciplinary Committee

Group Earnings
Announcement
Session
ReportSignificant
IssuesInstruction/
Delegation of
Authority

JAL
Philosophy
Council

Risk
Management
Council

Risk Management
Committee
Financial
Risk Committee

Executive Officers

the Council
for Group
SafetyEnhancement

Group
Operational
SafetyPromotion
Committee

Corporate
Brand
PromotionCouncilTokyo 2020
CSR
Olympic and Committee
Paralympic
Promotion
Committee

Management
LiaisonCommittee

Financial Audit
Audit

Collaboration

Appointment/Dismissal/
Instruction/Command

Appointment/Dismissal
Audit &
Supervisory Board

Auditing

ReportAccounting
AuditorCollaboration
Collaboration

Investment
Monitoring
Committee

Guidance/Advice

Legal Advisors

JAL Wellness
Promotion
Committee

Departments and Subsidiaries

66

67

CORPORATE GOVERNANCE

Audit & Supervisory Board and Audits

Successors to the President and Other Leaders

Evaluating Board Effectiveness

Audit & Supervisory Board

The Company defines the President and other board

Under the Fundamental Policies of Corporate Governance,time; details are as follows. Moreover, at least once every

The Audit & Supervisory Board makes appropriate

members as persons with qualities to steadily get positive

every year the JAL Group assesses board effectiveness andthree years, an independent organization is involved in the

judgments from an independent, objective perspective,

results toward realizing the Corporate Policy by working

appropriately reviews board operations, while referring

evaluation, the most recent evaluation conducted in fiscal

based on their fiduciary responsibilities to the shareholders,

together with every staff based on a firm commitment toto evaluations of individual Directors and other resources.

year 2017.

when fulfilling their roles and responsibilities, such as

flight safety, which is the foundation of the JAL Group, andauditing the execution of Directors’ duties, appointing

display of initiative in practicing the JAL Philosophy. The

or dismissing accounting auditors and executing rights

Company assists candidates for President and other posts

concerning auditors’ remuneration.

to quickly acquire grounding and discipline necessary for
The Nominating Committee holds ongoing discussions on

Audit & Supervisory Board members monitor important

potential successors to the president and other company

matters concerning corporate management, businessleaders responsible for reforming the Group and driving

operations and the execution of duties by reviewing

growth to ensure the Corporate Policy and management

important Kessai (written approval) documents, as wellstrategies are maintained, and reports on these discussions

as participating in board meetings and other important

to Directors.

meetings. Furthermore, Audit & Supervisory Board members

to the Representative Directors. They also share information

Determination by the Corporate Governance Committee on how to proceed with board effectiveness evaluation, including details of the questionnaire• Primary items for evaluation in the questionnaire are board composition, culture, oversight,
operations, discussion on management strategies and dialogue with shareholders
Individual questionnaire for Directors

Support and Training Policy for Directors
and Audit & Supervisory Board members

Tabulation of questionnaires by Secretariat of the Boardand hold regular meetings with corporate auditors ofLegal considerations are explained to Directors to ensure

subsidiaries to improve and strengthen auditing within thethat they are aware of their responsibilities including the

JAL Group.

fiduciary duty of loyalty and the duty of care as a prudent

Audit & Supervisory Board members are provided withmanager and opportunities are provided for continuouscompany information, and opportunities to participate inparticipation in external training, affiliated organizations

external training and external associations, etc.

and such. We provide opportunities to Audit & Supervisory

External Audit & Supervisory Board members are appointed

Board members for continuous participation in externalfrom among persons with vast knowledge and experience

training, affiliated associations, etc., in addition to providing

in various fields, and those who do not qualify as highly

corporate information.

independent as defined by the “Standards for Independence

To deepen the understanding of the Company of Directorsof External Directors” established by the Company are not

and Audit & Supervisory Board members, we provide safety

appointed. External Audit & Supervisory Board members

education such as a memorial climb up Mt. Osutaka andensure sound management by conducting audits from avisits to the Safety Promotion Center, in addition to visiting

Results of assessment

Future issues and initiatives for Board enhancement

neutral and objective standpoint, with the cooperation offrontlines. We also provide advance explanations on agenda

It was confirmed that the Board of Directors conducts

On the other hand, several needs have been confirmed

internal audit departments and accounting auditors.

items to be submitted for deliberation, as necessary, andfree and open-minded discussions, with the opinions ofby the Board of Directors, including the need to shift

opportunities to explain other matters at their request.

External Directors respected by internal Directors, whotoward strategic discussions in order to present JAL’s

In addition, the Forum of Independent External

have been appointed in a good balance including fromoverall direction when formulating the next Medium

Officers, comprised of External Directors and Audit &frontline divisions given the importance of flight safety. In

Term Management Plan starting in 2020, strengthening

Supervisory Board members, and sponsored by the Lead

addition, External Directors have been highly accessible topreventive and continuous risk management in order toIndependent External Director, is held several times ainformation as requested, and the roles of External Directors

support sound growth, bolstering the oversight function

year. The participants are briefed on JAL’s international

are being appropriately fulfilled through efforts centeringof the Board by enhancing its monitoring capacity, andnetwork strategy, competition strategy, human resourceson the Lead Independent External Director.

promoting constructive dialogue with shareholders. Going

Discussion by the Board of Directors about
issues and measures
Further discussion by the Board

ReportRecommendations

Corporate Governance Committee

Decision made on policy for initiatives by
the Board of Directors

Financial Data/ Corporate Information

strategy, and risk management, in order to deepen their

Report

ESG Management

JAL REPORT 2019with internal audit departments and accounting auditors

Process for Evaluating Board Effectiveness• To maintain anonymity, the Secretariat of the Board sends the questionnaire to Board
members and summarizes responses.

and staff members conduct an annual audit of each businesssite, subsidiary and affiliated company and report the results

Assessment Process

Business Activities and Strategy

Audit & Supervisory Board Members

Message from the President

management through practical and diverse experiences.

Board effectiveness was assessed this year for the fourthforward, we will steadily put such initiatives into action.

understanding of the Company’s business.
In fiscal year 2018, newly appointed External Directors andExternal Audit & Supervisory Board members were given
safety education, including field visits and a tour of the
Safety Promotion Center, and were provided opportunities
to deepen their understanding about JAL’s history and the
JAL Philosophy.

68

69

CORPORATE GOVERNANCE

Remuneration of Directors

Framework for incentive remuneration
1. Annual incentives (performance-linked bonuses)

Compliance

Whistle blowing contact point
We have set up a Group Hotline with contact points in the

The amount to be paid every fiscal year as an annualCompliance promotion system

Company and a law firm, which can be used by any person

Directors) and Executive Officers

incentive will vary from approximately 0 to 200

To promote compliance with all applicable laws, regulations

working for the JAL Group. This enables us to promptly

depending on the degree of achievement, with 100

and rules governing our corporate activities, we haveidentify and remedy cases of misconduct, power harassment

Basic policy

representing the amount to be paid when achievement isdesignated the General Affairs Department of Japan Airlines

and other issues and reinforce compliance management.

1. To support the sustainable and steady growth of thein line with performance targets.

Co., Ltd. to oversee all compliance matters and are focusing

Company and the JAL Group and to increase corporate value
over the medium and long term, the Company will encourage
the performance of duties consistent with its Corporate Policy
and management strategies and provide strong incentives
for the achievement of specific management targets.

Performance Evaluation Indices• Net profit attributable to owners of parent• Indices related to safe flight operations• Individual evaluation indices for each officer, etc.

on elevating staff awareness through various measures.

Corruption prevention measures
In order to pursue profit in a fair manner, the JAL Group

1. Every JAL Group staff is encouraged to practice thehas, based on the global tide of business scope expansion

JAL Philosophy in their day-to-day work and can viewand efforts to prevent bribery and prevent money

the following regulations and handbooks related tolaundering, stipulated corruption prevention as part ofcompliance on the Group's Intranet.

the JAL Group Code of Conduct “Commitment to Society.”

2. To encourage a healthy entrepreneurial spirit, the Company

Evaluation indices will be considered for review as necessary

will establish appropriate proportions for annual incentives

in accordance with changes in business conditions, the roles(performance- linked bonuses) linked to fiscal yearof each officer and other factors.

* JAL Group Regulations on Preventing Insider Trading

regulations in countries and regions where it conducts

performance and for long-term incentives (performance-

2. Long-term incentives (performance-linked share-based* JAL Group Handbook on Protecting Personal Information

air transport business, such as Japan's Unfair Competition

linked share-based remuneration) linked to corporate value inremuneration)* Information Security Action Handbook

Prevention Act, the U.S. Foreign Corrupt Practices Act, theaccordance with medium- to long-term performance, designed

The number of shares to be granted every fiscal year as* Guide to the Antimonopoly Act

British Bribery Act, and the Chinese Commercial Bribery Act.

to promote alignment of interests with its shareholders.

a long-term incentive will vary from approximately 0 to

* Group Hotline Regulations

We will take steps to prevent bribery and corruption which

The JAL Group complies with anti-corruption laws andappropriately based on the Company’s business performance.

representing the number to be granted when achievement

2. The following diverse initiatives are implemented forGroup employees. Furthermore, in fiscal year 2018, weevaluation period will be three years, with performance fordedicated special efforts to alcohol-related training.

1. The Company will set appropriate remuneration levels based

three consecutive fiscal years evaluated every year.

to objective data on remuneration in the marketplace.
2. Considering factors including the nature of theCompany’s business and the effectiveness of incentive
remuneration, fixed remuneration and performance-

Performance Evaluation Indices
Indices prioritized in the Medium Term Management Plan
• Consolidated operating profit margin• Consolidated ROIC
• Customer satisfaction, etc.

JAL Group Code of Conduct "Commitment to Society"* Face-to-face compliance education, including measures atindividual business sites* The publication of quarterly compliance newsletters* Seminars about laws and regulations organized by the
Legal Affairs Department* Practical exercises on how to deal with targeted email

linked remuneration are comprised as follows.
Medium Term Management Plan period.

attacks and other threats- Preventing Corruption
We do not give or accept bribes of any form,
whether direct or indirect, in our business activities
domestically or internationally. In addition, we do notgive or accept undue cash, gifts or entertainment or
any other benefits in excess of social norms.

* Biannual e-learning on information security

With respect to common stock granted to eligible
Directors and Executive Officers through the share-based

Through these initiatives, we aim to foster a culture of

remuneration plan, the Company will establish a target

compliance across the entire JAL Group, ensure business

number of held shares for each position and impose limits

activities are in tune with accepted social standards andon share sales to further promote the aligning of interests

reduce legal risk.

with shareholders.

In addition, a director from each JAL Group company

Financial Data/ Corporate Information(Assuming 100% achievement against targets)(1) Amount of fixed basic remuneration:* 50%(2) Amount of annual incentives (performance-linked
bonuses) to be paid according to the degree ofachievement against targets: 30%(3) Amount of long-term incentives (performancelinked share-based remuneration) to be issued
according to the degree of achievement against
targets: 20%

Evaluation indices will be considered for review for eachmember of society.

ESG Management

JAL REPORT 2019is in line with performance targets. The performance
Remuneration levels and compositionon the Company’s operating environment and with reference

Business Activities and Strategy

could lead to suspected bribery, and prevent corruption as a

220 depending on the degree of achievement, with 100

3. The Company will reward the management team

Message from the President

Remuneration Policy for Directors (excluding External

is given overall responsibility for compliance at their

The above ratio is for guidance only and adjustments canProcedures for determining remuneration

respective company. These directors comprise the JAL Groupbe made to reflect changes in the price of the Company’s

Matters related to remuneration for Directors and Executive

Compliance Network, which is responsible for swiftly sharing

shares or other factors.

Officers will be decided by the Board of Directors following

relevant information and strengthening the compliance* This amount excludes allowances in cases where an Executive Officer
serves concurrently as a Director or where an Executive Officer has
representative authority.

a deliberation and recommendation process by theframework at each Group company. This includes sending

Company’s voluntarily established Compensation Committee

quarterly email newsletters containing useful information,(refer to P.67).

such as news about compliance developments inside andoutside the Group and compliance case studies.

FY2018 Actual Remuneration Paid to Directors and Audit & Supervisory Board members
Number of officers

Total amount of remuneration, etc.
(millions of yen)

13
(4)
6
(4)

519
(36)
78
(29)

Directors(including External Directors)
Audit & Supervisory Board members(including External Audit & Supervisory Board members)

70*1 Annual incentives (performance-linked bonuses)

Total amount for each type of remuneration, etc.
(millions of yen)
Basic
Share-based
Bonus*1
remuneration
remuneration, etc.*2
278
181
60
(36)
(–)
(–)
78
–
–
(29)
(–)
(–)

*2 Long-term incentives (performance-linked share-based remuneration)

71

BOARD OF DIRECTORS(As of June 30, 2019)

Directors

Message from the President
Business Activities and Strategy

2.Yuji Akasaka (DOB:January 3, 1962)

Representative Director, Chairman

Representative Director, Executive President

Governance

Chairman of the Management Committees, Chairman of the Council
for Group Safety Enhancement, Chairman of the Corporate Brand
Promotion Council, Chairman of the JAL Philosophy Committee, General
Manager of JAL SDGs, Chairman of the Risk Management Council

Personnel

Nominating

Compensation

Disciplinary

72

Nominating

Compensation

Personnel

1

8
10

2

3

4

5

6

7

3.Tadashi Fujita (DOB:October 25, 1956)

4.Hideki Kikuyama (DOB:March 19, 1960)

Representative Director,
Executive Vice President

Director, Senior Managing Executive Officer
General Manager, Finance & Accounting Division

Aide to the President, Chief Wellness Officer,
Chairman of the JAL Wellness Promotion Committee

Since joining the company, Executive Vice
President Fujita has worked mainly in thesales department at Head Office. As General
Manager of Managing Division Passenger
Sales, he assumed overall responsibility
for the entire passenger sales division andachieved positive results. As Representative
Director and Executive Vice President
serving as Aide to the President since2016, he is contributing significantly tofurther improving and strengthening themanagement team.

Disciplinary

Since joining the company, President Akasaka has served
mainly in the Engineering & Maintenance Division and has
acquired very high levels of frontline experience and insight
into flight safety. He also gained extensive knowledge
and a network of connections in the airline maintenanceindustry. From 2014, he has brought his strong leadershipand decision-making capabilities to JAL Engineering Co.,
Ltd. as President and has strengthened the of flight safety
foundation. As Representative Director and President since
2018, he aims to realize the Corporate Policy through joint
efforts with all employees by maintaining flight safety, thebasic foundation of the JAL Group, and guiding employees
in practicing the JAL Philosophy by showing by example.

Since joining the company, Director Kikuyama has
held successive positions in IT systems, passenger
reservations, human resources and industrial affairs,
corporate planning and other divisions at Head Officeand branch offices in the Americas and other regions,and has exercised exceptional leadership and strong
planning and coordination capabilities to achieve
positive results. As Director, Senior Managing Executive
Officer of Managing Division Route Marketing since2016, he has contributed greatly to maximizing
route profitability. As Director, Senior Managing
Executive Officer of the Finance & Accounting
Division since 2019, he has assured highly transparent
information disclosures that are comprehensible forshareholders and investors, and has demonstrated
precise management decision-making capabilities that
support shareholders’ interests.

5.Shinichiro Shimizu (DOB:December 13, 1962)

6.Ryuzo Toyoshima (DOB:August 17, 1959)

7.Nobuyoshi Gondo (DOB:May 3, 1956)

8.Eizo Kobayashi (DOB:January 7, 1949)

9.Masatoshi Ito (DOB:September 12, 1947)

10.Sonoko Hatchoji (DOB:January 15, 1950)

Director, Senior Managing Executive Officer

Director, Senior Managing Executive Officer

External Director

External Director

External Director

General Manager, Secretary’s Office

General Manager, Managing Division Route Marketing

Director, Managing Executive Officer,
Safety General Manager

Since joining the company, Director Shimizu has held
successive positions in personnel and industrial affairs
divisions related to cockpit crew and cabin attendants,
and has exercised exceptional leadership and strong
planning and coordination capabilities to achieve positive
results. As General Manager of Human Resources since2013 and the Secretary’s Office since 2016, he is making
considerable contributions to improving and stabilizing
JAL’s presence through precise evaluation of JAL’s
position from a high-level perspective.

Since joining the company, Director Toyoshima
has held successive positions in industrial affairs
related to cockpit crew, including Vice President,
and has exercised exceptional leadership andstrong planning and coordination capabilities
to achieve positive results. As General Manager
of Corporate Control since 2015, he has
contributed significantly to the expansion of theamoeba management system within the JAL
Group.

General Manager, Corporate Safety & Security
Manager, Family Assistance & Support

Personnel

Since joining the company, Director Gondo has
acquired very high levels of insight into flightsafety and frontline experience as a cockpit crew.
Drawing on his experience acquired as General
Manager, Corporate Safety & Security, he has
contributed greatly to maintaining safety, thebasic foundation of the JAL Group.

As the head of management at a global
general trading company, External Director
Kobayashi has extensive experience andvast business insight into global business
management and leadership of diversified
group companies. He brings practical anddiverse perspectives to the management andprovides sound business supervision for JAL.

Governance Corporate Governance Committee

Nominating Nominating Committee

Compensation Compensation Committee

Personnel Personnel Committee

Disciplinary Officers Disciplinary Committee

GovernanceNominating

Independent
Compensation

Disciplinary

Governance
Personnel

Nominating

Independent
Compensation

Disciplinary

As the head of global enterprises, External
Director Ito has great business insight andextensive experience in marketing andbusiness strategy. He brings practical anddiverse perspectives to the management andprovides sound business supervision for JAL.

GovernanceNominating

Financial Data/ Corporate Information

Since joining the company, Chairman Ueki has
acquired very high levels of insight into flightsafety and frontline experience as cockpit crew.
As Representative Director and President since2012, he has demonstrated strong leadershipand decision-making capabilities, overseeing the
preparation of the Medium Term Management
Plan and executing it responsibly. From 2018,
he continues to help strengthen the oversightfunction of the Board as Chairman of the Boardand as a member of the Corporate GovernanceCommittee, the Nominating Committee,
Compensation Committee and other committees.

9

ESG Management

JAL REPORT 2019

1.Yoshiharu Ueki (DOB:September 16, 1952)

Independent
Compensation

Personnel

Disciplinary

External Director Hatchoji has experience in financial
product development, loans and risk management atbanks, and vast knowledge and extensive experiencein customer-centric marketing and management
strategy in hotel management. She also has diverse
perspectives in areas such as education reforms atuniversities. She draws on this experience to provide
JAL with management advice and sound businesssupervision.

73

MESSAGE FROM EXTERNAL DIRECTORS

Develop into an Enterprise That Creates New ValueAs chairperson of the Nominating Committee, I am also involved in the appointmentof candidates to the positions of Director, and I get a real feeling of JAL’s open
Message from the President

corporate culture each day. For instance, we can prepare carefully before meetings,
because reference materials for Board meetings are provided to us in advance. We arealso involved in discussions from the early stages of review when drafting Medium
Term Management Plans.
On the other hand, one area where I feel there are issues to resolve is the ability tocreate new ideas for the future. Up until now, all airlines have operated businesses
with a focus on “hard” services, namely, establishing routes and attracting customers.

Masatoshi Ito
External Director

JAL Group Corporate Governance for Sustainable Growth

Main concurrent positions: Representative
Director and Chairman of Ajinomoto Co.,
Inc., President of the Japan Advertisers
Association Inc., External Director of
Yamaha Corporation, External Director of
NEC Corporation

which is the ability to look ahead 10 and 20 years from now and create new systems,
are needed to survive in the aviation industry. I feel that such experience is stilllacking, both at the organizational and individual levels.
Application of artificial intelligence (AI) and other technological innovations isadvancing at a rapid pace worldwide. Looking ahead, I will draw on my experiences
at a consumer goods company, where we developed global management, and offer
advice at Board meetings and other meetings to create a company capable of offering
new value in addition to air transportation.

The JAL Group has three independent External Directors. They actively contribute to meetings ofthe Board of Directors and various voluntary committees, and their experience and knowledge aredrawn upon when formulating Group strategies and making management decisions. Going forward,
we will continue to realize sustainable growth for the JAL Group by incorporating objective advice
offered by External Directors in management.

Don’t Forget Experiences from the Bankruptcy

ESG Management

JAL REPORT 2019

Business Activities and Strategy

Attendance at Board of Directors
meetings: 100% (19 of 19 meetings)

Nowadays, however, customer needs are diversifying. Imagination and creativity,

JAL’s Board of Directors and various committees readily seek and accept critical opinions.
They are also very open forums where participants engage in substantive discussion. The

Build a Corporate Climate That Tolerates Mistakessame is also true of the Management Committee and other executive meetings.
This corporate culture seems to have been cultivated from the fact that many officers
and employees who experienced the bankruptcy, learned lessons and reflected them inbeen heavily involved in strengthening governance, most recently as chairperson of

the JAL Philosophy are taking active participation in operations.

the Corporate Governance Committee. From time to time, we have reviewed board

In order to continuously instill the JAL Philosophy throughout the Company, and tooperations, taking into account the results of the first four annual evaluations ofcandidly discuss current issues, monthly workshop-style conferences are held, attended

board effectiveness. Looking ahead, I will contribute to realizing the vibrant operationby over 200 directors and Vice President including the President and Chairman of theof the Board of Directors, while responding sincerely to external requests for stronger
governance.
When considering JAL’s management issues from a medium- and long-term
perspective, one element that is both a strength and a potential weakness is human

Eizo Kobayashi
External Director
Lead Independent External Director
Attendance at Board of Directors
meetings: 89.5% (17 of 19 meetings)
Main concurrent positions: Senior
Representative for Business Community
Relations of ITOCHU Corporation,
External Director of OMRON Corporation,
External Director of Japan ExchangeGroup, Inc.

resources. While I fully appreciate that employees have advanced capabilities including
hospitality, considering international flight slots will expand and competition will
intensify due to the development of airports in metropolitan area, being a workforce with strong conservative and specialist elements could also be a drawback. It is

Sonoko Hatchoji
External Director
Attendance at Board of Directors
meetings: 100% (15 of 15 meetings)
Main concurrent positions: Special
Advisor to the President and Chief
Strategy Officer of Tsuda University,
External Director of Daicel Corporation,
External Director of Maruha Nichiro
Corporation

Financial Data/ Corporate Information

During the four years since I was appointed as an External Director at JAL, I have

Board. While it appears that current favorable performance is supported by these
efforts, I feel that it is essential not be complacent with the status quo but instead
secure diversity in the Board if we are to take the company to the next stage, a global
airline. With regard to female managers, there is a considerable number of talented
women actively involved as executive officers, general managers and Vice Presidents,
and I expect it is only a matter of time before we see sustainable development of female
directors. The next issue is appointing human resources from overseas to important
posts.

advised to improve development of human resources capable of managing the next-“Be humble, avoid arrogance, and continue to extend efforts.” The words of Honorary

generation and creating new value by further strengthening cross-section personnel

Adviser Dr. Kazuo Inamori are displayed in a room where directors work together

exchanges, assigning overseas human resources to important posts and collaboratingside by side and not in private rooms. It is almost 10 years since the bankruptcy.

with other companies. Another issue is building a corporate climate that tolerates

Going forward, I will continue to play my role as an External Director to maintain thismistakes. Only by pursing challenges will JAL be able to pioneer a new age.

corporate climate and increase corporate value.

Through clearly communicating my ideas at Board meetings and other committee
meetings, I will continue to contribute my efforts to building a vibrant corporate
climate.

74• Figures for attendance at Board of Directors meetings are from fiscal 2018.
• Ms. Sonoko Hatchoji was newly appointed at the 69th Ordinary General Meeting of Shareholders on June 19, 2018, and became a member of the Board of Directors
on the same date. The number of meetings that she was eligible to attend is therefore different to other external members of the Board of Directors.

75

SUPPLY CHAIN INITIATIVES

AUDIT & SUPERVISORY BOARD MEMBERS(As of July 1, 2019)

Yasushi Suzuka

During his career at JAL, Mr. Suzuka has engaged primarily in

Audit & Supervisory Board
Membermaintenance operations such as maintenance planning and engineering.

Supply Chain Management

Cooperating with suppliers and monitoring

Basic stance

Conduct, we utilize Sedex Information Exchange Limited

With our suppliers

To verify compliance with the JAL Group Supplier Code of(Sedex*1), which we joined in 2015.
Using the CSR information platform provided by Sedex, we

insight into production. He has been a member of JAL’s Audit &and support of many suppliers to operate its flights andselect certain Group suppliers based on transaction volume

Supervisory Board since July 2012, he is also chairperson of the Japan

provide products and services to customers daily. Therefore,

regardless of product type or domestic/overseas location

SAP Users’ Group.

we strive to build strong partnerships with suppliers

and ask them to become Sedex members and to respond

Main concurrent positions:Nilbased on mutual trust by ensuring fair and transparent

to a self-assessment questionnaire. In fiscal year 2018, 150

procurement activities and .showing our appreciation for

suppliers answered the self-assessment questionnaire.

their support, as explained below.

Going forward, we will continue to conduct supply chain

Message from the President

He has made a substantial contribution to the Board with his extensive

The JAL Group is aware of the need to gain the cooperation

risk assessments based on results of the self-assessment

Norikazu Saito

Working primarily in finance and accounting departments, Mr. Saito

Audit & Supervisory Board
Membermade a substantial contribution to management of the JAL Group withhis extensive knowledge of finance, accounting, investor relations (IR),Officer and General Manager of the Finance and Accounting Divisionfrom June 2014. He has been a member of the Audit & Supervisory
Board since June 2019.
Main concurrent positions:Nil

Professor Hatta is an authority on financial auditing theory and corporate

External Audit & Supervisory
Board Member
Independent Officer

internal control and has served as an External Audit & Supervisory Board

Attended 19 of 19 Board of Directors
meetings
Attended 13 of 13 Audit &Supervisory Board meetings

Member for JAL since July 2012.
Main concurrent positions:Professor at Ohara Graduate School of
Accounting, Professor Emeritus at Aoyama Gakuin University, external
Audit & Supervisory Board Member for the Development Bank of Japan
Inc. and a council member on the Japanese government’s Financial
Services Agency Business Accounting Council, among other positions.

Since his certification as an attorney in April 1973, Mr. Kamo has

External Audit & Supervisory
Board Member
Independent Officer

accumulated extensive experience and expertise in compliance andAttended 19 of 19 Board of Directors
meetings
Attended 13 of 13 Audit &Supervisory Board meetings

corporate governance. He has served as an External Audit & Supervisory
Board Member for JAL since June 2016.
Main concurrent positions:Attorney for the Ginza Sogo Law Firm,
committee chairperson for CHANS (Office for Government Procurement
Challenge System, under the jurisdiction of the Japanese Cabinet Office),and External Auditor for Azearth Corporation, among other positions.

Revision of the Supplier Code of Conduct
The JAL Group has observed the JAL Group Supplier Code of
Conduct since April 2016, but given the recent global focus

After joining Sanwa & Co. Tokyo Marunouchi Office (current Deloitte

External Audit & Supervisory
Board Member
Independent Officer

Touche Tohmatsu LLC), Mr. Kubo cultivated extensive experience

Attended 15 of 15 Board of Directors
meetings since being appointed as amember of the Audit & Supervisory
Board
Attended 9 of 9 Audit & Supervisory
Board meetings

and achievements and gained deep insight into accounting throughhis involvement in many corporate audits, share listings, corporate
reorganization proceedings, M&A deals and other projects. He has served
as an External Audit & Supervisory Board Member for JAL since June 2018.
Main concurrent positions:Managing Partner of Kyoei Accounting
Office and Representative Director of Japan Enterprise Sustainable
Transformation Advisory Co., Ltd., among other positions.

Note: The number of Board of Directors meetings and Audit & Supervisory Board meetings attended by Independent External Auditors are the actual attendances
for fiscal year 2018. Mr. Shinsuke Kubo was newly appointed at the 69th Ordinary General Meeting of Shareholders on June 19, 2018, and became a memberof the Audit & Supervisory Board on the same date. The number of meetings that he was eligible to attend is therefore different to other external members of
the Audit & Supervisory Board.

76

contribute to the achievement of the SDGs and help resolve
other social issues. In addition, as an Official Airline Partnerof the Olympic and Paralympic Games Tokyo 2020, we are
actively promoting initiatives based on the Sustainable
Sourcing Code.*2*1 Sedex, the Supplier Ethical Data Exchange, is a non-profit organization
established in the U.K. in 2004 that provides a platform for managing
and sharing corporate ethical information with the aim of ensuring
responsible business practices on supply chains.
*2 Guidelines established by the Tokyo Organising Committee of the
Olympic and Paralympic Games to ensure that services truly necessary
for the Olympic Games are procured with consideration for economic
rationality, transparency and also other ethical principles and to ensure
procurement with consideration for sustainability.

Build mutual
understanding
and truston supply chain management, we significantly revised thecode in July 2019. The revised code covers eight key areas on

View supplier data
and monitor
improvements
Provide CSR data
based oninternational
standards*

the major premise of securing safety: (1) quality assurance,(2) human rights and labor, (3) safety and sanitation ofwork environment, (4) global environment, (5) business

Shinsuke Kubo

By coordinating with suppliers through Sedex, we hope toFinancial Data/ Corporate Information

Osamu Kamomaterializing.

ESG Management

JAL REPORT 2019

Shinji Hatta

as needed of suppliers with a high likelihood of risks

Business Activities and Strategy

and other fields, before serving as Director, Senior Managing Executive

questionnaire using Sedex, and request improvements
1. Fair and transparent procurement
When selecting suppliers, we comprehensively assessa broad range of factors, such as product and service
quality, costs and delivery, the company’s reputation andcorporate social responsibility (CSR) and sustainability
initiatives. We also ensure fair and transparent
procurement activities by offering numerous opportunities
for domestic and international suppliers to do businesswith the JAL Group and conduct fair and transparent
procurement activities at all times.
2. To provide safe and reliable services to customers
To deliver peace of mind to customers when theyboard our flights, we cultivate a culture of safety as toppriority with our suppliers and conduct rigorous quality
management to offer the finest hospitality.
3. Promoting sustainable procurement activities
We work with suppliers to build sustainable supply chains,
including initiatives aimed at legal compliance, global
environment preservation, respecting of human rights,
appropriate labor practices and fair business practices.

management, (6) expansion to suppliers, (7) contribution

Suppliers

Provide CSR data,submit reports on
improvements

to regions and society, and (8) establishment of internal
promotion systems. Commentary on social background andexamples of specific initiatives has also been added.
As in the past, we ask all our suppliers to understand andcomply with the Supplier Code of Conduct, as we aim
to establish sound supply chains with considerations for

Evaluate CSR activities,
advise on improvements,
monitor progress* International standards: ISO 14001, SA 8000, OHSAS 18001,
Ethical Trading Initiative (ETI) Base Code, etc.

sustainability to achieve the Sustainable Development Goals.
JAL Group Supplier Code of Conduct
WEB

https://www.jal.com /en /outline /client/77

SUPPLY CHAIN INITIATIVES

Use of Certified Products

To provide customers with safe and reliable services

Nowadays, responsible procurement requires environmental

need to worry about pests or disease or use pesticides. As<Deeper relationship with sustainable coffee>

including inflight meals and cabin service products used inand social impacts to be considered, and a typical means forvegetables stay fresh for a long time, JAL customers can

JAL CAFÉ LINES is an onboard service that aspires to serve

flight, we are mindful to procure goods and services withthis is “certification” programs. The JAL Group promotes

enjoy their crispness. We have also reduced food waste

the best tasting coffee. We began introducing coffee

consideration to sustainability of the environment, human

the use of certified materials by comparing the standards

because little waste is generated during cooking. In fiscal

sourced for sustainability in 2011 ahead of other airlines.

rights, labor and other social issues. In fiscal year 2018,used in various certification programs, setting a high,year 2020, we will use a variety of ASIAGAP certified

Now, Rainforest Alliance certified*10 coffee beans are used in

we screened all products procured by the JAL Group, andinternational third-party certification as the standard

vegetables in a wider range of dishes.

Economy Class on all flights.

identified those products with particularly high risk. Goingbenchmark, and using safety-related certification programs

forward, we will conduct supplier audits when serious issues

for inflight meals and cabin service products.

are detected and further achieve sustainable procurement
by interviewing and engaging experts and NPOs.

<Adoption of FSC® certified products>
Having established sustainable procurement standards forpaper, in September 2018, we began using FSC® certified*4

Process for Identifying High-Risk Products(2) Prioritize products based on
likelihood of risk and impact

Currently, We have already adopted FSC certified paper

Then, in December 2018, we began offering Doi Tungcoffee on board flights to and from Bangkok. Doi Tung
*6 ASIAGAP certification
ASIAGAP certification is a global standard for farm management andis given to farms conforming to many prescribed standards for foodsafety and environmental conservation, such as pesticide and fertilizer
management.
*7 JAL Agriport
JAL Agriport is an agricultural joint venture with WAGO Co., Ltd. Locatedin Narita, Chiba Prefecture, it operates tourist farms and sells private
brand products.

grown for opium production into coffee plantations. The
coffee was developed collaboratively by the Mae Fah Luang
Foundation, which tackles poverty in Thailand, and Mi
Cafeto Co., Ltd., which provided local guidance on coffee

2020, we aim to have adopted FSC® certified products forall onboard paper cabin service products including sanitary*10 Rainforest Alliance certification
Rainforest Alliance certification indicates that a farmer has been audited
and assessed as meeting standards required for environmental, social andeconomic sustainability.

products and magazines such as SKYWARD.*5*4 FSC certification
FSC® certification is a global forest certification scheme that delivers
products from well-managed forests, which are managed inenvironmentally, socially, and economically appropriate manner, toconsumers in a visible way, thereby returning economic benefits to
producers.
*5 These details are written with prior approval under FSC® promotional
license (FSC®N003038).
®

Vegetable factoryof the Wagoen

The JAL Group remains committed to reducing various
risks along supply chains through the procurement ofrecommended certified materials, ensuring reliability
and safety for customers and striving for sustainable<Introduction of sustainably sourced marine products>

procurement.

ESG Management

JAL REPORT 2019

Auditing Suppliers that Provide Productswith High Sustainability Risk

mountain areas of Thailand to convert fields of poppies

cultivation technologies.

cups, paper hand towels and menu cards, and by fiscal year

(3) Create a risk map(4) Identify products withhigh sustainability risk

coffee was the outcome of a project in impoverished

Business Activities and Strategy(1) Take inventory of products

goods for cabin service products in cabins and lounges.

Message from the President

Identifying High-Risk Products

Having established sustainable procurement standards formarine products (wild and aquaculture), in June 2019, we

As part of JAL Group’s efforts to address products identified

began using such marine products in select inflight meals

as having high sustainability risk, SMETA*3 audits werein Business Class. The marine products are sourced throughconducted against seven suppliers. Based on results of

AEON Co., Ltd. In fiscal year 2020, we will start to use andthe audits, we worked with tier 1 suppliers on items thatoffer a variety of sustainably sourced MSC certified*8 andneeded immediate improvement, and confirmed requests

ASC certified*9 marine products in menus.
Financial Data/ Corporate Information

for improvement and results of corrective measures.

*3 SMETA (Sedex Members Ethical Trade Audit) is an auditing scheme
designed to improve corporate ethics in global supply chains and is
widely accepted as an international standard. It enables strengths andweaknesses (nonconformities) of companies to be identified againstinternational standards and clarifies necessary action to further improvethe company. For further details, please see the official Sedex website.

WEB

https://www.sedexglobal.com /smeta-audit/

Logo for responsible forest
management*8 The Marine Stewardship Council (MSC) operates a certification programfor sustainable and environmentally and socially conscious fisheries, andfor the natural marine products caught by those fisheries.
*9 The Aquaculture Stewardship Council (ASC) operates a certification
program for marine products bred at environmentally and sociallyconscious aquaculture farms.
Doi Tung coffee plantation<Adoption of ASIAGAP certified products>
Having established sustainable procurement standards for
agricultural products, in December 2018, we began using
ASIAGAP certified*6 frilly leaf lettuce in select inflight meals
in Business Class and Economy Class. The lettuce is sourced
through JAL Agriport.*7
The Wagoen farm, where this lettuce is produced, is oneof the largest plant factories in Japan where light, waterand air are all completely artificially controlled. The farm
has also acquired ASIAGAP certification. Since vegetables
are grown in a completely closed environment, there is no78

79

SUPPLY CHAIN INITIATIVES

Pursuing Food Safety for Inflight Meals
and Lounge Meals

management methods. In fiscal year 2018, more than 100<Pursuing safety for cabin service products>

in accordance with the Food Sanitation Act, and whether

hygiene audits were conducted and guidance provided to

JAL is also pursuing safety for tableware used for inflightthe toy has been designed to prevent accidental ingestion.

JAL believes that health management at catering companies

all inflight catering companies and JAL lounges.

meal. During hygiene audits, careful checks are made to

In fiscal year 2018, all toys had passed the ST Standard

see whether inspections are being conducted in accordance

Conformity Test.

preparing inflight meals requires direct management andagency. For this reason, hygiene audits are conducted byprofessional auditors familiar with FSSC22000*11—theglobal standard for food hygiene management—to confirm
that inflight catering companies at all destinations weserve are operated properly in accordance with HACCP*

12with the Food Sanitation Act, and whether used tableware

Message from the President

direct guidance, rather than being outsourced to an external*11 FSSC 22000 certification: FSSC 22000 is the world’s foremostinternational standard for food safety management systems, consistingof ISO 22000 plus additional requirements, designed to reduce risks
associated with the safe provision of food.
*12 Hazard Analysis and Critical Control Point (HACCP): HACCP is amethod of process control whereby hazards, such as contamination
by microbes, metal or other impurities, are predicted for each process,from the receipt of ingredients to the serving of meals, and particularly
important processes are constantly monitored and recorded to help
prevent those hazards.

is being properly washed at prescribed temperatures.
Regarding toys offered to children, given that children may
put the toys in their mouths, we are introducing productsthat have undergone an ST Standard*13 Conformity Test.

*13 The toys safety standard comprises mechanical safety, flammable safety
and chemical safety. Toys featuring the ST logo mean that they arerecommended by the Japan Toy Association as having been carefully
produced with regard to safety.

This test verifies whether inspections have been conducted

Business Activities and Strategy

Dialogue with External Expert
To better understand how social conditions and the business environment are changing and toreflect those changes in our initiatives, JAL engaged in dialogue with an external expert on the
global supply chain of the aviation business.

JAL REPORT 2019

Setting Clear Standards

As for environmental issues on the supply chain, action is needed to deal with single plastic

While supply chain management requires a multifaceted perspective, social

related to Ocean plastic pollution, a prominent issue in recent years which countries have begun

issues in particular require respect for human rights and the right to work and an

regulating. Consideration will also need to be given to the procurement of raw materials,

order of priority according to guiding principles on business and human rights.

including paper.

chains. You need to understand that, if these risks eventuate, they could also pose

Conclusion
The JAL Group is already investigating and shedding light on human rights issues. Once thesebe prioritized. When prioritizing initiatives, I think it is important you clarify thehuman rights impact assessments have been conducted, it is essential that human rights

basis on which priorities have been set, for instance, whether you select areas

due diligence be undertaken from high priority areas where there is significant risk, even if

where JAL buys an extensive range of services or products with higher transaction

there are difficult obstacles to overcome. While it seems likely that supply chain issues willvalues, or areas with higher human rights risks in the country where you operate.

be ranked high in priority, it is important in supply chain management to clearly convey JAL

Takeshi Shimotaya

I also think it is important that, once clarified, this should be clearly described inGroup’s philosophy on respecting human rights and your Supplier Code of Conduct to tier 1

Managing Director,
Sustainavision Ltd.

JAL Group policies.

suppliers and to exercise your influence (leverage) in seeking action from tier 2 and subsequent

Financial Data/ Corporate Informationa risk to your company, and have a solid understanding of what should really

Mr.Shimotaya is a sustainabilityCSR consultant. After working for amajor heavy industry manufacturer
from 1991, he moved to the United
Kingdom in 2007, and earned an
MSc in Environmental Assessment
and Management from the Universityof East Anglia, and an MBA from the
University of Lancaster. He founded
Sustainavision in 2010, and has since
worked to bridge the sustainability
gap between Europe and Japan.

ESG Management

This requires you to think of the obvious risks to people involved in your supply

suppliers further upstream. Holding a series of study and training sessions to develop a deeper
Required Initiatives
The key to addressing human rights and labor issues in supply chains is tounderstanding for supply chain management both inside and outside JAL, and readily disclosing
Group information should also serve as a valuable initiative in enhancing corporate loyalty.

listen to the views of workers, community members and other people who arerights-holders but are unable to complain directly or to express their views to
the company. To achieve this, you need to create highly effective grievance(For more details on our human rights initiatives, please refer to pages 63–64)

mechanisms for handling complaints or opinions. By selecting and auditing those
suppliers found in the analysis of self-assessment questionnaires as requiring
further auditing, you could verify conditions of workers, community members
and other people involved. However, since auditing all suppliers is impossible,
you need to build a user-friendly mechanism to receive complaints directly fromworkers and be able to implement remedial measures quickly when human rights
violations are revealed. In addition, when building such a mechanism, a major
factor in enhancing its effectiveness will be third-party intervention, creating asituation that protects any workers expressing complaints or opinions from being
disadvantaged by reason of such expression.

80

81

FINANCIAL DATA — EIGHT-YEAR SUM MARY
Billions of yen

FY2011FY2012FY2013

FY2014FY2015FY2016FY2017FY2018

Thousands of U.S. dollars*1

FY20181,344.7
1,165.0
179.6
175.2
149.0
261.1
△199.2
△67.3
61.8
85.8
265.5
292.7
198.6

1,336.6
1,127.4
209.1
209.2
174.4
312.3
△ 207.2△ 49.6
105.1
88.5
297.7
321.1
210.6

1,288.9
1,118.6
170.3
165.0
164.1
253.1
△ 215.5△ 53.5
37.5
95.7
266.1
286.2
233.1

1,383.2
1,208.6
174.5
163.1
135.4
281.5
△ 180.1△ 55.8
101.3
110.8
285.4
305.4
208.0

1,487.2
1,311.1
176.1
165.3
150.8
296.7
△ 186.3△ 37.0
110.3
124.1
300.2
320.1
222.1

13,399,954
11,812,784
1,587,170
1,489,863
1,358,744
2,673,366△ 1,679,358△ 333,696
994,008
1,118,154
2,705,324
2,884,782
2,001,315

As of fiscal year-end
Total assets*6
Net assets
Interest-bearing debt
Shareholdersʼ equity

1,087.6
413.8
208.4
388.5

1,216.6
583.1
160.1
565.0

1,340.1
711.0
134.2
690.2

1,473.3
800.7
100.5
776.4

1,578.9
870.5
92.6
843.0

1,728.7
1,003.3
116.0
972.0

1,853.9
1,094.1
125.7
1,060.3

2,030.3
1,200.1
142.3
1,165.1

18,292,891
10,813,001
1,282,511
10,497,639

514.52
1,071.19

458.45
1,903.53
80.00
362,639411.06
2,142.00
104.00362,584481.292,325.79
120.00362,500

456.56
2,749.71
94.00
359,594383.233,019.52
110.00353,334

432.103,340.15
110.00349,006

3.89
30.09
0.99

362,704

473.36
1,558.15
95.00
362,671

17.0
63.6
17.9
35.7
0.5
23.8
26.4
8.3
11.3
−
30,648

15.8
36.0
16.9
46.4
0.3
22.3
24.8
8.4
11.5
20.1
30,636

12.7
26.5
13.0
51.5
0.2
19.1
21.5
8.6
12.2
17.5
31,020

13.4
20.3
12.8
52.7
0.1
19.8
21.8
8.7
12.3
25.3
30,978

15.7
21.5
13.7
53.4
0.1
22.3
24.0
9.1
11.7
24.9
31,331

13.2
18.1
10.3
56.2
0.1
20.6
22.2
9.4
11.7
20.6
32,047

12.6
13.3
9.7
57.2
0.1
20.6
22.1
10.1
12.5
28.7
33,038

11.8
13.6
9.1
57.4
0.1
20.2
21.5
10.4
13.1
25.5
34,003

­
­
­
­
­
­
­
­
­
­
­

385.2
43,03630,313
6,844
70.4
12.7
9.0

406.6
44,74534,036
7,525
76.1
11.9
9.1

437.5
46,23535,390
7,723
76.5
12.4
9.5

454.8
47,696
36,109
7,793
75.7
12.6
9.5

448.7
50,56340,305
8,460
79.7
11.1
8.9

415.2
50,621
40,633
8,394
80.3
10.2
8.2

462.9
51,83642,013
8,585
81.0
11.0
8.9

530.6
54,92544,659
9,128
81.3
11.9
9.7

4,781,322

481.1
35,523
22,26428,965
62.7
21.6
13.5

485.2
36,44323,01230,020
63.1
21.1
13.3

487.4
37,08423,74531,218
64.0
20.5
13.1

487.5
36,30623,99331,644
66.1
20.3
13.4

501.2
35,86924,341
32,114
67.9
20.6
14.0

498.6
35,42324,55032,570
69.3
20.3
14.1

518.2
35,71425,64334,033
71.8
20.2
14.5

528.0
36,11626,19534,859
72.5
20.2
14.6

4,758,068

53.7
1,314

50.4
1,378

54.2
1,512

60.3
1,754

54.2
1,724

43.3
1,887

56.0
2,233

65.4
2,429

590,107

25.0
355

25.0
360

25.4
366

24.2
356

23.3
363

22.2
357

22.4
364

21.8
343

196,891

Per share data (yen, U.S. dollars)*
Net profit attributable to owners of parent
Net assets
Dividends
Average number of shares during the fiscal year (thousands of shares)
7

JAL REPORT 2019

Key Performance Indices
Operating margin (%)
ROE (%)ROA (%)
Equity ratio (%)
D/E ratio (Times)
EBITDA margin（％）*8
EBITDAR margin（％）*9
Unit cost (yen)*10
Unit cost (yen) (Including fuel cost)
Dividend payout ratio (%)
Number of employees
Business data
International passenger operations
Passenger revenues
Available seat kms (million seat kms)*11,13
Revenue passenger kms (million passenger kms)*12,13
Revenue passengers carried (1,000)*13
Revenue passenger load factor (%)*13
Yield (yen)*13
Unit revenue (yen)*13
Domestic passenger operations
Passenger revenues
Available seat kms (million seat kms)*11
Revenue passenger kms (million passenger kms)*12
Revenue passengers carried (1,000)
Revenue passenger load factor (%)
Yield (yen)Unit revenue (yen)International cargo operations
Cargo revenue
Revenue cargo ton-km (million ton kms)
Domestic cargo operations
Cargo revenue
Revenue cargo ton-km (million ton kms)

82

−

­

−
−
−
−
−
−

−
−
−
−
−
−

−

−

*1 US dollar amounts are provided
for convenience only, based on
the exchange rate of ¥110.99/
USD on March 31, 2019.
*2 Excluding deposits andwithdrawals from deposit
accounts*3 Free cash flow = Cash flow fromoperating activities + Cash flowfrom investing activities*4 EBITDA = Operating income +Depreciation expense*5 EBITDAR = Operating income +Depreciation expense + Aircraft
leases
*6 Total Assets amount as of theend of March, 2018 has beenchanged due to the revision of
the accounting standards andother regulations regarding
indication of deferred tax assets
and liabilities from FY2018 (Itwas 1,854.2Bn when disclosed
on April 27, 2018)*7 Japan Airlines Co., Ltd.
conducted a 2-for-1 stock split
on October 1, 2014. Figures forprofit per share, net assets per
share and dividend per share
have been calculated assuming
the stock split was conducted at
the start of fiscal 2011.
*8 EBITDA margin = EBITDA/
Operating revenue*9 EBITDAR margin = EBITDAR /Operating revenue*10 Unit cost = Consolidated airtransport cost (excluding fuelcosts) / ASK*11 ASK (available seat kilometers).
A unit of passenger transportcapacity: Total number of seatsx Distance flown (kms)*12 RPK (revenue passenger
kilometers). Total flight distancecovered by revenue passengers:
Number of revenue passengers
x Distance flown (kms).
*13 From FY2015, revenue
passengers carried, revenue
passenger kilometers, available
seat kilometers and load factor
include codeshare tickets soldby other companies for JALoperated flights.

Financial Data/ Corporate Information

1,309.3
1,142.5
166.7
157.6
166.2
247.9
△166.7
△61.9
81.2
82.7
249.5
281.0
164.5

ESG Management

1,238.8
1,043.5
195.2
185.8
171.6
264.8
△129.0
△60.6
135.8
81.0
276.2
307.1
121.8

Business Activities and Strategy

1,204.8
999.8
204.9
197.6
186.6
256.6
△62.4
△274.4
194.1
81.2
286.1
318.4
98.6

Message from the President

Years ended March 31
Operating revenue
Operating expenses
Operating income
Ordinary income
Net profit attributable to owners of parent
Cash flow from operating activities
Cash flow from investing activities*2
Cash flow from financing activities
Free cash flow*3
Depreciation and amortization
EBITDA*4
EBITDAR*5
Capital investment (Purchase of non-current assets)

83

EVALUATION AND ANALYSIS OF FINAN CIAL CONDITIONS
Economic Conditions

Analysis of Consolidated Operating Results

In fiscal year 2018, the international air travel demand and the

Number of visitors to Japan

international air freight demand remained strong in the first-half(Millions of visitors)
45

1,487.2

1. Earnings Summary¥

billionOperating profit

Profit attributable to owners of parent

¥

¥

176.1

billion150.8

billionMessage from the Presidentof the fiscal year. It slowed down in the second-half of the fiscal

Operating revenue

40

year, but overall it went well. The domestic air travel demand

In fiscal year 2018, consolidated operating revenues increased byexpansion and growth in profit-linked bonus payments. However,30

Crude oil prices, which affect fuel costs and international

7.5% year over year to 1,487.2 billion yen. International passenger

the Group continued its cost reduction efforts using its Divisioned

25

passenger and international cargo revenues, increased20

revenues rose by 67.7 billion yen, reflecting the revenue

profitability management system and other approaches.

significantly over the previous year in the first-half of the fiscal

15

management measures that led to firm high yield demand

As a result, consolidated operating profit rose by 0.9% year overyear but dropped in the second-half of the fiscal year due to10

for both outbound and inbound, together with an increase inyear to 176.1 billion yen.

5

fuel surcharge revenues and forex factors. Domestic passenger

the slowdown of the Chinese economy. However, fuel pricesrose again from January 2019, partly attributable to the OPEC

1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018

0

agreement to cut oil production and expectations for progress in

2020

35

remained robust.

(Year)

Ordinary income increased by 1.3% year over year to 165.3 billion

in individual passengers etc.

yen. Expense of loss on sales and disposal of flight equipment

Operating expenses increased by 8.5% year over year to 1,311.1

increased, however, non-operating expenses decreased due tobillion yen. Fuel costs increased by 35.9 billion yen due to higher

foreign exchange loss of 2.4 billion yen in the previous fiscal year.

fuel prices, maintenance costs rose by 10.8 billion yen mainly due

Net profit attributable to owners of parent increased by 11.4%

Air Passenger Traffic Forecast

Global passenger traffic

to a rise in engine maintenance costs, and personnel costs roseto 150.8 billion yen, partly reflecting a decline in income taxes –Compound Annual Growth Rate 2018-2037
RPK in Billions
2017
2037

(Millions of passengers)
4,500

by 11.8 billion yen due to an increase in headcount amid business

deferred from 32.1 billion yen.

Business Activities and Strategy

Source: Japan National Tourism Organization

U.S.-China trade talks, which left fuel price projections unclear.

revenues also increased by 9.8 billion yen because of an increase

4,000
3,500

JAL REPORT 2019

3,000

1,910

4,004

Europe171

361

Africa

2,000

6,996

1,000
500
0

2,371

Middle East
6.0%

3.8%

408

1,051

Latin America
4.8%

Fiscal year 2018 Changes in operating profit

1,500

7,737

18,587World
4.5%(Billions of yen)

+1.5bnASK y/y : +4.0%
RPK y/y : +4.7%(+0.9%)

Source: International Civil Aviation Organization (scheduled flights)

Other revenues

Source: Japan Aircraft Development Corporation
International
passenger

Domestic
passenger

+9.8
+1.9％

Cargo and
mail

+7.9

+8.6％

+67.7
customers, backed by a firm commitment to operational safety.

subsidiaries and 58 affiliated companies.

The operating revenue for the consolidated fiscal year increased

On April 28, 2017, the JAL Group released the JAL Group Medium

7.5% year over year to 1,487.2 billion yen, the operating expenses

Term Management Plan for Fiscal Years 2017-2020. To achieve theincreased 8.5% year over year to 1,311.1 billion yen, the operating

goals in the plan, the Group focused on instilling greater focus on

profit increased 0.9% year over year to 176.1 billion yen and the

profits among its staff through the JAL Philosophy and Divisioned

ordinary profit increased 1.3% from the previous year to 165.3

profitability management system and worked to improvebillion yen. Net profit attributable to owners of parent was 150.8

management efficiency to provide the highest level of service tobillion yen, up 11.4% from the previous year.

Fuel

+18.4

△35.9

+5.9％

Maintenance△16.7％△10.8△17.5％"other revenues"
include•Sales of travel
agency, etc.

+14.6％

Aircraft

△5.0
△4.7％

FSC*
Forex
Total

+3.9
△0.2
+3.7

FSC*
Forex
Total

FY2017

Revenues +¥104.0 billion(+7.5%)

−
△0
△0

△4.1％

Passenger
Service System
Costs

△9.0

Other
expenses△128.6％△29.7"Aircraft" includes•Aircraft Depreciation•Aircraft Leases•Aircraft Insurance
Premium, etc.

174.5
FSC* +28.9
Forex △1.2
Total +27.7

Personnel△11.8

Total FSC*
Total forex
Total

+32.8
△1.4
+31.4

△5.7％

Service costs△3.1
Expense of travel agency△2.7
Landing and navigation fees △2.8
Sales commissions△0.9
Other than those above
△20.0
Total
△29.7

Costs △¥102.4 billion(+8.5%)

Financial Data/ Corporate Information

JAL Group
The JAL Group comprises Japan Airlines Co., Ltd. (JAL), 83+ stands for profit increase(revenue increase, cost decrease)△ stands for profit decrease(revenue decrease, cost increase)

The effect of the change of the settlement
Adjustment method are as follows:・International passenger: +6.2Bn
・Domestic passenger: △6.2Bn
Those are reflected in the figures below.

(Year)ESG Management

736

2,500

North America
3.2%

Asia-Pacific
5.3%

2,474

3.8%

3,325

1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017

1,782

176.1

FY2018*FSC = Fuel Surcharge

84

85

EVALUATION AND ANALYSIS OF FINANCIAL CONDITIONS

2. Segment Earnings

Operating revenue(1) Air transportation segment¥

1,357.6

The operating revenue increased 8.0% year overbillion

FY2017FY2018FY2017528.0(534.3)+1.9（＋3.1）

34,03334,859+2.4(Millions of yen)

ASK (million seat kilometers)

35,714

36,116+1.1

YoY change (%)

RPK (million passenger kilometers)

25,643

26,195

+2.2

71.8%

72.5%

＋0.7pt30,00015,227

15,149(15,328)△0.5（＋0.7）

25,00020.2△0.2（＋0.9）

20,00014.6＋0.8（＋2.0）

606,095+14.5

billion yen.

Passenger operations

462,919

530,679+14.6

Cargo operations

56,03665,496+16.9

L/F (%)
Revenue per passenger*1,2(yen)* Figures for operating revenue and operating profit are
before elimination of intra-segment transactions.

Mail-service operations

9,858

9,123

△7.5

Yield*1,3 (yen)20.2

Unit revenue*1,4 (yen)

14.5

749

795

+6.2

544,706

553,799+1.7

Passenger operations

518,239

528,098+1.9

Cargo operations

22,444

21,853△2.6

Mail-service operations

3,718

3,547

△4.6

Luggage operations

304

301

△1.2

Luggage operations

1,074,269

1,159,895+8.0

Other revenues

182,995

197,708+8.0

Total revenues

1,257,265

1,357,603+8.0

Total revenues from international and domestic operations

8,585

FY2018530.6(524.4)9,128

YoY change (%)+14.6（＋13.3）+6.3

ASK (million seat kilometers)

51,83654,925+6.0

RPK (million passenger kilometers)

42,01344,659+6.3

L/F (%)
Revenue per passenger*1,2
(yen)

81.0%

81.3%
58,136(57,453)
11.9(11.7)
9.7(9.5)＋0.3pt

FY2017
Passenger revenues*1(billion yen)
Passengers (1,000)

462.9

1 3

Yield* , (yen)11.0

Unit revenue*1,4 (yen)

8.9

+7.8

（＋6.6）+7.8（＋6.6）+8.2（＋6.9）*1 The effect of the change of the settlement adjustment method fordomestic sectors on international itineraries is excluded in the figures inparentheses*2 Revenue per passenger = Passenger revenues / Passengers*3 Yield = Passenger revenues / RPK*4 Unit revenue = Passenger revenues / ASK

America
EuropeAsia / Oceania
China
Hawaii / Guam
Total

+13.4
+12.8
+11.5
+24.4
+19.2
+14.6

● ASK

FY2017
14,971

15,581

+4.1

7,962

7,790

△2.2

Asia / Oceania

18,042

19,322

+7.1

China

3,292

3,422

+4.0

Hawaii / Guam

7,569

8,808

+16.4

Total

51,83654,925+6.0

60,00090.0

54,92550,00020,00070.0

10,00065.0

America
EuropeAsia / Oceania
China
Hawaii / Guam
Total

60.0

● Load Factor

2015

2016

2017

2018

60.0

10,000
55.0

5,000
0

2013

2014

2015

2016

2017

2018

(FY)

50.0

JALPAK CO.,Ltd.

for international visitors, who are expected toincrease toward 2020. In addition, JAL Payment
Port Co., Ltd. started a prepaid card business
JAL Global WALLET from November and will
provide new financial services such as exchanging
currencies for international travelers.
are shown on the right.

FY2017
Overseas travelers handled(10,000 number of travelers)
Domestic travelers handled(10,000 number of travelers)Operating Revenue (before elimination of
consolidated transactions, billions of yen)

FY2018YoY change (%)

23.1

22.2

△3.9

254.5

271.8

+6.8

175.1

182.0

+4.0

JAL Card Co.,Ltd
FY2017
Memberships (10,000 number of members)
Operating Revenue (before elimination of
consolidated transactions, billions of yen)

FY2018YoY change (%)

342.6

357.9

+4.5

18.3

19.4

+6.1

FY201812,714
6,580
15,661
2,870
6,831
44,659Component Ratio (%)

+8.3
+0.1
+4.9
+10.0
+10.9
+6.3

(FY)

(1000.0)

FY2017

80.0
75.0

2014

11,735
6,571
14,9362,610
6,158
42,013● Revenue passengers carried

81.3

2013

15,000(Million passenger kilometers)

America
EuropeAsia / Oceania
China
Hawaii / Guam
Total

30,000

0

65.0

85.0

44,65940,000

70.0

Financial Data/ Corporate Information

Revenue Passenger-Load factor (%) (right hand scale)

Results of JALPAK Co., Ltd. and JAL Card Co., Ltd.

EuropeFY2017■ RPK (million passenger kilometers) (left hand scale)■ ASK (million seat kilometers) (left hand scale)(Million seat kilometers)

America● RPK

International passengers

Narita Airport to provide an entertaining activity

Component Ratio (%)

75.0

26,195

Co., Ltd. in April to operate a tourist farm near

Component Ratio
FY2017FY2018
26
26
16
16
33
33
11
11
14
14
100
100

FY201872.5(2) Other Businesses
In other businesses, JAL established JAL Agriport（％）

FY2018YoY*1 The effect of the change of the settlement adjustment method fordomestic sectors on international itineraries is excluded in the figures inparentheses*2 Revenue per passenger = Passenger revenues / Passengers*3 Yield = Passenger revenues / RPK*4 Unit revenue = Passenger revenues / ASK

35,000ESG Management

JAL REPORT 2019

53,919● Passenger revenues(14.8)

80.0

36,116

Business Activities and Strategy

Revenues of international routes by geographic segment① International passenger operations(20.4)

Revenue Passenger-Load factor (%) (right hand scale)

40,000

Message from the President

529,563

Domestic operations

YoY change (%)

518.2

billionInternational operations

profit increased 0.7% year over year to 162.3

FY2018■ RPK (million passenger kilometers) (left hand scale)■ ASK (million seat kilometers) (left hand scale)

Passenger revenues*1(billion yen)
Passengers (1,000)¥

Components of Revenues from the Air Transportation Segment

year to 1,357.6 billion yen and the operating

1,230
733
4,146
1,409
1,066
8,585

FY2018

1,332
734
4,270
1,554
1,236
9,128

Component Ratio (%)

+8.4
+0.1
+3.0
+10.3
+15.9
+6.3
(%)

FY2017

America
EuropeAsia / Oceania
China
Hawaii / Guam
Total

86

162.3

Domestic passengers② Domestic passenger operations

Operating profit

78.4
82.5
82.8
79.3
81.4
81.0

FY2018

81.6
84.5
81.1
83.9
77.6
81.3

Component Ratio (pt)

+3.2
+1.9
△1.7
+4.6
△3.8
+0.3

87

EVALUATION AND ANALYSIS OF FINANCIAL CONDITIONS
Operating expenses

3. Analysis of Factors Affecting Operating Expenses
Major Operating Expense Items
FY2018

215.2
83.5
62.0

251.2
86.3
72.9

+35.9
+2.8
+10.8

+16.7
+3.4
+17.5

17.9

18.9

+0.9

+5.5

112.2
45.3
302.1
86.6
335.2
1,311.1

107.1
42.2
290.3
83.8
306.1
1,208.6

YoY

YoY(%)

+5.0
+3.1
+11.8
+2.7
+29.0
+102.4

+4.7
+7.5
+4.1
+3.3
+9.5
+8.5

*1 Aircraft= Aircraft Depreciation+ Aircraft Leases+ Aviation Insurance Premium, etc.
*2 Services= Expenses regarding inflight services, airport lounges, cargo equipment, etc.

billionprofitability management system and the total operating expenses

Capital investment during the fiscal year

increased by 8.5% year over year to 1,311.1 billion yen.

2018 totaled 223.4 billion yen (including(1) Fuel costs

expenditure for intangible fixed assets).

Fuel costs increased by 35.9 billion yen year on year due to higher

In the air transportation segment,

prices, foreign exchange rates and other factors. The Group’s

investment is made for aircraft tofuel consumption is rising due to capacity expansion, but it

As of end of FY2018(March 31, 2019)

Diff.

Fiscal 2018 Fleet

As of end of FY2017(March 31, 2018)
Owned

Leased

Total

Owned

Leased

Total

12

0

12

12

0

12

—

11

0

11

11

0

11

—

improve operating efficiency. It also

Boeing 777-300

4

0

4

4

0

4

—

continues to take steps to limit the rise of fuel usage throughincludes intangible fixed assets such as

Boeing 777-300ER

13

0

13

13

0

13

—

actively introducing fuel-efficient aircraft and efficient operational

measures to improve the Group’s ability

40

0

40

40

0

40

—

Boeing 787-8

25

0

25

25

0

25

—

Large-sized Boeing 777-200

Large-sized subtotal
Mediumsizedpractices.

to respond to diversifying customer(2) Unit cost*3

needs and systems to increase efficiency

Boeing 787-9

10

1

11

14

3

17

+6

Unit Cost will rise temporarily in fiscal year 2019 due to upfront

and enhance passenger convenience.

Boeing 767-300

6

0

6

6

0

6

—

costs for capacity expansion in fiscal year 2020. However, we planIn fiscal year 2018, capital investment

Boeing 767-300ER

28

1

29

29

0

29

—

to reduce Unit Cost by improving productivity in fiscal year 2020.

totaled 221.7 billion yen. Capital

69

2

71

74

3

77

+6

investment was mainly used to purchase(yen)

Medium-sized subtotal

8

0

8

3

0

3

△5

Boeing 737-800

34

23

57

42

20

62

10.5

10.4

+5

42

23

65

45

20

65

higher engine maintenance costs. Personnel costs increased by 11.8
billion yen due to an increase in headcount in accordance with

FY2018

Boeing 737-800, two Embraer 190, one—

EMBRAER 170

17

0

17

18

0

18

+1

FY2019Plan

Embraer 170, one ATR72-600 and two

FY2020*3 Unit Cost=Air Transportation Segment Operating Expense(excluding fuel,and before the depreciation method change reflected )/ASKEMBRAER 190

12

0

12

14

0

14

+2

Bombardier DHC8-Q400

5

1

6

1

0

1

△5

Net profit attributable to owners of parent

150.8

¥

Regional

ATR42-600), purchase leased aircraft andmake advance payments for aircraft.

Bombardier DHC8-Q400CC

5

0

5

5

0

5

—

Two of the six new Boeing 787-9 andSAAB 340B

10

0

10

8

0

8

△2

one of the two new ATR42-600 were

Bombardier DHC8-Q300

1

0

1

0

0

0

△1

converted to operating lease aircraft in

ATR42-600

4

0

4

5

1

6

+2

ATR72-600

0

0

0

1

0

1

+1

fiscal year 2018.

billionOrdinary income increased by 1.3% year over year to 165.3 billion

Net profit attributable to owners of parent rose by 11.4% to 150.8

yen. Expense of loss on sales and disposal of flight equipment

billion yen, mainly due to a decline in income taxes – deferredincreased, however, non-operating expenses decreased due tofrom 32.1 billion yen.

54

1

55

52

1

53

△2

205

26

231

211

24

235

+4

Regional Total
Total

ESG Management

JAL REPORT 2019

4. Net Profit Attributable to Owners of Parent

Small-sized subtotal

Business Activities and Strategy

Small-sized Boeing 737-400

17 new aircraft (six Boeing 787-9, fivein the market. Maintenance costs rose by 10.8 billion yen due tothe Group continued its cost reduction efforts using its Divisioned

billionBoeing 777-200ER

Fuel costs increased by 35.9 billion yen due to higher fuel prices

the capacity growth and profit-linked bonus payments. However,

223.4

¥

Message from the President

Fuel
Landing and navigation fees
Maintenance
Sales commissions(Air Transport)
Aircraft *1
Service *2
Personnel
Expenses of travel agency
Other
Total operating expenses(Billions of yen)

FY2017

1,311.1¥

Capital investment

6. Capital Investment and Aircraft Procurement

foreign exchange loss of 2.4 billion yen in the previous fiscal year.

5. Cash Flows

Cash flow from operating activities

Cash flow from investing activities

Cash flow from financing activities

¥

△¥

△¥

296.7

billion186.3

billion37.0

Cash Flow from Financing Activities

The assets at the fiscal year-end increased by 176.3 billion yen

increase corporate value, shareholder returns and maintenance ofCash flow from financing activities (outflow) declined by 18.8

from the end of the previous fiscal year to 2,030.3 billion yen,a firm financial structure. The Group conducts capital investmentsbillion yen year on year to 37.0 billion yen due to payment of

mainly due to procurement of aircraft and advance aircraftin accordance with strict investment discipline and aims todividends, share repurchases and issuance of bonds.

payments.

maximize free cash flow through securing an appropriate level of

The liabilities increased by 70.3 billion yen from the end of theinvestment return.

previous fiscal year to 830.1 billion yen due to increase advances
Cash flows

As a result of adjusting net profit before income tax deferredetc. of 156.2 billion yen with non-cash items, such as depreciation
costs, and net defined benefit liabilities and debts and credits inoperating activities, cash flow from operating activities (inflow)
increased by 15.1 billion yen year on year to 296.7 billion yen.
Cash Flow from Investing Activities
Excluding deposits and withdrawals from fixed deposit accounts,
cash flow from investing activities (outflow) increased by
6.2 billion yen year on year to 186.3 billion yen, mainly for
expenditures for acquiring fixed assets.

Cash flow from operating activities
Depreciation and amortization
Cash flow from investing activities*1
Investments*2
Free cash flow*3
Cash flow from financing activities
Total cash flow*4
EBITDAEBITDAR(Billions of yen)received and bonds payable.

FY2017FY2018YoY

The net assets increased by 106.0 billion yen from the end of

281.5
110.8
△180.1△211.9
101.3
△55.8
45.5
285.4
305.4

296.7
124.1
△186.3△226.2
110.3
△37.0
73.2
300.2
320.1

+15.1
+13.2
△6.2
△14.3
+8.9
+18.8
+27.7
+14.8
+14.7

the previous fiscal year to 1,200.1 billion yen, as a result of*1 Excluding deposits and withdrawals from deposit accounts*2 Investment, capital contribution or etc.
*3 Cash Flow from Operating Activities + Cash Flow from Investing Activities*4 Cash flow from Operating Activities + Cash Flow from Investing Activities+ Cash Flow from Financing Activities

1,165.1¥

billionConsolidated financial position

1

Equity ratio

57.4

%

(Billions of yen)
End of FY
2017

End of FY
2018

YoY

1,853.9

2,030.3+176.3

Cash and deposits*2

448.8

522.0

+73.2

Interest-bearing debt*3

125.7

142.3

+16.5

Future rental expenses under operating leases

67.4

81.1

+13.7

Shareholdersʼ equity

1,060.3

1,165.1+104.7

Shareholdersʼ equity ratio (%)

57.2%

57.4%

+0.2pt

0.1x

0.1x

+0.0x
△0.6ptTotal assets*

D/E ratio (%)*4

Financial Data/ Corporate Information

The JAL Group primarily uses cash flow for investments that

Cash Flow from Operating Activities

88

billionShareholders’ equity

7. Financial Position

paying dividends and acquiring own shares, and also net profit

ROIC(%) *5

10.1%

9.5%

attributable to owners of parent in the current fiscal year and an

ROE(%) *6

13.3%

13.6%

+0.2ptincrease in accumulated other comprehensive income.

ROA(%) *7

9.7%

9.1%

△0.7ptAs a result of the above, shareholders’ equity ended at 1,165.1
billion yen, and the equity ratio rose by 0.2 percentage points
from the end of the previous fiscal year to 57.4%.

*1 Total Assets amount as of the end of March, 2018 has been changed
due to the revision of the accounting standards and other regulations
regarding indication of deferred tax assets and liabilities from FY2018 (Itwas 1,854.2Bn when disclosed on April 27, 2018)*2 Certificate of Deposits etc. included*3 Accounts Payable-installment Purchase included*4 On-balance sheet Interest-bearing Debt / Shareholders' Equity*5 NOPAT/Average Fixed Asset (incl. Future Rental Expenses under Operating
Leases) at beginning and end of a fiscal year
*6 (Net profit attributable to owners of parent) / (Average of shareholder’sequity at beginning and end of a fiscal year)*7 (Operating profit ) / (Average of total assets at beginning and end of a
fiscal year)

89

EVALUATION AND ANALYSIS OF FINANCIAL CONDITIONS

8. Credit Ratings

10. Retirement Benefit Obligations(as of May 2019)

Certain overseas subsidiaries have defined-benefit retirement

Issuer ratingtable on the right.

A– (positive)

established defined-benefit retirement plans such as corporate

plans.

Japan Credit Rating Agency, Ltd. (JCR)

Long-term issuer rating

A (stable)

pension plans and lump-sum retirement plans, as well as defined

The Japan Airlines Welfare Pension Fund also introduces ancontribution pension plans. When employees retire, and on

option similar to a cash-balance plan as well as other alternatives.

other occasions, the Company and its consolidated subsidiaries

The JAL Group Pension Fund, which is used by some domestic

may also provide premium severance packages, which are notconsolidated subsidiaries, uses a cash balance pension plan.

included in calculations of the actuarial difference for retirement

Simplified accounting methods are used to calculate retirement

benefit obligations in retirement benefit accounting. As of March

benefit liabilities, assets and expenses for defined-benefit

31, 2019, the Company and 39 consolidated subsidiaries had

corporate pension plans and lump-sum retirement plans at somelump-sum retirement plans. The Group also had three corporate

consolidated subsidiaries.

9. Fuel and Exchange Rate Hedging(1) Hedging Policy

Fuel cost hedging by fiscal year (as of end-fiscal year 2018)

On international routes, fuel surcharges allow the Company tooffset some of its fuel costs. As a result, the Company uses fuelhedging for fuel used on domestic routes, which is equivalent
to approximately 40% of all fuel consumed by the Group’s airtransport operations. In addition, the Company’s foreign currency

Approx. Approx.
40% 40%40

20

Approx. Approx.
10% 10%excluding fuel costs. Consequently, the Company uses fuel and0exchange rate hedging only for fuel costs.

Fuel hedging

Forex hedging

Fuel use

Foreign currency
revenues

Domestic
routes40%

FSC*
revenuereceived

2020

2021

(FY)

The company regards shareholder returns as one of our most

The Company’s policy is to pay dividends from capital surplus

Profit Impact by Fuel and FX Markets in fiscal year 2019（*1）

important management matters. Our fundamental policy is totwice a year through an interim dividend and a year-end dividend.

(including hedging and fuel surcharge)

actively implement shareholder returns through continuous and

The Ordinary General Meeting of Shareholders approves the year-

stable dividends and flexible share repurchases, while securing

end dividend and the Board of Directors approves the interiminternal reserves for making investments for corporate growth

dividend. The Articles of Incorporation state that the Company

in the future and changing business environments and to build amay pay an interim dividend after approval by the Board ofstrong financial structure.

Directors, based on a record date of September 30.

In order to maintain a stable dividend level despite the upcoming

The company will continuously strive to increase capital efficiency

effective tax rate increase, the company will decide theand maintain stable shareholder return.

Singapore Kerosene(USD/bbl)

Non-fuel
costs

US$75

US$80

US$90

US$95

JPY 115+3.0bn+5.0bnJPY 110+9.0bn+5.5bn+1.5bn+1.0bnJPY 105+10.0bn+12.5bn+9.0bn+2.5bnFX Rate(JPY/USD)

Fuel costs
HedgedThe Company is exposed to fuelcost risks on domestic routes, which
do not have the FSC*

2019

11. Distribution of Profits to Shareholders

Approx. Approx.
5%
5%

The Company is exposed to forex
risks related to fuel costs, as foreign
currency expenses excluding fuelcosts are largely offset by foreign
currency revenues（Forecast）

0.0bn△6.5bn*1 Forecast on April 26,2019
The fuel surcharge applicable from April to July 2019 has been alreadydetermined as below:*April-May: Japan outbound/ Zone JPY7,000, others excluding Japanoutbound/ Zone USD70
June-July: Japan outbound/ Zone JPY8,000, others excluding Japanoutbound/ Zone USD70
With the fuel surcharges above, the recent fuel prices and the exchange
rates from April to May, the impact on profit will be approximately negative
7.0 billion yen (not included in the profit impact matrix chart above)

dividend per share level, considering its continuity, stability andpredictability with reference to a payout ratio of approximately
35%. In principle, income tax deferred is no longer excluded

Total Shareholder Return History (FY2012-2019)from fiscal year 2019. In addition, the company will proactively(Billions of yen)
250.0

and flexibly consider share repurchases, considering its financial
achieve a total payout ratio, which combines the total dividends

The impact of volatility in fuel prices is mitigated by hedging
and fuel surcharges, however there is some time lag of theireffects in each year. However, over a medium-term timeframe,
the Company has been largely successful in mitigating the risk offluctuations in fuel prices. Based on cumulative changes in prices
for the last three fiscal years, the Company has offset the impactof those changes through hedging and fuel surcharges.

stakeholders.
At the same time, the company continuously strives to improve

Fuel prices / forex

capital efficiency through monitoring a total return on equity
ratio, which is calculated by dividing the sum of total dividends

FSC* / hedging

paid out and share repurchases by shareholders’ equity. The
company makes its efforts to maintain this ratio at approximately

Impact0*FSC = fuel surcharge

Profit fluctuation

3% or above.
Based on this policy, the company plans to pay a year-end
dividend of 55 yen per share for fiscal year 2018. The annual
dividend is 110 yen per share, including the interim dividend of
55 yen per share. The dividend forecast in the fiscal year ending

171.6

166.2

164.1

150.8
135.4

100.0

0.0

50

44.5

149.0

150.0

50.0

174.4

25.1
18.9

25.0

25.1

29.4

114.0
33.7

32.3

20.0
30.0

20.0

20.0

32.3

29.0

37.7

43.5

33.2

38.7

38.3

2012

2013

2014

2015

2016

2017

2018

Financial Data/ Corporate Information

sharing periodic profits and allocating capitals among all of its

49.2

47.7

200.0

Will be determined

an approximately 35% to 50% range through appropriately
Cumulative impact of price fluctuations in fiscal 2016–2018（％）
60

position and other factors. As a result, the company seeks to
paid out and the total amounts of the share repurchases, of(2) Overcome Market Risks

ESG Management

JAL REPORT 2019

Internationalroutes60%

Foreign currency
expensespension funds, including the Japan Airlines Welfare Pension Fund.

Business Activities and Strategy

revenues are roughly the same as its foreign currency expenses,■ Fuel■ Forex60（％）

Message from the President

The Company and its major consolidated subsidiaries have

Rating & Investment Information, Inc. (R&I)

JAL’s current credit ratings are shown in the

40

30

20

38.3

2019 (FY)(Forecast)

10

Net Profit Attributable to owners of the parent
Total Dividends
Payout Ratio*1
Total Return Ratio*2
Share Repurchase*1 Dividend payout ratio=Total dividends/Net profit attributable to ownersof parent**2 Total return ratio=（Total amount of dividend + Amount of share
repurchase）/Net profit attributable to owners of parent**FY2013～2018 net profit attributable to owners of parent excludes effects
of deferred income tax

March 31, 2020 is 110 yen per share, with the estimated interim
dividend of 55 yen.

90

91

EVALUATION AND ANALYSIS OF FINANCIAL CONDITIONS

12.Business Risks(4) Risks concerning disasters

In addition, amid growing pressure on companies in recent years

The majority of the JAL Group’s passengers use aircraft departingto fulfill their corporate social responsibility to the environment,from or arriving at Haneda and Narita airports. Consequently,

such as preventing global warming, the JAL Group is facingthese airports play a vital role in the JAL Group’s air transportationtighter restrictions on CO2 emissions, noise pollution, harmful

business. In addition, the Group’s Information System Center,

substances, and other environment issues. A further tightening(2) Risks concerning introduction of aircraft

which plays an important role in managing the Group’s flights,

of environmental regulations that leads to a higher cost burdenmaterial impact on investment decisions. The list is not exhaustive

In the air transportation business, the JAL Group places orders

reservations and other services, and the Integrated Operations

through emission charging mechanisms or other schemes, suchand the JAL Group may be affected by unforeseen risks notfor aircraft with the Boeing Company, Airbus SAS, Embraer SA,

Control, which is tasked with controlling the operation andas a new greenhouse gas trading system to be implemented

described below. This report also contains forward-looking

ATR, and Mitsubishi Aircraft Corporation to increase efficiency

scheduling of the Group’s fleet worldwide, are both located infrom fiscal 2020 at earliest, could have an impact on the Group’s

statements based on information available to the Company asby switching to more fuel-efficient aircraft and reducing aircraft

the Tokyo area. Consequently, a major earthquake or volcanic

operating performance.

of March 31, 2019. The JAL Group is exposed to the following

types

eruption in the Tokyo area could lead to the protracted closure② Litigation risk

principal risks due to the nature of its business activities, centeredin the fleet. However, the delivery of new aircraft may beof Haneda or Narita airports, while a fire, terrorist attack or other

The JAL Group’s business activities are exposed to the riskon the scheduled air transportation business and unscheduled air

delayed due to technical, financial, and other reasons at aircraft

incident at these key facilities could lead to a prolonged outage

of various types of litigation, which could affect the Group’stransportation business.

manufacturers, which could force adjustments to fleet plans thatof the Group’s information systems and operational capabilities,

operations and operating performance. In the event that litigation

affect the Group’s operations over the medium and long term.

which would have a severe impact on the Group’s operations. To

is filed against the Group, developments in the subsequent legal

mitigate the risk of a shutdown at the Operation Control Center

case may require additional costs and the booking of provisions,(3) Risks concerning changes in market environments

in Tokyo, the Group transferred some functions to the Operation

which could also affect the Group’s operating performance.

１ Operating environment

１ Fuel price volatility risk

Control Center at Osaka International Airport in April 2018 and

The JAL Group’s air transportation business operates in Japan

Fluctuations in fuel prices have a significant impact on thestarted 24-hour operations.

and markets worldwide. Demand for air travel may be affected

JAL Group’s operating performance. The Group charges a fuelby trends in the global economy, natural disasters and adverse

surcharge to partly cover the impact of higher fuel prices.

*The name of ‘the Operation Control Center’ was changed to ‘theIntegrated Operations Control’ due to reorganization on April 1, 2019.

weather conditions, terrorist attacks, regional conflicts, war, theHowever, changes in fuel prices are not immediately reflected(5) Risks concerning air safetyof IT systems. Failures in these IT systems caused by flaws in

outbreak and spread of infectious diseases, and other events.

in the fuel surcharge and it is inappropriate to ask customers to

The JAL Group implements a wide range of measures on a daily

computer programs, computer viruses, and other cyber-attacks

In addition, the JAL Group’s services are partly dependent on

cover the entire increase in fuel prices. The Group also uses crude

basis to ensure the safe operation of its flights. However, a single

may lead to the loss of critical data, as well as issues in flight

maintenance companies, airport personnel, sky marshals, fueloil hedging transactions to mitigate the risk of fuel price volatility.

fatal accident has the potential to undermine customer trust

operations, which could affect the Group’s operations. Large-

suppliers, luggage handling companies, security companies,

However, a sudden and steep drop in oil prices may not contributein the Group’s flight safety and lead to a loss of public support.

scale failures in power systems, communication networks, andand other third parties, which could affect the Group’s businessto an improvement in the Group’s operating performance, as the

The Group must also provide compensation for any passenger

other infrastructure that support IT systems could also result

operations.

benefits of the decline would not be reflected in business results

fatalities or injuries in the event of an accident, which couldin significant disruption to the Group’s operations. In addition,② Competitive environment

immediately due to hedge contract positions and other factors.

have a severe impact on the Group’s operating performance.

inadequate handling of customers’ personal information by

The Group faces severe competition in Japan and overseas in② Exchange rate volatility risk

In addition, safety issues related to the JAL Group, the samethe Group or unauthorized access that results in the disclosureareas such as routes, services, and pricing. On domestic routes,

The JAL Group operates in countries other than Japan. As a result,aircraft type operated by the Group or codeshare flights couldof such information could damage public trust in the Group’s

the Group competes with other major Japanese airlines, new low-some of its revenues and expenses are denominated in foreign

undermine customer trust in the Group’s flight safety and lead tobusiness, systems and corporate brand and undermine customer

cost airlines, and bullet train services. On international routes,

currencies. In particular, the price of aviation fuel, one of thea loss of public support, which could affect the Group’s operating

and market trust in the JAL Group, which could affect the Group’s

the Group competes with major domestic and international

Group’s main costs, is largely linked to the US dollar. Fluctuations

performance. To limit the impact of legal damages related to air

financial position and operating performance.

airlines, and competition is intensifying on both domestic andin US dollar exchange rates therefore have a greater impact on

accidents and to ensure those affected by any accident receive

international routes. Alliances, codeshare agreements, and

the Group’s expenses than on its revenues. To mitigate the impact

sufficient compensation, the Group has purchased liability(8) Risks concerning human resources and industrial affairs

reciprocal air frequent flyer programs between overseas andof exchange rate volatility on profits, the JAL Group uses foreign

insurance that provides an internationally recognized level of

The JAL Group’s business is dependent on securing personnel who

Japanese airlines are contributing to the challenging environment

currency revenues to offset foreign currency expenses and foreigncompensation and coverage.

have national certificates and other legally required qualifications

on international routes. Significant deterioration in thiscurrency hedging transactions. The price of new aircraft is also

competitive climate and operating environment could affect theclosely linked to the US dollar, which means the Group is also(6) Risks concerning legal regulations and litigations

considerable amount of time required by employees to acquireGroup’s operations.

exposed to the risk of exchange rate fluctuations when recording

The Group’s operations are subject to various international

these qualifications and skills during the course of their duties, the

The JAL Group has partnerships with global partner airlines inthe value of assets and depreciation costs related to aircraft. To

legal restrictions and national and local government laws and

JAL Group may not be able to secure sufficient personnel whenvarious forms such as joint business, alliance, codeshare, frequent

mitigate this risk, the Group uses hedging transactions to diversify

regulations. Revisions to these laws and regulations may result in

required, which could affect the Group’s business operations. In

flyer program, and so forth. The JAL Group’s alliance strategy may

opportunities for foreign currency exchange.

even tighter restrictions on the Group’s operations, which could

addition, many of the Group’s employees are members of labor

be affected by changes in operating conditions at other partner③ Capital and financial market risk

lead to a significant increase in costs.

unions. A collective strike by Group employees or other laborairlines including oneworld members or joint business partners,

The JAL Group needs to make significant capital investments,

１ Regulatory risk

disputes could affect the Group’s aircraft operations.

and by changes in the oneworld alliance membership or major

such as procuring new aircraft. To meet funding needs for

The JAL Group conducts its operations in accordance with various

developments in the Group’s alliance relationships.

these investments, the Group may procure funds from financial

rules and regulations, such as Japan’s Civil Aeronautics Act andinstitutions or capital markets. The Group’s ability to secureother regulations governing airline businesses, bilateral aviation

funds and its funding costs are affected by trends in capital andagreements and other international arrangements, Japan’s

financial markets, and by changes in its credit rating, which may

Antimonopoly Act and other similar antitrust laws overseas, andlimit the Group’s access to funds and lead to higher funding costs.

rules on taxes and public dues such as landing fees. Revisions to(1) Risks concerning the external management environment suchas international affairs and economic trends

Message from the President

The JAL Group has identified a number of risks that could have a(7) Risks concerning handling of IT (information system) and

ESG Management

JAL REPORT 2019

Business Activities and Strategy

customer information
The JAL Group’s operations are dependent on a large number

Financial Data/ Corporate Information

related to the operation of aircraft. However, due to thethese rules and regulations or notifications of legally enforceable
airworthiness directives could have an impact on the Group’s
operating performance. Moreover, the allocation of flight slots
at Haneda and Narita airports and the timing of the launch of
new routes could also affect the Group’s operating performance.

92

93

CONSOLIDATED FINANCIAL STATEMENTS

Thousands of U.S.
dollars (Note 4)

Millions of yen
As of March 31

2019

2018

2019

¥ 185,650¥ 177,937$ 1,672,673

LIABILITIES(1) Consolidated Balance Sheets

Current liabilities:
Operating accounts payable (Note 7)

Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Short-term loans payable (Notes 7 and 10)
Thousands of U.S.
dollars (Note 4)

Millions of yen
2019

2019

2018

AssetsCurrent assets:
Cash and deposits (Notes 5, 7 and 10)¥ 417,842$ 4,163,113

Notes and operating accounts receivable (Note 7)

153,112151,262

1,379,511

Securities (Notes 5, 7 and 8)

60,00030,999540,589

Flight equipment spare parts and supplies

21,92921,996

197,576

Other

65,09558,924586,494

(661)

(533)

(5,955)

Allowance for doubtful accounts
Total current assets

761,539

680,492

6,861,329

Investment securities (Notes 6, 7, 8 and 10)

101,289

90,757

912,595

119,713

Lease obligations (Notes 7 and 10)

2,461

2,389

22,173

190

185

1,711

Accounts payable—installment purchase (Notes 7 and 10)
Income taxes payable

21,73814,074

195,855

Advances received

129,108

107,506

1,163,239

―

393

―

101,896

76,653918,064454,399

396,846

4,094,053

Bonds payable (Notes 7 and 10)

50,00020,000450,491

Long-term loans payable (Notes 7 and 10)

73,52480,696

662,438

Lease obligations (Notes 7 and 10)

2,504

4,319

22,560

312

480

2,811

Asset retirement obligations (Note 19)
Other
Total current liabilities
Non-current liabilities:

Long-term accounts payable—installment purchase (Notes 7 and 10)
Deferred tax liabilities (Note 12)

169

227

1,522

Reserve for loss on antitrust litigation

5,936

5,931

53,482

Net defined benefit liability (Note 11)

212,672

230,084

1,916,136

Asset retirement obligations (Note 19)

8,657

3,595

77,998Other

22,015

17,687

198,351

Total non-current liabilities

375,793363,023

3,385,827

Total liabilities

830,192

759,869

7,479,881

181,352

181,352

1,633,949

183,050

183,049

1,649,247

822,554

731,106

7,411,064(535)(10,535)(4,820)1,186,421

1,084,972

10,689,440

Valuation difference on available-for-sale securities (Note 8)

20,371

16,469183,539

Deferred gains on hedges (Note 9)

1,837

6,360

16,551

Contingent liabilities (Note 17)

Tangible fixed assets, net:
Flight equipment (Notes 10 and 16)

733,961

704,134

6,612,857

NET ASSETS (Note 13)

Ground property and equipment (Note 16)

53,47852,728481,827

Shareholdersʼ equity:

Advances on flight equipment and other purchases

141,776

123,902

1,277,376

929,216

880,765

8,372,069

Software

92,07695,551

829,588

Long-term loans receivable (Note 10)

7,240

7,715

65,231

Deferred tax assets (Note 12)

96,62566,036

870,573

Net defined benefit asset (Note 11)

2,486

2,119

22,398

Other

40,12930,891

361,555

(275)

(334)

(2,477)

Allowance for doubtful accounts
Total non-current assets
Total assets

1,268,788

1,173,504

11,431,552¥ 2,030,328¥ 1,853,997$ 18,292,891

Common stock:
Authorized: 700,000,000 shares in 2019 and 2018
Issued: 349,028,700 shares in 2019and 353,715,800 shares in 2018
Capital surplus
Retained earnings
Treasury shares, at cost:
201,957 shares in 2019 and 2,555,957 shares in 2018
Total shareholdersʼ equity

Financial Data/ Corporate Information

Total tangible fixed assets

ESG Management

JAL REPORT 2019Non-current assets:

585

14,555Business Activities and Strategy¥ 462,064

3,150

13,287

Message from the President

As of March 31

65

Current portion of long-term loans payable (Notes 7 and 10)

Accumulated other comprehensive income:

Foreign currency translation adjustment

99

(30)

891

(43,596)(47,436)(392,792)

Total accumulated other comprehensive income(21,287)(24,637)(191,792)

Non-controlling interests

35,00133,792

315,352

1,200,135

1,094,127

10,813,001¥ 2,030,328¥ 1,853,997$ 18,292,891

Remeasurements of defined benefit plans (Note 11)

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

94

95

CONSOLIDATED FINANCIAL STATEMENTS(2) Consolidated Statement of Income and Comprehensive Income(3) Consolidated Statements of Changes in Net Assets

Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Millions of Yen
Millions of yen
Years ended March 31

2019

2018

2019

Operating revenue:
Passenger:
Domestic
International
Incidental and other revenue
Total operating revenue¥ 528,098
530,679
428,483
1,487,261¥ 518,239
462,919402,099
1,383,257$ 4,758,068
4,781,322
3,860,555
13,399,954

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

302,156251,223
86,38372,926
19,918124,104
454,389
1,311,101
176,160

290,354215,270
83,55262,08419,996
110,860
426,571
1,208,691
174,565

2,722,371
2,263,474
778,295
657,050
179,457
1,118,154
4,093,963
11,812,784
1,587,170

Capital surplus¥ 181,352

Retained earnings¥ 183,047

Treasury shares¥ 647,701

Total shareholders' equity¥ (531)¥ 1,011,569

Changes of items during period

9,622
12,397(7,234)
13,460(130,408)(7,613)
11,865(4,378)928
3,540
22,957(22,957)(71,159)(10,496)(179,475)
1,407,694

24,974(3,488)21,485140,995

299,333(289,458)
9,874
1,397,819

Profit attributable to:
Owners of parent
Non-controlling interests

150,807
4,337

135,406
5,588

1,358,744
39,075

Other comprehensive income (Note 14):
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income

3,868(4,505)
25
3,845
71
3,305
158,449

2,590
6,969
(296)
5,481
70
14,814
155,80934,849(40,589)
225
34,642639
29,777
1,427,597

154,156¥ 4,292

150,274¥ 5,535

1,388,917$ 38,670

135,406(51,790)
135,406

Purchase of treasury shares
Change of scope of consolidation, etc.

2

(211)

(9,999)(9,999)

(3)

(213)

Net changes of items otherthan shareholders' equity
Total changes of items during period－

283,405(10,003)73,403

Balance at March 31, 2018

¥ 181,352¥ 183,049¥ 731,106¥ (10,535)¥ 1,084,972

Balance at April 1, 2017

Accumulated other comprehensive income
Valuation difference
DeferredForeign currency Remeasurements Total accumulated
on available-for- gains(losses) on
translationof defined benefit other comprehensive
sale securities
hedgesadjustment
plansincome¥ 13,828¥ (667)¥ 232¥ (52,898)¥ (39,504)

Noncontrollinginterests¥ 31,328

Total net assets¥ 1,003,393

Changes of items during period
Dividends of surplus(51,790)

Profit attributable to owners of parent

135,406

Purchase of treasury shares(9,999)Change of scope of consolidation, etc.

(213)

Net changes of items otherthan shareholders' equity

2,640

7,027

(262)

5,461

14,867

2,463

17,331

Total changes of items during period

2,640

7,027

(262)

5,461

14,8672,463

90,734

Balance at March 31, 2018

¥ 16,469¥ 6,360¥ (30)¥ (47,436)¥ (24,637)¥ 33,792¥ 1,094,127
Millions of Yen

Shareholders' equity
Common stock
Balance at April 1, 2018

Capital surplus¥ 181,352

Retained earnings¥ 183,049

Treasury shares¥ 731,106

Total shareholders' equity¥ (10,535)¥ 1,084,972

Changes of items during period
Dividends of surplus(39,377)(39,377)

Profit attributable to owners of parent

150,807

150,807(9,999)Purchase of treasury shares(19,999)

Retirement of treasury shares
0

19,99917(9,999)−18

Change of scope of consolidation, etc.
Net changes of items otherthan shareholders' equity
Total changes of items during period−

091,447

9,999

101,448

Balance at March 31, 2019

¥ 181,352¥ 183,050¥ 822,554¥ (535)¥ 1,186,421

Balance at April 1, 2018

Accumulated other comprehensive income
Valuation difference
DeferredForeign currency Remeasurements Total accumulated Non-controllingon available-for- gains(losses) on
translationof definedother comprehensive interests
sale securities
hedgesadjustment
benefit plansincome¥ 16,469¥ 6,360¥ (30)¥ (47,436)¥ (24,637)¥ 33,792

Financial Data/ Corporate Information

33,223(32,127)
1,096
155,144(51,790)

Profit attributable to owners of parent

ESG Management

816
1,446
(798)
1,761
(11,964)(1,737)2,521(2,495)
829
267
5,477
(5,475)(1,209)(1,523)(12,084)
162,480

Dividends of surplus

Business Activities and Strategy

1,068
1,376
(803)
1,494
(14,474)
(845)
1,317
(486)
103
393
2,548
(2,548)(7,898)(1,165)(19,920)
156,240

Income taxes—current (Note 12)
Income taxes—deferred (Note 12)
Total income taxes
ProfitComprehensive income attributable to:
Owners of parent
Non-controlling interests

Common stock
Balance at April 1, 2017

Message from the President

JAL REPORT 2019

Non-operating income (expenses):
Interest income
Dividend income
Interest expenses
Gain on sales of flight equipment
Loss on sales and disposal of flight equipment
Loss on sales and disposal of supplies
Share of profit of entities accounted for using equity method
Foreign exchange losses
Gain on sales of investments in securities
Compensation income
Subsidy income for aircraft purchase
Loss on reduction of aircraft
Impairment loss (Note 15)
Other
Total non-operating income (expenses)
Profit before income taxes

Shareholders' equity

Thousands of U.S.
dollars (Note 4)

Total net assets¥ 1,094,127

Changes of items during period
Dividends of surplus(39,377)

Profit attributable to owners of parent

150,807

Purchase of treasury shares(9,999)Retirement of treasury sharesー

Change of scope of consolidation, etc.
Net changes of items otherthan shareholders' equity
Total changes of items during period

18
3,902
3,902

(4,522)

130

3,839

3,349

1,209

106,007

Balance at March 31, 2019

¥ 20,371¥ 1,837¥ 99¥ (43,596)¥ (21,287)¥ 35,001¥ 1,200,135(4,522)

130

3,839

3,349

1,209

4,559

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

96

97

CONSOLIDATED FINANCIAL STATEMENTS(4) Consolidated Statement of Cash flows
Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Thousands of U.S. dollars (Note 4)
Shareholdersʼ equity
Common stock
Balance at April 1, 2018

Capital surplus$ 1,633,949

Retained earnings$ 1,649,238

Treasury shares$ 6,587,133$ (94,918)$ 9,775,403

Changes of items during period(354,779)

Dividends of surplus(354,779)

1,358,744

Profit attributable to owners of parent

1,358,744

Purchase of treasury shares0(90,089)

180,187

―

153

162

Change of scope of consolidation, etc.
Net changes of items otherthan shareholdersʼ equity
Total changes of items during period−

0823,92190,089914,028

Balance at March 31, 2019

$ 1,633,949$ 1,649,247$ 7,411,064$ (4,820)$ 10,689,440

Noncontrollinginterests$ 304,459

Total net assets$ 9,857,888

Changes of items during period(354,779)

Profit attributable to owners of parent

1,358,744

Purchase of treasury shares(90,089)

Retirement of treasury shares―

Change of scope of consolidation, etc.
Net changes of items otherthan shareholdersʼ equity
Total changes of items during period

162
35,156

Balance at March 31, 2019(40,742)

1,171

34,58835,156(40,742)

1,171

34,58830,173

10,892955,104$ 183,539$ 16,551$ 891$ (392,792)$ (191,792)$ 315,352$ 10,813,001

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

30,173

10,892

41,07520182019

Cash flows from operating activities
Profit before income taxes¥ 156,240¥ 162,480$ 1,407,694

124,104
19,271(12,157)(2,445)803
266(1,317)(1,852)
188
7,707
29,823110,860
9,882(1,422)(2,262)798(81)(2,521)(8,621)(876)
18,803
13,7801,118,154
173,628(109,532)(22,029)
7,234
2,396
(11,865)(16,686)
1,693
69,438
268,699

320,632

300,820

2,888,836

3,005

2,895

27,074

(802)

(802)

(7,225)(26,117)(21,370)(235,309)

296,717

281,5422,673,366(529,763)
526,442(222,126)
33,390(4,153)247(4,773,069)
4,743,148(2,001,315)
300,837(37,417)
2,225

(314)
833
5,730

(408,263)
421,808(208,002)
22,701(2,941)
1,578
48
23(1,270)954
6,761(189,713)(166,600)(1,709,280)(3,085)
10,800(19,439)(2,649)29,796(10,024)(39,347)(3,534)447(2,221)30,306(13,468)(6,004)(10,004)(51,749)(2,851)
111(27,795)
97,306(175,141)(23,867)
268,456(90,314)(354,509)(31,840)
4,027(37,037)
2
69,968(55,883)(354)
58,704(333,696)
18
630,399

182,870

124,261122

1,647,625

―

(44)

(218)

(396)

¥ 252,795¥ 182,870$ 2,277,637

Adjustments to reconcile profit before income
taxes to net cash provided by operating activities:

Cash and cash equivalents at end of period (Note 5)

―
―

―

―
―

(2,829)7,505
51,626

Financial Data/ Corporate Information

Depreciation and amortization
Loss on sales and disposal of non-current assets and impairment loss
Decrease in net defined benefit liability
Interest and dividend income
Interest expenses
Foreign exchange losses (gains)Share of profit of entities accounted for using equity method
Increase in notes and operating accounts receivable
Decrease (increase) in flight equipment spare parts and supplies
Increase in operating accounts payable
Other, net
SubtotalInterest and dividend income received
Interest expenses paid
Income taxes paid
Net cash provided by operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of non-current assets
Proceeds from sales of non-current assets
Purchase of investment securities
Proceeds from sales and redemption of investment securities
Proceeds from purchase of shares of subsidiaries resulting in change in scope of consolidation
Proceeds from sales of shares of subsidiaries resulting in change in scope of consolidation
Payments of loans receivableCollection of loans receivable
Other, net
Net cash used in investing activities
Cash flows from financing activities
Net decrease in short-term loans payable
Proceeds from long-term loans payable
Repayments of long-term loans payable
Repayments for lease obligations
Proceeds from issuance of bonds
Purchase of treasury shares
Cash dividends paid
Dividends paid to non-controlling interests
Other, net
Net cash used in financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase in cash and cash equivalents resulting from merger
Decrease in cash and cash equivalents resulting fromexclusion of subsidiaries from consolidation

ESG Management

JAL REPORT 2019

Dividends of surplus

2019

Business Activities and Strategy

Balance at April 1, 2018

Accumulated other comprehensive income
Valuation difference
DeferredForeign currency Remeasurements Total ac-cumulated
on availablegains(losses) on
translationof defined benefit other comprehefor-sale securities
hedgesadjustment
plans
nsive income$ 148,382$ 57,302$ (270)$ (427,389)$ (221,974)

Years ended March 31

Message from the President(180,187)

Retirement of treasury shares(90,089)

Thousands of U.S.
dollars (Note 4)

Millions of yen

Total shareholdersʼ equity―

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

98

99

CONSOLIDATED FINANCIAL STATEMENTS

Notes to the Consolidated Financial Statements

f. Leased Assets

k. Derivatives and Hedge Accounting

Japan Airlines Co., Ltd. and Consolidated Subsidiaries

Depreciation of leased assets is computed as follows:

Derivatives positions are stated at fair value.
Gains or losses on derivatives designated as hedging instruments

b. Securities

the ownership of leased assets to the lessee are depreciatedare deferred until the gains or losses on the underlying hedged

Japan Airlines Co., Ltd. (the “Company”) and its domestic

Securities, except for investment securities of non-consolidated

by the same method applied to assets arising from purchaseitems are recognized with any unrealized gains or losses reported

consolidated subsidiaries maintain their accounting records andsubsidiaries and affiliates, are classified as trading securities,

transactions.

as a separate component of net assets, net of taxes. Foreign

prepare their financial statements in accordance with accounting

held-to-maturity securities or other securities. Trading securities

Leased assets under finance lease transactions that do not transfer

currency receivables and payables are translated at the applicableprinciples generally accepted in Japan, which are different inare carried at fair value. Held-to-maturity securities are carried

the ownership to the lessee are depreciated to a residual value

forward foreign currency exchange rates if certain conditions arecertain respects as to the application and disclosure requirements

at amortized cost. Marketable securities classified as otherof zero by the straight-line method using the lease term as themet.

of International Financial Reporting Standards. The accompanying

securities are carried at fair value with any unrealized gain or

useful life.

consolidated financial statements have been compiled from theloss reported as a separate component of net assets, net of taxes.

consolidated financial statements filed with the appropriate

Non-marketable securities classified as other securities are carriedg. Allowance for Doubtful Accounts

Passenger and cargo revenues are recognized when the

Local Finance Bureau of the Ministry of Finance as required byat cost or amortized cost. Cost of securities sold is determined

General provision for doubtful accounts is provided by applying

transportation services are rendered.

the Financial Instruments and Exchange Act of Japan and include

principally by the moving-average method.

a reserve percentage to receivables based on experience fromcertain additional financial information for the convenience

Investments in investment limited partnership and similar

past transactions. When considered necessary, specific reserves are

m. Income Taxesof readers outside Japan. Some supplementary information

associations (those deemed as securities under Paragraph 2 ofmade based on the assessment of individual accounts.

Deferred tax assets and liabilities are recognized for expected

included in the statutory Japanese-language consolidated

Article 2 of the Financial Instruments and Exchange Act of Japan)

financial statements, but not required for fair presentation, is notare stated at net amount equivalent to the Company’s equity on

h. Accounting Method for Retirement Benefits

between the financial statement carrying amounts of existingpresented in the accompanying consolidated financial statements.

the basis of the most recent financial statements available as of

In calculating the retirement benefit obligation, the method

assets and liabilities and their respective tax basis, and operating

As permitted by the Financial Instruments and Exchange Act of

the financial reporting date stipulated in respective partnershipof attributing expected benefits to the accounting period isloss and tax credit carryforwards. Valuation allowance is recorded

Japan, amounts of less than one million yen have been omitted.

contracts.

principally based on the benefit formula.

to reduce deferred tax assets to their net realizable value if it isActuarial gain and loss are amortized by the straight-line method

more likely than not that some portion or all of the deferred tax

l. Revenue Recognition

future tax consequences attributable to temporary differencesc. Inventories

over a period ranging from 5 to 17 years, which is less than theassets will not be realized.

necessarily agree with the sum of the individual amounts.

Inventories are valued at the lower of cost and net realizable

average remaining years of service of the active participants in the

The Company and certain domestic consolidated subsidiaries file

Certain amounts previously reported have been reclassified tovalue with cost determined principally by the moving-averageplans. Amortization is computed from the fiscal year subsequenttax returns under the Japanese consolidated corporate tax system.

conform to the current year’s classification.

method.

to the year in which the difference was recorded.
Past service cost is principally charged to income as incurred.

n. Cash Equivalents

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESd. Tangible Fixed Assets (excluding leased assets)

However, at certain subsidiaries past service cost is amortized

Cash equivalents are defined as highly liquid, short-terma. Principles of Consolidation and Accounting for Investments

Tangible fixed assets, excluding leased assets, are stated at cost,by the straight-line method over a period which is less than theinvestments with an original maturity of three months or less.

in Unconsolidated Subsidiaries and Affiliates

net of accumulated depreciation, and accumulated impairment

average remaining years of service of the active participants in

The accompanying consolidated financial statements include

loss, if any, except as indicated in the following paragraph.

the plans.

the accounts of the Company and all significant subsidiaries

Accumulated depreciation of tangible fixed assets on Marchcontrolled directly or indirectly by the Company. Companies over31, 2019 and 2018 amounted to ¥500,827 million ($4,512,361

i. Reserve for Loss on Antitrust Litigation

Information about changes in accounting policy/changes inwhich the Company exercises significant influence in terms ofthousand) and ¥436,907 million, respectively.

Estimated future loss is accrued in order to provide for penalties

presentation for the year ended March 31, 2018 is not applicable.

their operating and financial policies have been included in the

Depreciation of tangible fixed assets is computed as follows:

and compensation potentially arising from price cartels.

For the year ended March 31, 2019accompanying consolidated financial statements on the equity

Flight equipment: The straight-line method based on its estimatedbasis.

useful life

j. Foreign Currency Translation

Accounting Standard for Tax Effect Accounting”)

The balance sheet date of three of the consolidated subsidiaries

Other: Principally the straight-line method based on the estimatedRevenues and expenses in foreign currencies are translated

The Company and its domestic subsidiaries adopted “Partial

is December 31. Any significant differences in intercompany

useful lives of the respective assets

at the rates prevailing at the time of the transaction. Except

Amendments to Accounting Standard for Tax Effect Accounting”

accounts and transactions arising from intervening intercompany

The estimated useful lives are principally as follows:

as noted in “k. Derivatives and Hedge Accounting,” foreign(Accounting Standards Board of Japan (ASBJ) Statement No. 28,transactions during the period between the balance sheet date

Flight equipment: From 12 to 20 years

currency receivables and payables are translated into yen at the

February 16, 2018 (hereinafter, “Statement No. 28”)) from theof each subsidiary and the consolidated balance sheet date

Other: From 2 to 65 years

applicable year-end foreign exchange rates and any gain or loss

beginning of the current fiscal year and changed the presentation

on translation is included in current earnings.

and related notes of deferred tax assets and deferred tax

ESG Management

financial statements (both in yen and U.S. dollars) do not

3. CHANGES IN ACCOUNTING POLICY/CHANGES IN PRESENTATION
For the year ended March 31, 2018

Financial Data/ Corporate Information

have been adjusted, if necessary. The differences between theBusiness Activities and Strategy

As a result, the totals shown in the accompanying consolidated

Message from the President

JAL REPORT 2019

Leased assets arising from finance lease transactions that transfer
1. BASIS OF PRESENTING FINANCIAL STATEMENTS(Changes due to application of “Partial Amendments toacquisition and the fair value of the net assets at the respective

e. Software (excluding leased assets)

Differences arising from the translation of assets, liabilities,

liabilities, such that deferred tax assets and deferred tax liabilities

dates of acquisition of the consolidated subsidiaries andComputer software intended for internal use is amortized by therevenues and expenses of foreign consolidated subsidiaries

are classified as part of “non-current assets” and “non-current

companies accounted for by the equity method are recorded asstraight-line method based on its estimated useful life, which isand entities accounted for using the equity method into yen

liabilities,” respectively.

goodwill amortized by the straight-line method over a period of

principally five years.

at the applicable exchange rates at the year-end are presented

five years.

as foreign currency translation adjustment and non-controlling

All significant intercompany accounts and transactions andinterests in a component of net assets.

unrealized gain or loss on intercompany accounts and transactions
are eliminated in consolidation.

100

101

CONSOLIDATED FINANCIAL STATEMENTS

As a result, in the consolidated balance sheet of the previous fiscal

4. U.S. DOLLAR AMOUNTSWith respect to operating accounts receivable, the JAL Group

year, “deferred tax assets” of ¥5,576 million ($50,238 thousand)Amounts in U.S. dollars are included solely for the convenience

exercises due date management and outstanding balance

As of March 31, 2019classified in “current assets” and “deferred tax liabilities” of ¥230of the reader. A rate of ¥110.99 = US$1.00, the approximate

management in accordance with internal policies. The JAL Group

Assetsmillion ($2,072 thousand) classified in “non-current liabilities”

exchange rate prevailing on March 31, 2019, has been used in

makes its best efforts to identify and mitigate risks of bad debt

(1) Cash and deposits(2) Notes and operating accounts
receivabletranslation. The convenience translations should not be construed

from major customers with financial difficulties by periodically($594,972 thousand), and “deferred tax liabilities” classified

as representations that the Japanese yen amounts have been,monitoring their creditworthiness. Securities and investment

in “non-current liabilities” were presented in "non-current

could have been or could in the future be converted into U.S.

securities are composed mainly of shares of companies with which

liabilities" of ¥227 million ($2,045 thousand).

dollars at this or any other rate of exchange.

the JAL Group has business relationships. The JAL Group reviews

The notes related to tax effect accounting additionallythe fair values of such financial instruments and the financial

Fair value

Difference¥ 462,064¥ 462,064¥

153,112

153,112−(i) Investment securities of nonconsolidated subsidiaries
and affiliates

17,145

16,075(1,069)(ii) Other investment securities

104,036

104,036−

Total

736,358

735,288(1,069)185,650

185,650

−

65

65

−

−

(3) Securities and investment
securities

included those described in notes 8 (excluding total amount of

5. CASH AND CASH EQUIVALENTS

position of the issuers periodically in order to identify andvaluation allowance) and 9 of the “Accounting Standard for

The components of cash and cash equivalents in the

mitigate risks of impairment. Most operating accounts payable

Tax Effect Accounting,” which are required in paragraphs 3 toaccompanying consolidated statements of cash flows on Marchare due within one year. As for derivatives, the JAL Group believes

5 of Statement No. 28. However, that additional information

31, 2019 and 2018 were as follows:that the credit risks are extremely low, as it enters into derivative(1) Operating accounts payabletransactions only with reputable financial institutions with a(2) Short-term loans payablesound credit profile.

(3) Bonds payable

50,00050,568568

corresponding to the previous fiscal year is not disclosed,Statement No. 28.

As of March 31

2019

2018

2019

The Company utilizes derivatives in order to mitigate the risks(4) Long-term loans payable

86,81186,811−

Cash and deposits¥ 462,064¥ 417,842$ 4,163,113

of fluctuations in interest rates and foreign currency exchange(5) Lease obligations

4,966

4,966

−

rates on receivables and payables. The JAL Group utilizes currency(6) Long-term accounts payable—
installment purchase

503

503

−

Accounting Standards Issued but Not yet Effective

Securities

The following standard and guidance were issued but not yet

Time deposits with a maturityof more than three months
Cash and cash equivalents

adopted.
-“Accounting Standard for Revenue Recognition” (ASBJ Statement

Thousands of
U.S. dollars

Millions of yen

60,00030,999540,589(269,268)(265,971)(2,426,056)¥ 252,795¥ 182,870$ 2,277,637

Recognition” (ASBJ Guidance No. 30, March 30, 2018)

options to reduce the risk of foreign currency exchange rate
fluctuations for specific foreign currency-denominated receivables
and payables, mainly for fuel purchase payables.
The JAL Group also utilizes commodity derivatives in order to

6. INVESTMENT SECURITIES OF NON-CONSOLIDATEDSUBSIDIARIES AND AFFILIATES

mitigate the risk of fluctuations in commodity prices of fuel andInvestment securities of non-consolidated subsidiaries andThere are internal policies for derivative transactions which

affiliates which were included in “investment securities” in

set forth authorization levels and upper limits on transaction

Financial Accounting Standards Board (FASB) co-developed

the consolidated balance sheets on March 31, 2019 and 2018

volumes, and the JAL Group enters into derivative transactions

a new comprehensive revenue recognition standard andamounted to ¥39,210 million ($353,275 thousand) and ¥37,477

in accordance with such policies. Moreover, monthly meetings(1) Cash and deposits

published “Revenue from Contracts with Customers” in May 2014

million, respectively. Bonds of affiliates which were included inare held with the attendance of Board members responsible for(International Financial Reporting Standard (IFRS) No. 15 in IASB,“investment securities” in the consolidated balance sheets onderivatives to determine methods and ratios for minimizing risks(2) Notes and operating accounts
receivable

Topic 606 in FASB). Considering IFRS No.15 will be applied fromMarch 31, 2019 and 2018 amounted to ¥3,330 million ($30,002

as well as to report and confirm results of derivative transactions.

the fiscal year starting January 1, 2018 and Topic 606 from thethousand) and ¥3,330 million, respectively. Investments in other

The fair value of financial instruments is based on the quoted

fiscal year starting December 15, 2017, the ASBJ developed the

securities of non-consolidated subsidiaries and affiliates whichmarket price, when it is available. When there is no market

comprehensive Accounting Standard for Revenue Recognition

were included in “investment securities” in the consolidated

price available, fair value is reasonably estimated. Since various(i) Investment securities of nonconsolidated subsidiaries
and affiliates

and published them together with implementation guidance.

balance sheets on March 31, 2019 amounted to ¥1,679 million

assumptions and factors are reflected in estimating the fair value,(ii) Other investment securities

different assumptions and factors could result in a different fairTotal

328,565
¥

2,419

568
¥

7

value.

Thousands of U.S. dollars

As of March 31, 2019

Book value

Fair value

Difference$ 4,163,113$ 4,163,113$

1,379,511

1,379,511−

154,473

144,832(9,631)

Assets−(3) Securities and investment
securities

937,345937,345−6,634,453

6,624,813(9,631)

1,672,673

1,672,673

−

585

585

−

(3) Bonds payable

450,491

455,608

5,117

Liabilities(1) Operating accounts payable

standards would incorporate the fundamental policy of IFRS No.

7. FAIR VALUES OF FINANCIAL INSTRUMENTS

The book value of financial instruments in the consolidated

15 as the starting point from the perspective of comparability of

The Company and its consolidated subsidiaries (the “JAL Group”)

balance sheets, their fair value and the differences as of Marchfinancial statements, which is one of the benefits of achieving

manage its financial instruments to raise funds, principally for

31, 2019 and 2018 were as follows:(4) Long-term loans payable

782,151

782,151−

consistency with IFRS No. 15. If there are matters to be taken into

the purpose of flight equipment and facilities in accordance with

(5) Lease obligations

44,742

44,742−consideration in Japan in actual practice, etc., alternative handlingmanagement plans for air transportation, utilizing loans fromwill be added within a range that would not impair financial

financial institutions, issuance of bonds, finance lease transactions(6) Long-term accounts payable—
installment purchase

4,531

4,531

−

statement comparability.

and derivatives. Funds from short-term loans payable are utilized(2)Effective datefor ordinary operations. Funds from long-term loans payable

Effective from the beginning of the fiscal year ending March 31,

and finance lease transactions are utilized for flight equipment2021.

and facilities. Derivatives are utilized for the purpose of reducing(3)Effects of the application of the standards

the risk of fluctuations of interest rates and foreign currency

The Company and its domestic consolidated subsidiaries areexchange rates, and not for the purpose of speculation.

Financial Data/ Corporate Information($15,127 thousand).

2,412

stabilize such fuel costs.

The International Accounting Standards Board (IASB) andfor Revenue Recognition by the ASBJ was that the accounting¥* Derivatives assets and liabilities are stated on a net basis, and net liabilities
are enclosed in parentheses.
Transactions for which hedge accounting has not been applied are omitted
as they are not important.

(1)Overview

The fundamental policy for developing the Accounting Standard

327,997

Total
Derivatives*

ESG Management

JAL REPORT 2019No. 29, March 30, 2018)-“Implementation Guidance on Accounting Standard for Revenue

Liabilities

Business Activities and Strategy

following the transitional treatments prescribed in paragraph 7 of

Message from the President

were presented in “non-current assets” of ¥66,036 million

Millions of yen
Book value(2) Short-term loans payable

2,955,194

Total
Derivatives*$

21,7312,960,311$

21,794

5,117
$

63

* Derivatives assets and liabilities are stated on a net basis, and net liabilities
are enclosed in parentheses.
Transactions for which hedge accounting has not been applied are omitted
as they are not important.

currently in the process of determining the effects of these newstandards on the consolidated financial statements.

102

103

CONSOLIDATED FINANCIAL STATEMENTS

Derivatives

Millions of yen
As of March 31, 2018

Book value

Fair value

Difference

HEDGING ACTIVITIES.”

Assets(1) Cash and deposits

Millions of yen

Derivatives are described further in “Note 9. DERIVATIVES AND¥ 417,842

151,262

151,262(2) Notes and operating accounts
receivable

−

¥

−

(3) Securities and investment
securities(i) Investment securities of nonconsolidated subsidiaries
and affiliates

16,433

20,6294,196(ii) Other investment securities

69,632

69,632−

Total

655,170

659,366

4,196

Liabilities
177,937(1) Operating accounts payable−

177,937

As of March 31, 2018(ii) Financial instruments for which the fair value is extremely

Cash and deposits

difficult to measureNotes and operating
accounts receivableThousands of
U.S. dollars

Millions of yen

Investment securities:
Short-term investments¥ 417,842¥

151,262
30,999−Millions of yen

More than
five years,
within 10
years¥

More than
10 years

−

¥

−

−

−

−

−

−

−

As of March 31

2019

2018

2019

Held-to-maturity
securities

−

−

−

3,330

Investment securities
of non-consolidated
subsidiaries and affiliates¥ 22,065¥ 21,043$ 198,801

Other securities
with maturity date

−

2,091

−

−

Held-to-maturity securities

3,330

3,330

30,002Carrying
value

Unrealized
gain (loss)

Unrealized gain:
Stocks¥ 15,410¥ 38,157¥ 22,747

15,41038,15722,747(25)

Unrealized loss:
StocksShort-term investments
Total

499

474

30,99930,999－31,49931,474(25)¥ 46,910¥ 69,632¥ 22,721

Proceeds from sales of securities classified as other securities for
The redemption schedule for short-term and long-term debt

the year ended March 31, 2018 amounted to ¥1,496 million. For

subsequent to the consolidated balance sheet date is described in

the year ended March 31, 2018, the aggregate gain realized on“Note 10. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT.”

those sales totaled ¥764 million, and the aggregate loss realized(2) Short-term loans payable

3,150

3,150

−

(3) Bonds payable

20,00020,06565(4) Long-term loans payable

95,252

95,252−(5) Lease obligations

6,708

6,708

−

(iii) Redemption schedule for monetary claims and securities

8. INVESTMENT SECURITIESwith maturity date subsequent to the consolidated balance

No trading securities were held on March 31, 2019 and 2018.

sheet date

Securities classified as other securities are included in “investment

9. DERIVATIVES AND HEDGING ACTIVITIES

securities” in the accompanying consolidated balance sheets.

Certain consolidated subsidiaries utilize forward foreign currency

The components of unrealized gain or loss on marketableexchange contracts and currency options on a consistent basis

securities classified as other securities on March 31, 2019 and 2018

to hedge certain foreign currency transactions related towere summarized as follows:

foreign purchase commitments, principally for flight equipment(6) Long-term accounts payable—
installment purchase
Total
Derivatives*

666

666

−

303,715

303,780

65

¥

8,312

¥

8,307

¥

on those sales totaled ¥2 million. Neither of them was applicable(4)
Millions of yen
Within one
year

More than
one year,within fiveyears

Cash and deposits¥ 462,064¥

Notes and operating
accounts receivable

153,112

As of March 31, 2019

instruments, including securities and derivatives transactions
Assets(1) Cash and deposits and (2) Notes and operating accounts
receivable
The fair value equates to the book value due to the short-term

Investment securities:
Short-term investments

60,000−More than
five years,
within 10
years
¥

−

More than
10 yearsand foreign accounts payable, and other items. The Company
¥

−

−

−

−

−

−

−

−

−

−

3,330

Other securities
with maturity date

−

1,027

−

−

nature of these instruments.
Thousands of U.S. dollars

As of March 31, 2019
Cash and deposits

Liabilities(1) Operating accounts payable and (2) Short-term loans payable
The fair value equates to the book value due to the short-term
nature of these instruments.
(3) Bonds payable
The fair value of bonds payable is determined based on theNotes and operating
accounts receivable
Investment securities:
Short-term investments

Within one
year$ 4,163,113
1,379,511
540,589

More than
one year,within five
years
$

−

More than
five years,
within 10
years
$

−

Carrying
value

Unrealized
gain (loss)

Unrealized gain:

StocksTotal

15,09543,29428,199

815

742

(72)

for hedging transactions are examined by other departments.

60,00060,000−Gains and losses on hedging instruments and the assessment of

60,81560,742(72)

hedge effectiveness, which are performed both at inception and¥ 75,910¥ 104,036¥ 28,126

−

−

−

−

Held-to-maturity
securities

−

−

−

30,002Other securities
with maturity date

−

9,253

−

−

guidelines and strategies established by management. The
routine operations of the department which is responsible

on an ongoing basis, are reported at meetings of the related
department managers on a timely basis.

−−these hedging transactions in accordance with the internal¥ 28,199

The contract amount and the estimated fair value of the open

Thousands of U.S. dollars−

The Company and its consolidated subsidiaries enter into

¥ 43,294

More than
10 years$

exposure related to the commodity prices of fuel.

¥ 15,095

Unrealized loss:

As of March 31, 2019

Acquisition
cost

Carrying
value

Unrealized
gain (loss)$ 136,003$ 390,071$ 254,067

136,003

390,071254,067(648)

Unrealized gain:
Stocksderivatives positions on March 31, 2019 and 2018, which met thecriteria required for the application of hedge accounting, aresummarized as follows:

Unrealized loss:
StocksShort-term investments

market price.
(4) Long-term loans payable, (5) Lease obligations and (6) Long-

Acquisition
cost

Financial Data/ Corporate Information

market price. These investment securities are described further in“Note 8. INVESTMENT SECURITIES.”As of March 31, 2019

Short-term investments

The fair value of securities is determined mainly based on thealso enters into a variety of options in its management of risk

Millions of yen

Stocks

Held-to-maturity
securities(3) Securities and investment securities

for the year ended March 31, 2019.

ESG Management

JAL REPORT 2019

* Derivatives assets and liabilities are stated on a net basis, and net liabilities
are enclosed in parentheses.
Transactions for which hedge accounting has not been applied are omitted
as they are not important.

(i) Methods of calculating the fair value of financial

Business Activities and Strategy

Other securities
14,711
11,318132,543
The above are not included in “(3) (ii) Other investment securities” in thefair value of financial instruments because there is no market value and it isdifficult to measure the fair value.

As of March 31, 2018

Acquisition
cost

Message from the President¥ 417,842

Within one
year

More than
one year,within five
years

Total

7,343

6,685

540,589

540,589−

547,932

547,274(648)$ 683,935$ 937,345$ 253,410

term accounts payable—installment purchase
The fair value of long-term loans payable, lease obligations 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 acomparable maturity.

104

105

CONSOLIDATED FINANCIAL STATEMENTS

Millions of yen
As of March 31, 2019
Type of derivativeThousands of U.S. dollars

Contract amount
Major hedged items

Total

Contract amount

Maturing
after oneyear

Estimated
fair value

Maturing
after one
year

Total

Estimated
fair value

10. SHORT-TERM LOANS PAYABLE AND LONG-TERM DEBT

The aggregate annual maturities of long-term debt within five

Certain The weighted-average interest rate for short-term loans

years subsequent to March 31, 2019 are summarized as follows:

payable outstanding on March 31, 2019 was 0.0%. Long-term
debt on March 31, 2019 and 2018 consisted of the following:Thousandsof U.S.
dollars

Buy:
USD

Operating accounts payable¥ 55,926¥ 3,252¥ 687$ 503,883$ 29,299$ 6,189

EUR

Operating accounts payable

2,513

34

(102)

22,641

306(919)

OthersOperating accounts payable

1,287

−

(27)

11,595

−

(243)

Buy:
80,14019,634363

722,047

176,898

3,270

Operating accounts payable

69,04015,702(134)

622,038

141,472(1,207)

Aircraft fuel81,05521,0491,624

730,291

189,647

14,631

Commodity swaps:
Received variable/pay fixed

Method of hedge accounting: Special treatment( “Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – k. Derivatives and Hedge Accounting”)
Forward foreign currency exchange contracts:
Buy:
Operating accounts payable

919

−

29

8,280

−

261

EUR

Operating accounts payable

259

−

(17)

2,333

−

(153)

OthersOperating accounts payable

223

−

(5)

2,009

−

(45)

¥ 2,419

Total$ 21,794

All derivative transactions were conducted as over-the-counter (OTC) transactions. Fair value is estimated based on prices quoted byfinancial institutions and others.

As of March 31, 2018

Contract amount
Major hedged items

Maturing
after one year

Total

Estimated
fair value

USD

Operating accounts payable¥ 41,055¥ 2,476¥

EUR

Operating accounts payable

2,673

64

(27)

OthersOperating accounts payable

1,594

2

(62)

(1,450)$ 119,713

0.4%Long-term loans
payable (excluding
current portion) due
2020 to 2030

73,52480,696

662,4380.2%

20,905

188,3502023

10,40093,7022024

19,088

171,979

Total

64,558581,656¥ 142,281$ 1,281,926

Assets pledged as collateral as of March 31, 2019 for long-termand short-term debt of ¥86,620 million ($780,430 thousand) areflight equipment and others totaling ¥162,738 million ($1,466,240

Lease obligations:

thousand). Assets pledged as collateral as of March 31, 2018

Current portion oflease obligations

2,461

Lease obligations(excluding current
portion) due 2020
to 2032

2,504

2,389

22,173

2.9%

for long-term and short-term debt of ¥94,023 million are flightequipment and others totaling ¥170,397 million.

4,319

22,5601.2%

Also included as part of pledged assets are certain assets set aside
for revolving pledges on obligations accompanying syndicatedloans taken out by an affiliate, Tokyo International Airport

Long-term accounts
payable—installment
purchase:

Total

102,6032022

Terminal Corporation, for core business purposes.
The Company entered into loan commitment agreements
amounting to ¥50,000 million ($450,491 thousand) with three
190

185

1,711

2.0%

banks. There were no loan payables outstanding under these loan
commitment agreements.
11. RETIREMENT BENEFIT PLANS

312

480

2,811

2.0%

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 rateof pay, length of service and the conditions under which the

50,00020,000450,491¥ 142,281¥ 122,626$1,281,926

0.4%

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

Currency options:

indemnity plans. In certain cases, additional severance payments

Buy:
Operating accounts payable

69,65917,343449

Operating accounts payable

61,946

14,691(1,299)Aircraft fuel67,883

17,90810,702

may be provided.
As of March 31, 2019, the Company and 38 consolidated

Sell:
Commodity swaps:

subsidiaries had adopted a lump-sum severance indemnity plan.
Additionally, there were three corporate pension funds, including
the Japan Airlines Welfare Pension Fund. Certain foreign

Method of hedge accounting: Special treatment ( “Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – k. Derivatives and Hedge
Accounting”)

subsidiaries have also established contributory defined benefit

Forward foreign currency exchange contracts:

The Japan Airlines Welfare Pension Fund also introduced anBuy:pension plans.
option similar to a cash-balance plan as well as other alternatives.

USD

Operating accounts payable

761

−

(17)

EUR

Operating accounts payable

258

−

15

OthersOperating accounts payable

183

−

(2)

Total

Aircraft fuel¥ 8,307

All derivative transactions were conducted as OTC transactions. Fair value is estimated based on prices quoted by financial institutions and others.

106¥ 14,555

Bonds payable due
2021 to 2038

$ 143,607

11,3882025 and thereafter¥ 13,287

Current portionof long-term
accounts payable—
installment
purchase¥ 15,939

2021

Financial Data/ Corporate Information

Buy:

Received variable/pay fixed2019

Bonds payable:

Forward foreign currency exchange contracts:

Put option

2019

Current portion of
long-term loans
payableLong-term
accounts payable—
installment
purchase(excluding current
portion) due 2021
to 2026

Millions of yen

Call option

2018

2020

ESG Management

JAL REPORT 2019

USD

Type of derivative

2019

Thousands of
U.S. dollars

Business Activities and Strategy

Operating accounts payableSell:
Put option

As of March 31
Long-term loans:

Currency options:
Call option

Millions of yen

Weightedaverageinterest
rate

Millions of yen

Message from the President

Forward foreign currency exchange contracts:

Years ending March 31

The JAL Group Pension Fund, which was established by certain
consolidated subsidiaries, introduced a cash-balance plan option.
Some of the consolidated subsidiaries adopt the simplified
method for the calculation of retirement benefit obligations.

107

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended March 31, 2019 and 2018(4) Reconciliation from retirement benefit obligations and plana. Defined Benefit Plans

The significant components of deferred tax assets and liabilities

assets to net defined benefit liability (asset)
Years ended March 31(1) Balances of retirement benefit obligations, excluding plans

2019

2018

2019

¥ 471,248¥ 477,584$ 4,245,859

Service cost

13,131

12,946

118,307

Interest cost

3,482

3,527

31,372

Actuarial loss

2,280

1,363

Benefit paid

(24,323)(24,169)

Balance at beginning of period

91

91

Bond

4

4

2019

¥ 373,012¥ 380,893$ 3,360,771

Other

5

5

Plan assets(261,405)(248,801)(2,355,212)

Total

100

100

111,606

132,092

1,005,550

98,57995,871

888,179

20,542

Total net defined benefit
liability (asset)

210,186

227,964

1,893,738(219,145)

Net defined benefit liability

212,672

230,084

1,916,136

(1)

(3)

(9)

Net defined benefit asset(2,486)(2,119)(22,398)¥ 465,816¥ 471,248$ 4,196,918

Total net defined benefit
liability (asset)¥ 210,186¥ 227,964$ 1,893,738

Thousands of
U.S. dollars

2018

2019

Net defined benefit liability¥ 64,380¥ 69,633$ 580,052

Operating accounts payable

11,02011,79099,288

Accrued bonuses

7,735

355

69,690(9) Actuarial assumptions

Non-recurring depreciation

4,827

4,826

43,490Years ended March 31

2019

Deferred liability on flightequipment

2,943

1,625

26,515%%

Asset retirement obligations

2,482

1,194

22,362

Discount rate

0.4–1.2

0.4–1.2

Impairment loss

2,274

54

20,488Long-term expected rate of return

1.0–2.0

1.0–2.0

Reserve for loss on antitrust
litigation

1,776

1,777

16,001

Deferred losses on hedges

880

675

7,928

Current and target asset allocations, historical and expected returns
on various categories of plan assets have been considered indetermining the long-term expected rate of return.

2018

b. Defined Contribution Plans

Lease obligations

The Company and its consolidated subsidiaries contributed a total

Tax loss carryforwards*2Years ended March 31

2019

2018

2019

of ¥1,629 million ($14,676 thousand) and ¥1,614 million for the

2019

2018

2019

Service cost

¥ 13,131¥ 12,946$ 118,307

years ended March 31, 2019 and 2018, respectively.

Balance at beginning of period¥ 245,430¥ 242,402$ 2,211,280

Interest cost

3,482

3,527

31,372

Expected return on plan assets

3,749

3,698

33,777

Expected return on plan assets(3,749)(3,698)(33,777)

185

1,091

1,666

Past service costs amortization

(60)

(49)

(540)

Net actuarial loss amortization

7,713

7,771

69,492Retirement benefit cost basedon the simplified method

400

343

3,603

Years ended March 31

Actuarial gainContributions paid by theemployer
Benefit paid
Balance at end of period

28,194

17,817254,022(19,712)(19,579)(177,601)¥ 257,847¥ 245,430$ 2,323,155(3) Reconciliation from retirement benefit obligations and plan

(697)

(670)

(6,279)Total¥ 20,221¥ 20,169$ 182,187(6) Remeasurements of defined benefit plans in othercomprehensive income

Millions of yen
Thousands of
U.S. dollars

Millions of yen
Years ended March 31

2019

2018

9,203

87,647

253,453

1,039,832

Valuation allowance for tax loss
carryforwards*2

(567)

—

(5,108)Valuation allowance fordeductible temporary differences(4,605)—(41,490)

Subtotal of valuation allowances*1(5,173)(174,066)(46,607)

Total deferred tax assets

110,238

79,386993,224

Valuation difference on availablefor-sale securities

8,548

6,854

77,015

Deferred gains on hedges

1,722

3,521

15,514

Asset retirement obligations

629

336

5,667

̶

202

̶

2,882

2,662

25,966

13,782

13,577

124,173¥ 96,455¥ 65,808$ 869,042

Deferred tax liabilities:

2018

Other
Total deferred tax liabilities2019¥ (60)¥ (49)$ (540)Net deferred tax assets

Actuarial gains

5,619

7,499

50,626¥ 5,558¥ 7,449$ 50,076*1 Valuation allowances decreased by ¥168,893 million ($1,521,695
thousand). The main reasons for this are: (1) the valuation allowancefor tax loss carryforwards has decreased since the tax loss carryforwards
resulting from reorganization expired at the Company and (2) the
valuation allowance for deductible temporary differences, etc., based on
the estimated amount of future taxable income has decreased owing to
the JAL Group’s stable performance.
*2 Tax loss carryforwards and the deferred tax assets for that by deadlineof carry forward:$ 19,335

Retirement benefit cost

400

343

3,603

Contributions paid by theemployer

(124)

(106)

(1,117)

Benefit paid

(169)

(149)

(1,522)

Decrease due to partial
termination of retirement
benefit plans

(31)

―

(279)

Balance at end of period

9,728

Past service costs¥ 2,059

Other

2019

̶

66,3122019¥ 2,146

Balance at beginning of period

Years ended March 31

Thousands of
U.S. dollars

269
152,047

115,411

Other
Subtotal of deferred tax assets

Leased assets

simplified method

̶

7,360

(4)

(0)

(36)

¥ 2,216¥ 2,146$ 19,965

Total(7) Remeasurements of defined benefit plans in accumulated
other comprehensive income

Millions of yen

Thousands of
U.S. dollars

As of March 31

2019

2018

2019

Past service costs that are yet tobe recognized¥ (259)¥ (320)$ (2,333)

Actuarial losses that are yet tobe recognized

62,53868,157563,456¥ 62,278¥ 67,837$ 561,113

Total

Financial Data/ Corporate Information

assets to net defined benefit liability (asset), applying the

Other

As of March 31
Deferred tax assets:

ESG Management

JAL REPORT 2019

Thousands of
U.S. dollars

Thousandsof U.S.
dollars

Millions of yen
2019(5) Retirement benefit costs

Millions of yen

were as follows:Business Activities and Strategy

Other

simplified method

108

General insurance fund

2018

Total

Millions of yen

%

2019

Unfunded retirement benefit
obligations(2) Balances of plan assets, excluding plans adopting theand the related valuation allowances on March 31, 2019 and 20182018%

Message from the President

Thousands of
U.S. dollars

2019

Funded retirement benefit
obligations

Years ended March 31

Millions of yen

Thousands of
U.S. dollars

Millions of yen

adopting the simplified method

Years ended March 31

12. INCOME TAX(8) Plan assets

109

CONSOLIDATED FINANCIAL STATEMENTS

Millions of yen
As of March
31, 2019¥ 7,156

Valuation
allowance(363)

Deferred tax
assets¥ 6,792

2021
¥ —

2022
¥ —

—

¥ —

2023
¥ —

—

¥ —

—

¥ —

2024

2025
and
beyond

Total

¥ 204

¥ 7,360

¥ —
—

(204)
¥ ―

¥ —

(567)
¥ 6,792
(b)

2020

2021

2022

2023

Total

Valuation
allowance(3,270)

—

—

—

—

(1,838)(5,108)Deferred tax
assets$ 61,194

$ —

$—

$ —

$ —

$ ―

$ 61,194
(b)

$ —

$ —

$ 1,838$ 66,312

March 31, 2019 and 2018 were as follows:

impairment loss. Assets to be sold and idle assets are written

designate an amount not exceeding half of the price of new

down to their respective recoverable amounts.

shares as additional paid-in capital, which is included in capitalas dividends is calculated based on its unconsolidated financial

Years ended March 31

statements in accordance with the Act.

Valuation difference on availablefor-sale securities, net of taxes:

million ($172,889 thousand). Such appropriations have not been
The total number and changes in the total number of shares ofand the Company’s and the consolidated subsidiaries’ effective

Increase

Decrease

On March
31, 2019

Number of shares ofstock authorized:
Common stock
Preferred stock
Total

700,000—

̶

50,000—750,000̶Common stock

follows:

Total
2018
%

%

Statutory rate

29.9

30.2

Share of loss of entities accounted for using
equity method

(0.3)

(0.5)

Changes in valuation allowance (including the
tax loss carryforwards expired)(30.8)

Total

1.9

(2.2)

Effective tax rate

0.7

13.2

̶

—

̶

Pre-tax amount

5,562

3,722

50,112

Tax expense (benefit)(1,693)(1,131)(15,253)

3,868

2,590

34,849Deferred gains (losses) arisingduring the period

5,835

12,59552,572

Less: Reclassification adjustment
included in profit(12,252)(2,702)(110,388)

9,892

̶

(57,816)

50,000̶

750,000

Tax expense (benefit)

1,912(2,923)

17,226

Deferred gains (losses) onhedges, net of taxes(4,505)

6,969(40,589)353,715—

4,687

349,028

353,715

̶

4,687

349,028

2,555

2,333

4,687

201

2,555

2,333

4,687

201

Foreign currency translation
adjustment:

shares is due to the share repurchase.
The decrease in common stock and common stock in treasury of
4,687 thousand shares is due to the retirement of treasury shares.
The total number and changes in the total number of shares of

The Company and certain consolidated subsidiaries haverecognized impairment loss on the following groups of assets
in the accompanying consolidated statements of income andcomprehensive income for the year ended March 31, 2019:

Assets utilized in the Companyʼsand consolidated subsidiariesʼ
operations

Groups of assets

Locations

Assets to be sold or disposed of

Flight equipment―

Assets to be disposed of

Equipment(Including asset
retirement obligation)

NaritaInternational
Airport
Maintenancedistrict

An impairment loss of ¥7,898 million ($71,159 thousand) was

Translation adjustment arisingduring the period

25

(308)

225

Less: Reclassification adjustment
included in profit

(0)

11

(0)

Foreign currency translation
adjustment

25

(296)

225

recognized as non-operating expenses in the accompanying
consolidated statements of income and comprehensive income

Remeasurements of defined benefit
plans:

for the year ended March 31, 2019. The main breakdown is flightequipment of ¥477 million ($4,297 thousand) and equipment
including removal costs corresponding to asset retirement
obligation in the Narita International Airport Maintenancedistrict scheduled for reorganizations of ¥7,421 million ($66,861

Remeasurements of defined
benefit plans arising during theperiod(2,094)(271)(18,866)

Less: Reclassification adjustment
included in profit

7,653

7,721

68,952a sales agreement (assets that cannot be sold are evaluated as

thousand). The recoverable amount of assets to be sold or
disposed of is measured by the net realizable value based on

Income taxes in Japan applicable to the Company and its domestic

stock authorized and in issue and common stock in treasury for

Pre-tax amount

5,558

7,449

50,076zero), or calculated by discounting future cash flows measured byconsolidated subsidiaries consist of corporation tax, inhabitants’

the year ended March 31, 2018 were as follows:

Tax expense (benefit)(1,712)(1,968)(15,424)

value in use by 5.0%.

Remeasurements of defined
benefit plans

3,845

5,481

34,642The Company and certain consolidated subsidiaries havetaxes and enterprise tax. Income taxes of foreign consolidated
subsidiaries are based generally on the tax rates applicable intheir countries of incorporation.
13. NET ASSETSThe Companies Act of Japan (the “Act”) provides that an
amount equal to at least 10% of the amount to be disbursed
as distributions of capital surplus (except for distributions fromadditional paid-in capital) and retained earnings (except for
distributions from the legal reserve) be appropriated to additional
paid-in capital and the legal reserve, respectively, until the sum ofadditional paid-in capital and the legal reserve equals 25% of thecapital stock account. Such distributions can be made at any timeby a resolution of the shareholders, or by the Board of Directors if

110

Less: Reclassification adjustment
included in profit

2019 and 2018, respectively.

Thousands of sharesYear ended March 31,
2018
Number of shares ofstock authorized:

On April
1, 2017

Increase

Decrease

On March
31, 2018

Common stock

700,000—̶

700,000

Preferred stock
Total
Number of shares ofstock in issue:
Common stock
Total
Number of sharesof common stock intreasury:
Common stock
Total

50,000750,000

—

̶

̶

̶

50,000750,000

353,715353,715

—

̶

̶

̶

Financial Data/ Corporate Information

Other$ 50,112(6,417)The increase in common stock in treasury of 2,333 thousand(14.3)¥ 3,722

Pre-tax amount

Number of sharesof common stock intreasury:
Common stockwith the contract amounts of sales for the years ended March 31,¥ 5,562700,000

Number of shares ofstock in issue:

tax rates for the years ended March 31, 2019 and 2018 were as

2019

On April
1, 2018

by the Company and its consolidated subsidiaries in accordance

Unrealized holding gains arisingduring the period

Valuation difference on availablefor-sale securities, net of taxes

recoverable amounts at the higher of fair value less costs to selland value in use. Fair value is based on reasonable estimates made

2019

2018

Deferred gains (losses) on hedges,
net of taxes:

Thousands of sharesYear ended March 31,
2019

2019

The Company and its consolidated subsidiaries estimated

ESG Management

JAL REPORT 2019

A reconciliation between the Japanese statutory income tax rate

the year ended March 31, 2019 were as follows:

Thousandsof U.S.
dollars

Millions of yen

surplus. The maximum amount that a company can distributestock authorized and in issue and common stock in treasury for(a) Tax loss carryforwards are the amount resulting from multiplying
the statutory rate.
(b) As taxable income against which tax loss carryforwards can beutilized is likely to be earned in the next year, the Company has
determined that deferred tax assets for the tax loss carryforwards
are recoverable.

Years ended March 31

which generated largely independent cash flows for calculating

A company may, by a resolution of its board of directors,

Business Activities and Strategy$ 64,474$ —the Board of Directors.

accrued in the consolidated financial statements as of March 31, 2019.

Tax losscarryforwards (a)$ —Assets are attributed or allocated to cash-generating units

comprehensive income including tax effect for the years ended

shareholders approved dividends of surplus amounting to ¥19,189

2025
and
beyond2024

15. IMPAIRMENT LOSS ON NON-CURRENT ASSETS

Reclassification adjustments for each component of otherAt the annual shareholders’ meeting held on June 18, 2019, theThousands of U.S. dollars
As of March
31, 2019

14. OTHER COMPREHENSIVE INCOME

nor the legal reserve is available for distribution by resolution of

Message from the President

Tax losscarryforwards (a)2020certain conditions are met, but neither additional paid-in capital

recognized impairment loss on the following groups of assets

Share of other comprehensive
income of entities accounted forusing equity method:in the accompanying consolidated statements of income andcomprehensive income for the year ended March 31, 2018:

Share of other comprehensive
income of entities accounted
for using equity method arisingduring the period

71

70

639

Total other comprehensive income¥ 3,305¥ 14,814$ 29,777

Assets utilized in the Companyʼsand consolidated subsidiariesʼ
operations

Groups of assets

Locations

Assets to be soldFlight equipment―

353,715353,715

An impairment loss of ¥1,209 million was recognized mainly on
flight equipment as non-operating expenses in the accompanying
199
199

2,356
2,356

̶
̶

2,555
2,555

consolidated statements of income and comprehensive income
for the year ended March 31, 2018.

111

CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the computation of basic earnings

19. ASSET RETIREMENT OBLIGATIONS

20. SEGMENT INFORMATIONAs Lessee

per share of common stock for the years ended March 31, 2019a. Asset Retirement Obligations Recognized in the

The reportable segments of the Company and its consolidated

Depreciation equivalent is calculated by the straight-line method

and 2018:

Consolidated Balance Sheets on March 31, 2019 and 2018

subsidiaries are components for which discrete financial

The Company and its consolidated subsidiaries, in connection

information is available and whose operating results are regularly

with some buildings and land, have entered into real estate lease

reviewed by the Board of Directors to make decisions about

contracts with terms ranging from 1 to 46 years for the years

resource allocation and to assess performance. Air transportation

ended March 31, 2019 and 2018. Asset retirement obligations

includes international and domestic passenger operations, cargoon the assumption that the useful lives of the related assets are
the same as the lease term and the residual value is zero.

Thousandsof U.S.
dollars

Millions of yen

Interest expenses equivalent is calculated on the assumption
2019

2019

that the difference between aggregate lease rentals and theYears ended March 31

acquisition cost of leased assets is deemed to be the interest

Earnings (allocable to) available
for shareholders of common
stock:

have been recognized in light of the obligation of the Company

operations and other transportation services.

and its consolidated subsidiaries to the owners of the buildings

The accounting policies of the segments are substantially theProfit attributable to ownersof parent

and land to remove the facilities from leased real estate at thesame as those described in [the significant accounting policies in

end of those contracts. The liabilities on March 31, 2019 and 2018

“Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.”

have been calculated with expected useful lives ranging from 1 toInter-group sales are recorded under the same conditions used in

46 years and discount rates ranging from 0.1% to 2.5%.

transactions with third parties.

portion and is apportioned over the term of the lease by theinterest method.
Future rental expenses under non-cancelable operating leases

2019

2018

2019

Within one year

¥ 14,368¥ 12,278$ 129,453

Over one year

66,802

55,188601,874¥ 81,170¥ 67,466$ 731,327

Total

̶

$ 1,358,744

̶¥ 135,406

̶$ 1,358,744

The following table summarizes the changes in the aggregate
Thousands of shares
Years ended March 31

2019

2018

Weighted-average number of shares ofcommon stock outstanding

349,006

353,334

carrying amount of asset retirement obligations for the years
ended March 31, 2019 and 2018:
Thousandsof U.S.
dollars

Millions of yen

Net assets per share are computed based on the net assets

Years ended March 31

2019

2018

2019

On March 31, 2019 and 2018, contingent liabilities for guarantees

available for distribution to the shareholders of common stock

Balance at beginning of period¥ 3,988¥ 3,788$ 35,931

for bank loans of employees amounted to ¥81 million ($729

and the number of shares of common stock outstanding on eachthousand) and ¥107 million, respectively.

Increase due to purchases of tangible
fixed assets

2

0

18

balance sheet date.

Increase due to changes in estimatedobligations*

5,031

143

45,328for lease obligations of Jetstar Japan Co., Ltd. amounted to ¥3,680
million ($33,156 thousand) and ¥4,042 million, respectively.
The Company guarantees for damage resulting from a breach of
the obligation, assertion or guarantee on the contract regarding
stock transfer reservation concluded between Fukuoka Airport
Holdings Co., Ltd. (transferor), in which the Company holds an

yen

U.S. dollars

Years ended March 31

2019

2018

Net assets per share ofcommon stock¥ 3,340.15¥ 3,019.52

2019$ 30.09

58

56

522

Decrease due to settlement

(423)

(0)

(3,811)

Balance at end of period¥ 8,657¥ 3,988$ 77,998

Accretion due to the passage of time

ESG Management

JAL REPORT 201917. CONTINGENT LIABILITIESOn March 31, 2019 and 2018, contingent liabilities for guarantees

Business Activities and Strategy

As of March 31¥ 135,406¥ 150,807

Thousands of
U.S. dollars

Millions of yen¥ 150,807

Appropriations for payment ofpreferred dividend

outstanding on March 31, 2019 and 2018 were as follows:

2018

Message from the President

16. LEASES* Regarding the buildings in the Narita International Airport Maintenancedistrict, ¥5,001 million ($45,058 thousand) is recognized as the total
cost and the timing of the obligation to restore them to their original
condition have become estimable for the year ended March 31, 2019.

investment, and the Ministry of Land, Infrastructure, Transport
and Tourism Civil Aviation Bureau (transferee), capped at ¥7,867

b. Asset Retirement Obligations Not Recognized in the

million ($70,880 thousand) on March 31, 2019 and 2018.

Consolidated Balance Sheets as of March 31, 2019 and 2018
and buildings from domestic service airports based on permission

Basic earnings per share is computed based on the earnings

for national property use and a real estate rental contract foravailable for distribution to or allocable to the shareholders ofnational property, and have an obligation to remove the facilities

common stock and the weighted-average number of shares offrom leased real estate. The Company and its consolidated

common stock outstanding during each year. Diluted earnings per

subsidiaries have an important role in public traffic, and depend

share are computed based on earnings available for distribution

on the trends of the aviation administration of each country.

to the shareholders and the weighted-average number of shares

For this reason, the time of building removal and withdrawalof common stock outstanding during each year after giving

cannot be determined at the discretion of the Company and its

effect to the potentially dilutive securities to be issued upon the

consolidated subsidiaries alone in regard to rented airport-related

conversion of convertible bonds. However, diluted earnings per

facilities. Moreover, since there is also no schedule for building

share have not been presented for the years ended March 31,

removal and withdrawal at present, asset retirement obligations

2019 and 2018 since the Company had no equity instruments

cannot be reasonably estimated. Therefore, the asset retirement

issued that had a dilutive effect on earnings per share.

obligations corresponding to the debt concerned have not been

Financial Data/ Corporate Information

The Company and its consolidated subsidiaries have rented lots
18. AMOUNTS PER SHARE

calculated.
yenYears ended March 31

U.S. dollars

2019

2018

¥ 432.10¥ 383.23

2019

Earnings per share of common stock:
Basic

112

$ 3.89113

CONSOLIDATED FINANCIAL STATEMENTS

Year ended March 31, 2019Airtransportation

Other

Total

Eliminations

From the beginning of the current fiscal year, the Company and its

Consolidated

domestic consolidated subsidiaries adopted “Partial Amendments¥ 1,487,261¥̶¥ 1,487,261

123,105

35,425

158,531(158,531)

̶

1,357,603

288,190

1,645,793(158,531)

1,487,261

162,316

13,880176,196(36)

176,160

1,971,986

189,582

2,161,569(131,240)

2,030,328

121,863

2,249

124,113(9)

124,104

Impairment loss

7,898

̶

7,898

̶

7,898

Investments in entities accounted for using equity
method8,246

23,32331,570̶

31,570¥ 221,708¥ 1,768¥ 223,477¥ ̶¥ 223,477

Total
Segment profit
AssetsDepreciation and amortization

Increase in tangible fixed assets and intangible assets

to Accounting Standard for Tax Effect Accounting” (ASBJ

May 7, 2019 to September 30, 2019(5) Other 							Statement No. 28, February 16, 2018) and changed the method

The Company plans to retire all of the acquired treasury sharesof presentation. Segment assets are indicated using converted

by the meeting of the Board of Directors in accordance with

figures that reflect changes to the method of presentation on

the Companies Act Article 178.

March 31, 2018.
Information by Geographical Area
Operating revenue from overseas operations, which include
international passenger and cargo services of domestic
consolidated airline subsidiaries rendered during the years ended
March 31, 2019 and 2018, export sales of domestic consolidated

Business Activities and Strategy¥ 252,764(4) Purchase period 					Message from the President¥ 1,234,497

Intersegment¥20 billion (maximum)

Accounting Standard for Tax Effect Accounting”)

Operating revenue:
External(3) Total purchase price of shares 				(Changes due to application of “Partial Amendments toMillions of yen

subsidiaries and sales of consolidated subsidiaries outside Japanfor the years ended March 31, 2019 and 2018 were as follows:

Millions of yen

Thousands of U.S. dollars
Airtransportation

Other

Total

Eliminations

Consolidated

Operating revenue:$ 11,122,596$ 2,277,358$ 13,399,954$ ̶$ 13,399,954

1,109,153

319,172

1,428,335(1,428,335)

̶

Total

12,231,759

2,596,540

14,828,299(1,428,335)

13,399,954

Segment profit

1,462,438

125,056

1,587,494(324)

1,587,170

Assets

17,767,240

1,708,099

19,475,349(1,182,448)

18,292,891

Depreciation and amortization

External
Intersegment

2018

2019

Asia and Oceania¥ 274,167¥ 237,359$ 2,470,195

North America

236,802209,263

2,133,543

Europe100,944

89,247

909,487

Total¥ 611,914¥ 535,871$ 5,513,235

20,263

1,118,235(81)

1,118,154

71,159̶

71,159̶

71,159Investments in entities accounted for using equity
method74,294

210,136

284,440

̶

284,440$ 1,997,549$ 15,929$ 2,013,487$ ̶$ 2,013,487

21. RELATED-PARTY INFORMATION
There are no material transactions that need to be presented forthe years ended March 31, 2019 and 2018.
22. SUBSEQUENT EVENTSFinancial Data/ Corporate Information

1,097,963

Impairment loss

Increase in tangible fixed assets and intangible assets

2019Years ended March 31

ESG Management

JAL REPORT 2019Year ended March 31, 2019

Thousands of
U.S. dollars

Share Repurchase
The Company resolved to purchase treasury shares at the meetingof the Board of Directors held on April 26, 2019, in accordanceMillions of yen
Airtransportation

with the Companies Act Article 156, Paragraph 1, applied by
Eliminations

replacement under Article 165, Paragraph 3 of the same Act.

Other

Total

¥ 1,140,333¥ 242,923¥ 1,383,257¥ —¥ 1,383,257

116,931

32,386

149,318(149,318)—

1,257,265

275,310

1,532,575(149,318)

1,383,257

161,261

13,401

174,662(96)

174,565

1,800,285

172,840

1,973,126(119,128)

1,853,997

108,236

2,635

110,872(11)

110,860

Impairment loss

1,184

25

1,209

—

1,209

Investments in entities accounted for using equity
method8,475

22,192

30,668—30,668¥ 209,541¥ 1,263¥ 210,804¥ —¥ 210,804

Year ended March 31, 2018

Consolidated

Operating revenue:
External
Intersegment
Total
Segment profit
AssetsDepreciation and amortization

Increase in tangible fixed assets and intangible assets

114

As a result, the following was implemented.
1. Reasons for share repurchase 				To improve capital efficiency and expand shareholders’ return
2. Details of repurchase(1) Type of shares to be purchased 			Common shares of the Company(2) Total number of shares to be purchased 			7 million shares (maximum) 			
(2.0% of total number of issued shares excluding treasury
shares)115

CONSOLIDATED FINANCIAL STATEMENTSCONSOLIDATED SUBSIDIARIES(As of March 31, 2019)

Corporate Name

Paid-in Capital Ratio of Voting Rights(Millions of yen) Direct(%) Indirect(%) Total(%)

Paid-in Capital Ratio of Voting Rights(Millions of yen) Direct(%) Indirect(%) Total(%)

Other Segments
Maintenance

Air Transport BusinessJAPAN TRANSOCEAN AIR CO., LTD.

4,537

72.8

—

72.8

JAPAN AIR COMMUTER CO., LTD.

300

60.0

—

60.0

J-AIR CO., LTD.

200

100.0

—

100.0

ZIPAIR TOKYO CO., LTD.

490

100.0

—

100.0

HOKKAIDO AIR SYSTEM CO., LTD.

490

57.3

—

57.3

RYUKYU AIR COMMUTER CO., LTD.

396

—

74.5

74.5

Airport Passenger Handling

JAL AIRTECH CO., LTD.

315

66.6

3.4

70.0

HKD1,000
1,960

46.4

4.6

51.0

Cargo
JUPITER GLOBAL, LTD.

Passenger Sales
JALPAK CO., LTD.*1

80

96.4

1.2

97.7

JAL SALES CO., LTD.

460

100.0

—

100.0

100.0

—

100.0

JAL JTA SALES CO., LTD.

30

16.7

83.3

100.0

33

66.7

33.0

100.0

JALSKY OSAKA CO., LTD.

30

100.0

—

100.0

JALPAK INTERNATIONALHAWAII, INC.

USD 1,000
1,000

—

100.0

100.0

JALSKY KYUSHU CO., LTD.

30

100.0

—

100.0

100.0

100.0

30

100.0

—

100.0

EUR 1,000
1,600—

JALSKY SAPPORO CO., LTD.

JALPAK INTERNATIONAL(EUROPE) B.V.

JALSKY KANAZAWA CO., LTD.

10

100.0

—

100.0

JALPAK INTERNATIONAL(FRANCE) S.A.S.

EUR 1,000
160

—

100.0

100.0

JALSKY SENDAI CO., LTD.

10

100.0

—

100.0

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

GBP 1,000
100

—

100.0

100.0

JAL GROUND SERVICE CO., LTD.

100

99.8

0.2

100.0

JALPAK INTERNATIONAL ASIA
PTE. LTD.

SGD 1,000
146

—

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 SATELLITE TRAVEL CO.,LTD.

HKD 1,000
750

—

100.0

100.0

JAL GROUND SERVICE SAPPORO CO., LTD.

10

—

97.7

97.7

PT. TAURINA TRAVEL DJAYA*2

IDR 1,000
500,000

—

49.0

49.0

JAL ENGINEERING CO., LTD.

80

100.0

—

100.0

JAL MAINTENANCE SERVICE CO., LTD.

10

100.0

—

100.0

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 REPORT 2019

Ground Handling

Maintenance

ESG Management

100

JAL SKY AIRPORT OKINAWA COMPANY., LTD.

Business Activities and Strategy

JAL SKY CO., LTD.

Airport-Related Business
JAL ABC, INC.

Others

Cargo
100

69.2

—

69.2

JAL CARGO SERVICE CO., LTD.

50

100.0

—

100.0

JAL CARD, INC.

360

50.6

—

50.6

JAL CARGO HANDLING CO., LTD.

50

—

100.0

100.0

JAL FACILITIES CO., LTD.

180

85.0

—

85.0

JAL CARGO SERVICE KYUSHU CO., LTD.

20

40.0

40.0

80.0

JAL PAYMENT PORT CO., LTD.

390

16.5

68.5

84.9

140

51.0

—

51.0

Passenger Sales
JAL NAVIA CO., LTD.

50

100.0

—

100.0

JAL Digital EXPERIENCE CO.,LTD.

JAL MILEAGE BANK CO., LTD.

40

100.0

—

100.0

JAL AGRIPORT CO., LTD.

100

49.0

—

49.0

JAL BRAND COMMUNICATIONS
CO., LTD.

100

100.0

—

100.0

JAL BUSINESS AVIATION CO.,
LTD.

75

51.0

—

51.0

JTA INFORMATION & COMMUNICATION CO., LTD.

50

—

100.0

100.0

JAL SBI FINTECH CO., LTD.

45

51.0

—

51.0

JAL SUNLIGHT CO., LTD.

20

100.0

—

100.0

OFFICIAL FILING CO., LTD.

10

50.0

4.0

54.0

JPRO CO., LTD.

10

—

100.0

100.0

USD 1,000
2,000

100.0

—

100.0

Airport-Related Business
2,700

51.0

—

51.0

JLC INSURANCE COMPANY
LIMITED

Financial Data/ Corporate Information

JAL KANSAI AIRCARGOSYSTEM CO., LTD.

JAL ROYAL CATERING
CO., LTD.

Message from the President

Air Transport Business Segment

Corporate Name

*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 a considered
subsidiary because JAL has substantial control.

116

117

ESG DATA

Governance Data (Japan Airlines Co., Ltd.) (G)(As of July 1, 2019)

Corporate governance-related items

Topics discussed

Formulation of Fundamental Policies of Corporate Governance

Yes

Organization Form

Company with Audit & Supervisory Board

Directors

Environmental Data (E)FY2014

Electricity Use*1
Heat Use (crude oil equivalent)*1
Water Use*1

840
1.5
6.4

854
1.5
6.0

—

—

86.6
6.12
4.38
0.70

FY2017FY2018

933
1.3
5.0
47.3
80.6
5.10
3.95
0.63

Unit

85.1
5.78
4.43
0.72

875
1.4
5.7
44.4
84.6
5.30
4.24
0.71

907
1.3
5.4
46.0
82.2
5.02
3.87
0.63

10,000 tons
10,000 tons
10,000 tons
10,000 tons

125
48,494445

120
46,770430

11344,936426

110
43,512435

102 Million kWh
41,717 1,000 liters
485
1,000㎥

—
—

—
—

—
—

3,415
1.2

3,475
1.2

3,436
1.1

4,368
1,772
3,266
1.0

4,285
1,689
3,912
1.0

％

1,000 tons
1,000 tons
1,000 tons

tons
tons
tons
％

Social Data (Japan Airlines Co., Ltd. and 51 Consolidated Subsidiaries) (S)FY2014FY2015FY2016FY2017FY2018Unit

31,98623,3672,519
6,100

32,75324,0552,570
6,128

33,03823,8282,629
6,581

34,00324,2952,690
7,018

Persons
Persons
Persons
Persons

Average age
Ground Staff
Cockpit Crew
Cabin Attendants

38.3
38.7
42.7
35.1

37.4
37.7
41.1
35.0

38.2
38.6
43.8
34.9

38.6
38.9
44.1
35.6

39.1
39.5
44.0
35.4

Years old
Years old
Years old
Years old

Ratio of Men
Ratio of Women

53.2
46.8

52.3
47.7

52.5
47.5

51.6
48.4

50.2
49.8

％
％

Managerial Staff
General Staff
Ratio of Disabled Staff*4
Ratio of Female Managers

15.9
84.1
2.04
15.1

16.0
84.0
2.28
15.6

15.9
84.1
2.56
16.3

15.8
84.2
2.69
16.3

15.5
84.5
2.69
16.8

％
％
％
％

60.2
318,24962.8
380,997

66.4
403,51964.7
422,187

Childcare Leave Applicants*5
Nursing Care Leave Applicants*5

779
51

782
42

781
65

843
89

789
68

Persons
Persons

Ratio of Local Hires at Overseas Offices
Ratio of Locally Hired Managerial Staff at Overseas Offices

90.8
62.8

90.4
60.8

89.9
61.9

88.4
58.4

89.8
64.0

％
％

Average Years of Continuous Service

14.4

13.9

14.2

14.5

14.7

Years

Community Contribution
Participation in Voluntary Activities*2
Total Hours of Voluntary Activities*2

—
—

1,705
30,0002,169
14,0636,826
59,5518,140
68,288Persons
Hours

Training Period per Person*2
Training Cost per Person*2

96% (Fiscal year 2018)

Audit & Supervisory Board Members
Number of Audit & Supervisory Board Members (of which, External Members)

Five (of which, three External Members)

External Audit & Supervisory Board Member attendance at Board of Directors meetings
Key meetings attended by Audit & Supervisory Board
Members
Number of Audit & Supervisory Board meetings
External Audit & Supervisory Board Member attendance at Audit &Supervisory Board meetings

100%(Fiscal year 2018)
Management Committee, Group Council for Safety Enhancement General Meeting, Risk Management
Council, Group Earnings Announcement Session, Management Liaison Committee
13 (Fiscal year 2018)
100% (Fiscal year 2018)

Appointment of independent External Directors and External Audit &Supervisory Board Members

Six (three External Directors, three External Audit & Supervisory Board Members)

Accounting Auditor

KPMG AZSA LLC

Internal Auditing

Audit

Establishment of Committee

Composition(number of members)

The Chairperson

Number of meetings(Fiscal year 2018)

Corporate Governance Committee

4

Eizo Kobayashi (Lead Independent External Director)

3

Nominating Committee
Compensation Committee
Personnel Committee
Officers Disciplinary Committee

5
5
5
5

Masatoshi Ito (Independent External Director)
Eizo Kobayashi (Lead Independent External Director)
Yuji Akasaka (Representative Director, Executive President)
Eizo Kobayashi (Lead Independent External Director)

7
3
2
2

Topics discussed

Composition

Number ofmeetings(Fiscal year
2018)

Management
Committee

The Management Committee is a body established by theCompany for the purpose of contributing to appropriate andflexible decision-making by the Board of Directors and thePresident.

A forum for discussion attended by the President, Vice President, Senior Managing
Executive Officers, Managing Executive Officers, other Directors, and Audit &Supervisory Board Members.

40

Group
Councilfor Safety
Enhancement
GeneralMeeting
Risk
Management
CouncilThis body is tasked with ensuring safe flight operations acrossthe Group and promoting safety management, in line with
the Group’s principles and policies. The council determines key
policies related to safety management, clarifies the status ofmanagement systems and regularly overhauls those systems,
and addresses day-to-day flight safety issues.

Safety General Manager for Japan Airlines, chairperson, vice chairperson, council
members. The chairperson (president) can call Full-time Adviser and Related
Managers and ask for opinions. Audit & Supervisory Board Members can attend
and express opinions.

12

The Council takes responsibility for overall risk management
to stabilize Group-wide management activities. It also
makes decisions in relation to establishing the JAL Group
Basic Policies on Risk Management, conducts regular risk
investigations, takes measures when risks eventuate, andmanages BCP.

President, Vice President, General Manager of Managing Division Route Marketing,General Manager of Product / Service Planning, General Manager of Managing Division
Passenger Sales, General Manager of Cargo & Mail, General Manager of Corporate
Safety & Security, General Manager of Operations, General Manager of Flight Operations,
General Manager of Engineering & Maintenance, General Manager of Cabin Attendants,
General Manager of Airport Operations, General Manager of Corporate Control, General
Manager of Finance & Accounting Division, General Manager of Human Resources,
General Manager of Procurement, General Manager of Corporate Planning, General
Manager of Innovation Promotion, General Manager of IT Planning, General Manager
of Communication Division, General Manager of Secretary’s Office, General Manager ofGeneral Affairs. Audit & Supervisory Board Members also attend the Council.

The Corporate Brand Promotion Council is tasked withimproving corporate brand (corporate value) based on the
JAL Group Corporate Policy and strategies, clarifying thestatus of corporate activities, managing the progress ofeach measure, and sharing information to strengthen thecorporate brand.

President, Brand Communication / Tokyo 2020 Olympic and Paralympic Promotion
Department Director, Executive Officers and Presidents of Group airlines nominatedby the chairperson. The chairperson can call the suitable person according to theagenda.

12

JAL Philosophy Council is tasked with promoting the JAL
Philosophy. It is responsible for developing basic policies for
initiatives, planning and implementing related measures andevaluating the impact of those measures.

Chairman, President, Vice President, General Manager of Managing Division RouteMarketing, General Manager of Managing Division Passenger Sales, General Manager ofCargo & Mail, General Manager of Flight Operations, General Manager of Engineering& Maintenance, General Manager of Cabin Attendants, General Manager of Airport
Operations, General Manager of General Affairs, General Manager of Human Resources,
General Manager of Corporate Control, General Manager of Communication Division,
General Manager of Safety & Security Division, General Manager of Operation Division.
The chairperson (president) can call the suitable person according to the agenda.

4

The purpose of The Group Earnings Announcement
Session is to share the“performance” of each company
and department of the JAL Group and to consider ways toimprove the performance.

Directors, Honorary advisor, Chairman, Vice Chairman, President, Executive
Officers, Area Managers, Presidents of major subsidiaries, Audit & Supervisory
Board Members. Members can include the suitable person as needed.

12

The Management Liaison Committee monitors the progressof management projects and shares information.

Chairman, President, Vice President, Senior Managing Executive Officers, Managing
Executive Officers, Executive Officers (excluding group airline charge and district charge).
The chairperson (president) can call the suitable person according to the agenda.

22

Bodies directly
controlled by
the President

70.8 Hours/Person
470,698 Yen/Person*1 Airports, Offices, Maintenance Centers (Japan)*2 Past data have been revised in accordance with improvements made in the accuracy of data collection.
*3 The number of employees until fiscal year 2016 excluded employees planning to retire as of the end of March that fiscal year, but since fiscal year 2017, the numberof employees has included these employees and excluded temporary employees (from temporary staffing companies).
*4 As of June 1 of the year following each fiscal year. Combined data for Japan Airlines Co., Ltd. and its special subsidiary JAL Sunlight Co., Ltd.
*5 Japan Airlines Co., Ltd. only

118

19 (Fiscal year 2018)

External Director attendance at Board of Directors meetings

Corporate
Brand
PromotionCouncilJAL
Philosophy
CouncilGroup Earnings
Announcement
SessionManagement
LiaisonCommittee—

Financial Data/ Corporate Information

31,53423,0932,446
5,995

10 (of which, three External Directors)

Number of Board of Directors meetings

ESG Management

JAL REPORT 2019

Human Resources
Consolidated Staff Headcount*3
Ground Staff
Cockpit Crew
Cabin Attendants

Chairman

Number of Directors (of which, External Directors)

Business Activities and Strategy

General Waste (Aircraft) *1*2
General Waste (Ground) *1*2
Industrial Waste *1
Ratio of Final Disposal

FY2016

1 yearChairperson of the Board

Message from the President

Environment
CO2 Emissions
Scope 1 Aircraft
Ground *1*2
Scope 2 *1*2
Scope 3CO2 Emissions/RTK (Comparison with FY 2005)
NOx (LTO cycle)
CO (LTO cycle)
HC (LTO cycle)

FY2015

Term of Office Stipulated(Establishedfrom
FY2019)119

INTERNATIONAL ROUTE MAP(As of June 28, 2019)

Flight destinations overseas: 350 cities(Including code-share flights)

Prince George
Whitehorse
Terrace
Ketchikan
JuneauFairbanks

Tallinn
St. Petersburg

Anchorage

Wenatchee
Kelowna
Bellingham

Yellowknife

Walla Walla
Edmonton
Calgary
SpokanePullmanKalispell
Missoula

Des Moines
Kansas City
Tulsa
MadisonMilwaukee
ChicagoPeoriaBloomington
Grand Rapids
Kalamazoo

Oklahoma City
Omaha
Minneapolis
Wichita
Great Falls
BozemanJacksonSalt Lake City

Khabarovsk
Nizhny Novgorod

ToledoDetroitTorontoCleveland
OttawaBuffaloDenverWinnipeg

ViennaFrankfurt
MunichSamaraTenerife
Gran Canaria

Krasnodar

Stuttgart
ZagrebDubrovnik
Athens
Venice Amman

SevillaSao Paulo
MalagaMilan
Nice
GenevaMarseille
Barcelona
Toulouse

Bologna
Rome
ZurichNizhnekamsk
Kazan

Rostov

Baku

Malta

Perm

Volgograd

Sochi

Doha

Novosibirsk
Omsk

Bucharest

Irkutsk

DalianYantaiFuzhouIstanbul

XiamenAnkaraChongqing

Shenyang

Vladivostok

Xi'an

Tianjin
Qingdao

Chiang Rai
Mandalay
KunmingNanjing
Wuhan
Chiang Mai
ChengduNay Pyi Taw
KolkataDelhi
Dubai
Guangzhou
ShenzhenAhmadabad
Hanoi
YangonYakima

Japan
Busan
Jeju

HangzhouTaipeiTainanColomboMale
Langkawi
PenangNairobiHong Kong
Guam
ManilaLuang Prabang
Vientiane
Siem Reap
Da Nang
Phnom Penh

ChennaiBangkokBangalore
Addis Ababa

BoiseShanghaiKaohsiung

Pune
Hyderabad

PhuketHo Chi Minh City
Kota Kinabalu

Kuantan
Kuala Lumpur
Dar es Salaam
Singapore

Samui
Krabi

Yogyakarta
Surabaya

Johannesburg

Denpasar
Kuching
Cairns

DurbanBrisbane

Cape Town

Perth

SydneyMelbourne

BostonSeattlePasco
PortlandRedmond
EugeneReno
Sacramento
Santa Rosa
San Francisco
Mammoth Lakes
Las Vegas
Palm Springs San Jose
FresnoBurbank
Los Angeles
OntarioLong BeachSanta Ana
San Diego
Phoenix
TucsonHermosillo
Lihue
AlbuquerqueCiudad Obregon
Honolulu
Los Mochis
Kahului
El PasoCiudad Juarez
Kona
Chihuahua
Hilo
La PazCuliacan
San Jose del Cabo
North West Arkansas
DurangoLittle RockMonterrey
Puerto Vallarta
Nadi
Guadalajara
Manzanillo
Aguascalientes
PapeeteNuevo Laredo
Leon
Reynosa
Gold Coast
San Luis Potosi
Queretaro
AucklandIxtapa Zihuatanejo
TampicoMexico City
Acapulco
Veracruz
Medford

OaxacaDallasOrlando

Miami
Fort Lauderdale
West Palm Beach
Fort Myers
Tampa
CancunPensacola
MeridaNew Orleans

San Juan

Fortaleza

NewarkHartford
New York
Philadelphia
Harrisburg
Baltimore
DaytonWashington
Richmond
Indianapolis
Cincinnati
Norfolk
Lexington
Evansville
Raleigh Durham
Greensboro
Louisville
Knoxville
Charlotte
Greenville
ColumbiaCharleston
Nashville
Atlanta
Savannah
St. Louis
HuntsvilleJacksonville
Birmingham
MemphisParis

Financial Data/ Corporate Information

Jakarta

Portland

Victoria

Beijing

Mumbai

BilbaoVancouver

SeoulFrankfurt
Salvador

RecifeLondonBrasilia

ManausBelo Horizonte
CampecheCiudad del Carmen

AustinHoustonLima
Campo Grande
Londrina
IguazuSan Antonio
TapachulaSantiago

Villahermosa
Tuxtla Gutierrez
Port Alegre
Curitiba
Sao Paulo
Rio De Janeiro• The routes above include code-share flights.
• The map has been altered to highlight the cities on JAL’s route network.
• Broken lines () are one-way routes.

120

ESG Management

JAL REPORT 2019

London
Paris
Basel
Lyon
La Coruna
Santiago deCompostela
Vigo
OviedoPorto
LisbonMadridYekaterinburg
Ufa Chelyabinsk

Business Activities and Strategy

RochesterMontreal
Burlington
Syracuse
Columbus
Pittsburgh

Warsaw
BerlinHannoverPragueBudapest

Message from the President

Stockholm
Hamburg
Reykjavik
Newcastle
Copenhagen Kaliningrad Kittila
BillundDublinDusseldorf
Gothenburg
Ivalo
Manchester
Luxembourg
BelfastOslo
Rovaniemi
Amsterdam
Oulu
Glasgow Brussels
Moscow
Edinburgh
Helsinki
Riga
Aberdeen
Vilnius

121

DOMESTIC ROUTE MAP

STOCK INFORMATION / CORPORATE INFORMATION(As of June 28, 2019)(As of March 31, 2019)

Flight destinations in Japan: 56 cities

Stock Information(Including code-share flights)• Stock Exchange The First Section of the Tokyo Stock Exchange• Stock Code

Asahikawa(Center of Hokkaido) Memanbetsu
Sapporo(Okadama)

KushiroObihiro(Tancho Kushiro)(Tokachi Obihiro)

Sapporo(New Chitose)

Hanamaki(Iwate Hanamaki)

Sendai

Hiroshima
Yamaguchi Ube

Oita

Nanki Shirahama
Kochi(Kochi Ryoma)

Miyazaki(Miyazaki Bougainvillea)

Kikaijima
Tokunoshima(Tokunoshima Kodakara)
Okinoerabu(Erabuyurinoshima)
Yoron

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

September 30 and March 31• Contact
Stock Transfer Agency Department
Mitsubishi UFJ Trust and Banking Corporation
1-1, Nikko-cho, Fuchu-shi, Tokyo, Japan
Mailing address: ShinTokyo Post Office Post-office box no.29
Phone: 0120-232-711(toll free (Only within Japan))
Open: 9:00 am to 5:00 pm except Sat, Sun and public holidays(Japan time)
Website: www.tr.mufg.jp/daikou/ (only in Japanese)• Method of official announcement
Electronic public notice at:
URL www.jal.com/ja/corporate/publicnotices/ (only in Japanese)
Provided, however, that if the electronic notice cannot be made due
to an accident or any unavoidable reason, the public notice shall be
published in the Nihon Keizai Shimbun.
• Limitation on listing or recording of Citizens of Foreign
Countries and Other Persons in Register of Shareholders andRegister of Beneficial Shareholders

The Articles of Incorporation lay down the following provision
concerning the Civil Aeronautics Act, Article 120-2.

Article 12. Limitation on listing or recording of Citizens of Foreign Countries and Other Persons
in Register of Shareholders and Register of Beneficial Shareholders 12.1 If theCompany receives from a person, who falls into one of the categories listed in theitems below, a request for listing or recording his or her name and address in theregister of shareholders (including the register of beneficial shareholders; hereinafter
the same), and if the acceptance of such request causes the total voting rights
owned by persons, who fall into one of the categories listed in the items below, torepresent one-third or more of the Company’s total voting rights, the Company shallrefuse such listing or recording.
(1) A person who does not have Japanese citizenship(2) A foreign country, foreign public body or similar entity(3) A corporation or other organization established under foreign laws and regulations
2.When the Company intends to list or record all shares held by any of theshareholders listed in the items of the following paragraph, upon notification froma book-entry institution in accordance with Article 151. Paragraph (1) or (8) of the
Act on Book-Entry Transfer of Company Bonds, Shares, etc., and thereby the total
number of voting rights held by such persons listed in the items of the preceding
paragraph will account for more than a third of the Company’s voting rights, theCompany shall list or record such shareholders in the register of shareholders inaccordance with measures provided for in the Ordinance of the Ministry of Land,
Infrastructure, Transport and Tourism to list or record only a part of the shares sothat the total number of voting rights held by such shareholders in the items of thepreceding paragraph accounts for less than a third of the Company’s voting rights.

• Transition of share price and trading volume
（Yen）
5,000

Share price(Left axis)

Trading volume(Right axis)(Million shares)
100

Kita-Daito
Kumejima

TaramaYonaguni

Ishigaki(Painushima Ishigaki)

Okinawa(Naha)

Minami-Daito

4,000

80

3,000

60

2,000

40

1,000

20

Shareholders Name

Number ofsharesPercentage of Shares
Against Total Numberof Issued Shares (%)

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

22,807,800

6.53

Japan Trustee Services Bank, Ltd.
(Trust account)

17,048,300

4.88

Japan Trustee Services Bank, Ltd.
(Trust account 9)

11,320,600

3.24

Kyocera Corporation

7,638,400

2.18Japan Trustee Services Bank, Ltd.
(Trust account 5)6,803,600

1.95

STATE STREET BANK AND TRUSTCOMPANY 505001

5,067,600

1.45

Daiwa Securities Group Inc.

5,000,000

1.43Japan Trustee Services Bank, Ltd.
(Trust account 1)

4,529,400

1.29Japan Trustee Services Bank, Ltd.
(Trust account 2)

4,203,000

1.20Japan Trustee Services Bank, Ltd.
(Trust account 7)

3,904,000

1.11

Company Profile
Corporate NameJapan Airlines Co., Ltd.

Headquarters

Nomura Real Estate Bldg., 2-4-11
Higashi-Shinagawa, Shinagawa-ku, Tokyo
140-8637, Japan
Phone: +81 (0)3-5460-3121
Website: www.jal.com/en

Established

August 1, 1951

Representative
Director,
Yuji Akasaka
Executive President
Capital181,352 million yen

Employees

Consolidated Employees 34,003 people
Employees 12,750 people

Miyako

0

0
April
2015

122

• Major Shareholders

April
2016

April
2017

April
2018

April
2019

Financial Data/ Corporate Information

Tanegashima(Cosmoport Tanegashima)

Amami-Oshima

Osaka(Kansai)

Takamatsu Tokushima(Tokushima Awaodori)

Amakusa

Yakushima

Osaka(Itami)Matsuyama

Kumamoto(Aso Kumamoto)Kagoshima

Matsumoto(Shinshu Matsumoto)• Shareholder Registry Administrator
Mitsubishi UFJ Trust and Banking Corporation

ESG Management

Okayama(Okayama Momotaro)

Nagasaki

KomatsuTajima(Kounotori Tajima)

September 30 and March 31• Outstanding Issued Shares
Common stock 349,028,700 (Number of shares per unit: 100)
Number of Shareholders 144,308* T he total number of shares issued as of May 23, 2018 was
349,028,700 shares, a decline of 4,687,100 shares due to retirement oftreasury stock as resolved at the meeting of the Board of Directors heldon April 27, 2018

Business Activities and Strategy

JAL REPORT 2019

Oki
(Oki Island Global Geopark)• Date of record for dividend• Shareholder Registry Administrator
Mitsubishi UFJ Trust and Banking Corporation

Aomori

NiigataJune each year

• Date of Finalizing Shareholders Eligible to Exercise Voting Rights
at the Ordinary General Meeting of ShareholdersMarch 31

• Date of record for dividend 

Hakodate

Okushiri

Yamagata(Oishii Yamagata)

FukuokaMarch 31

• Ordinary General Meeting of Shareholders

Akita

Kitakyushu

100 shares• Account closing dateRishiri

MisawaIzumo(Izumo Enmusubi)

9201• Number of Shares Per Unit

Message from the President• The routes below are operated as code-share flights with Fuji Dream
Airlines Co., Ltd. (FDA) using FDA aircraft and crew: Sapporo (New
Chitose) = Yamagata, Sapporo (New Chitose) = Matsumoto, Sapporo(Okadama) = Matsumoto, Sapporo (Okadama) = Shizuoka, Yamagata= Nagoya (Komaki), Sendai = Izumo, Niigata = Nagoya (Komaki),Niigata = Fukuoka, Matsumoto = Fukuoka, Shizuoka = Izumo, Shizuoka= Fukuoka, Shizuoka = Kitakyushu, Shizuoka = Kagoshima, Nagoya(Komaki) = Izumo, Nagoya (Komaki) = Kochi, Nagoya (Komaki) =Fukuoka, and Nagoya (Komaki) = Kumamoto.
• The routes below are operated as code-share
flights with Amakusa Airlines Co., Ltd. (AMX)
using AMX aircraft and crew: Fukuoka = Amakusa
and Kumamoto = Amakusa.
* Some flights on the Osaka (Itami) = Kumamotoroute are also code-share flights with AMX.
* Some routes are not operated in certain
seasons.

• Total number of shares to be issued 750 million(Common stock) (700 million)(Class 1 Preferred stock) (12.5 million)(Class 2 Preferred stock) (12.5 million)(Class 3 Preferred stock) (12.5 million)(Class 4 Preferred stock) (12.5 million)

Capital andPaid-in Capital

355,845 million yen

Businesses

1. Scheduled and non-scheduled airtransport services
2. Aerial work services
3. Other related business(Amount is rounded down to the nearest million yen)123

Japan Airlines Co., Ltd.
日本航空株式会社
Finance
Department, Brand Engagement Promotion Department
財務部
・ブランドエンゲージメント推進部〒140-8637
Nomura Real Estate Building, 2-4-11 Higashi-Shinagawa, Shinagawa-ku, Tokyo 140-8637, Japan
東京都品川区東品川二丁目4番11号
野村不動産天王洲ビル
Tel.: +81 (0)3-5460-3121
TEL:03-5460-3121

Corporate website
https://www.jal.com/en/
ホームページ
www.jal.co.jp
Corporate
information
https://www.jal.com/en/outline/
企業情報
www.jal.com/ja/outline/
CSR information www.jal.com/ja/csr/
https://www.jal.com/en/csr/
CSR情報
投資家情報
Investor Relationswww.jal.com/ja/investor/
https://www.jal.com/en/investor/