Chapter 3 Growth Strategy

Chapter 3 Growth Strategy
Timeline
Recover and Stabilize Business Performance

Shift to Growth

The Medium Term Management Plan will place ESG strategies at the top of its management strategy tocreate new social values such as the sustainable flow of people, goods, and distribution channels.
We aim for medium- to long-term growth by focusing on solving social issues in Japan and othercountries around the world through "air transportation" and "connection."▶Creating Values through air transportation and Connection
As an important social infrastructure, air transportation provided by the JAL
Group has created social and economic values as a "safe and secure" meansof transportation through which many people and various goods can freely
move around.
Air transportation is both a means of transportation and a source of societal
connection.
Through this "connection," we contribute to the well-being of people and thewell-being of society, as well as revitalizing local communities.

See pp.49-50 ESG Strategy for details.

Director Senior Managing
Executive Officer
Senior Vice President ofCorporate Strategy andPlanning
Chief Financial Officer▶Promoting capital efficiency with capital costs in mind
In terms of finance to support these efforts, we will strive to improve capitalefficiency while keeping in mind the cost of capital.
In FY2025, we raised shareholder's equity ratio (based on credit rating
evaluation) from 39.3 percent to about 50 percent, and set the ROIC target at
9 percent and ROE at 10 percent or more by surpassing cost of shareholders'equity.
As we grow by creating new values, we will enhance capital efficiency whilestrengthening our financial base.
We are also considering the introduction of a new investment efficiency
index, "Sustainable ROIC" (tentative name), which takes social values into
consideration.
By visualizing the value of ESG strategies, one of our goals is performanceand capital efficiency. This takes into account not only the increase incorporate profits and cash, but also the increase in social values delivered
through our business.
The JAL Group aims to realize "a vibrant society and a future where many
people and goods freely move around," as set forth in JAL Vision 2030,
which aims to create a safe, secure and with peace of mind society and asustainable future.
As an officer in charge, I will contribute to the growth of the JAL Group by
striving to gain the understanding and support of our stakeholders and by
quantifying and visualizing the social value that the JAL Group brings, suchas well-being, productivity, innovation, and regional revitalization through airtransportation and connection.

45

JAL REPORT 2023

2050

Bn JPY or Above

100.0
Bn JPY

2021

2023

2025

(Plan disclosed on May 2, 2023)(Plan)

2022

FY2021-2025 Medium Team Management Plan

Outline of Environmental Awareness and Strategy
As of May 2023 (Medium-Term Management Plan Rolling Plan 2023)

Politics
政治
Digitalization and regional revitalization
Economic reconstruction by promoting
Japan as a tourism-oriented nation
Heightened environmental regulations
such as greenhouse gas control

EconomySociety and the Environment

Technology

	Centralization to decentralization andmultipolarization
	Fluctuations in fuel and foreign exchange
market conditions	Recovery from the COVID-19 pandemic	Urban and regional disparities	Transition to a resilient society	A move from “mass” to “personal”
	Accelerating the movement toward carbon
neutrality and biodiversity conservation
	World population growth and decline in Japan	Shortage of human resources in the aviationand tourism industries	Delay in recovery of international supplies

	Digital acceleration and integration with the realworld	Business model transformation with DX
	Non-face-to-face touchless services to becomea normMain Opportunities
Demand✓Increased demand for domestic
flights✓Increase in inbound traffic✓Generation of new demand due to changes
in consumer and business behaviors
Demand✓Air transport demand recovers fromthe COVID-19 pandemic

Demand✓Decrease in air transport demand
due to digitalization

Demand✓Increased costs associated withenvironmental regulations

Cost

Preference
Demand✓Improve customer preference byaddressing needs

Productivity✓Increased productivity✓Securing and creating demand by
maintaining and expanding route networks

Demand✓Creating new business models✓Slower growth in air transportdemand due to modal shift✓Decrease in passenger demand on local routes
✓Difficulty maintaining production system

Preference✓Loss of competitiveness due toobsolescence

Demand✓Obsolete existing business

Major Risks
Cost✓Decrease in passenger demand on
local routes

Demand✓Rapid fluctuations in freight demand

Achieve value creation through ESG strategies to achieve medium- to long-term growth

ESG Strategy

Long-term business strategy

pp.49-50 Topmost Strategy in Order to Realize Value Creation and Grow

Business strategy

pp.51-76

Business Model Reform

DX Strategy

Restructure business portfolio and increase profit
by promoting ESG strategies

Using digital technology to provide customers withsafe and secure travel and new experiences

Financial Strategy

Build Risk Tolerance and Growth

Strategy to Drive ESG Strategy
Human Resources Strategy

Develop and hire human resources that respect
diverse values, challenge new value creation, anddrive change

pp.77-80

GX Strategy

Accelerate efforts to achieve carbon neutrality by
2050 through a variety of approaches

Strategy to Support ESG Strategy
Resource Allocation

Amid the end of the COVID-19 pandemic, passenger demand originating in Japan and domestic flights are still weak, and the recovery in flights
originating overseas exceeds expectations.
Costs have increased due to the continued high prices in jet fuel market prices and foreign exchange trends.
The movement toward carbon neutrality and biodiversity conservation is accelerating.
Looking ahead to FY2025, although costs will remain high, passenger demand is expected to recover steadily, and a tight demand-supply
environment is expected.
We will position our ESG strategy as the top strategy for realizing value creation and growth and will shift to a medium- to long-term growth strategy
with value creation as the starting point. We will aim to achieve our management targets by steadily implementing our business actions and financial
plans to promote our ESG strategy.

TOP

JAL REPORT 2023

Data Section*Sales and EBIT by business area described in this Chapter are calculated using a simplified
method for internal management and are not sales and profit by business segment.
In addition, there is no one-to-one correspondence between air transportation businesssegment and other business areas.

2030（EBIT）

185.0

Profit Target（EBIT）(EBIT)
64.5 Bn JPY

Net Zero CO2emission

Sustainability

SAITO Yuji

FY2023-2025

JAL Vision

Growth Strategy

The importance of enhancing sustainability in society was reacknowledged
with the experience of the COVID-19 pandemic.
People who have a continuous and diverse relationship with a particularregion are called "related populations".
In a society with a declining population, the sustainability of the region
depends on how to stimulate interacting community.
It is our role to address the interests of the local area to people, to havethem engage with the area through experiences, and create "connections"
between the people and area. We also have the role to create a purpose forthis movement.
For example, rather than having one hundred visitors visit the area once, weshould deepen the connection with people and the area by having ten people
visit the same area ten times.
With the end of the COVID-19 pandemic, traveling restrictions has been

Rolling Plan 2023

relaxed traveling lifting, we will work across sectors and occupations to createconnections through air transportation.
In order to keep air transport sustainable, it is essential to reduce
environmental impact.
We will promote the GX strategy and work toward carbon neutrality andbiodiversity conservation towards 2050.
▶Making the most of human resources to create connections
As a business strategy to promote ESG strategies, we will promote businessmodel reform, DX strategy, human resources strategies (human capitalmanagement), and GX strategies.
Among them, we believe that human resources strategies (human capitalmanagement) are particularly an important driver.
The JAL Group, a provider of social infrastructure, is a group of humanresources with a strong sense of contribution by creating the JAL Group's
value of air transportation and connection.
Each employee understands and derives ideas based on the vision ofcreating "connections" outlined in the Rolling Plan 2023 and creates newvalues to create connections.
To achieve this, it is important for each employee to create new values,
challenge the creation of medium- to long-term values, and transform andgrow as a human resource, with aspirations.
More than 20 internal dialogues have been conducted since the publication of
the Rolling Plan 2023.
We received an enthusiastic response from many employees who mentioned
their satisfaction with the value of air transportation and connection.
And one of the keywords when creating new values is diversity.
We believe that the promotion of diversity, equity and inclusion (DEI), in which
diverse human resources are accepted and recognized and can play anactive role, will lead to new value creation.
Creating innovation and social change requires highly motivated humanresources.
We will adopt a more dynamic system for the utilization and promotion ofhuman resources by providing a work environment in which the humanresource performance of the JAL Group can be maximized to evaluate ourefforts in creating value.
At the same time, we will support the growth of our employees so that they
can build their own careers autonomously. We will also promote measures toincrease engagement and advance their careers by providing them with thenecessary means of reskilling.

Sustained Increase In Corporate Value

The JAL Group Value Creation Story▶Medium Term Management Plan Rolling Plan
Based on the results of the first two years of the FY2021 to FY2025 Medium
Term Management Plan and environmental changes, we revised andmaterialized specific strategies and plans for the three years to FY2025, andformulated the Rolling Plan 2023.
While the COVID-19 pandemic is coming to an end, new challenges haveemerged, including changes in geopolitical conditions, global price increases,
and a shortage of human resources.
In response to these changes in the business environment, we will achieve
our Medium-Term Management Plan by steadily implementing our ESG
strategy, which is the top strategy for achieving growth, in order to shift from"recovery and stability" to "growth."

Introduction

1. Overall Strategy ―Realize Value Creation through ESG Strategies for Medium-to Long-term Growth―46

Chapter 3 Growth Strategy

Overall Strategy
1.1.Overall
Strategy

2. ESG Strategy

3. Business Strategy

4. Financial Strategy

Safety and Security ―Accelerate Efforts to Realize JAL Vision 2030―

We have established management targets for FY2025 in the areas of safety and peace of mind, sustainability, and finance, taking into

The JAL Group aims to realize a safe and secure society by deepening the layers of safety as a leading safety company.
We aim to realize JAL Vision 2030 by focusing on the sustainable development of our human resources, the final stronghold to protect safety
and the driving force for value creation. We also addresses various environmental changes issues surrounding aviation and upgrades fight safety
using digital technology.

account the business environment, global trends, stakeholder expectations, their impact on our business, and their importance tomanagement. These are the key management issues and challenges of the JAL Group.
FY2025 TargetsJAL

3 cases0 (during the entire period of the Medium-Term Management Plan)NPS*1 +4.0pt (FSC international/domestic)
CO2 Emission
Reduction

Environment

Reduction ofSingle-use Plastic

Sustainability
Communities

Regional
Revitalization

PeoplePromotion of D&I

EBIT Margin

total emissions:below 9.09 million tons

91% change

Development of Safety Personnel

Response to Environmental Changes

Use of Digital Technology and Information	Succession and continuous penetration of culture andawareness that puts safety and security as the highest
priority

Expanding JAL SMART SECURITY, an aviation security
facility capable of conducting sophisticated aviation
security inspections, in preparation for diversifying
threats such as terrorism	In addition to maintenance engineer's knowledge, wehave developed a failure prediction logic using big
data and AI to predict aircraft failures

Passengers -15%
Cargo -17%

Group Female Manager Ratio

22.8%(as of March 31, 2023)

Achieve 10% or Higher

4.7%

ROIC

9%

3.3%

JAL

EPS

c. ¥290 level￥79（Earnings Per Share）*1 Net Promoter Score：Objective indicator of customer satisfaction (compared to beginning FY2021)*2 Increase in passenger count between metropolitan and rural areas by stimulating tourism demand and creating new flows etc. AIM to improve Total Shareholder Return (TSR) FY2025 Targets
FY2022 Results

See p.48 for our efforts to achieve safety and security goals.

 FY2025 Targets
FY2022 Results

Sustainability

We have set targets in four social topics that the JAL Group address as important issues.
Environment : The reduction of CO2 emissions and single-use plastics emissions is expected to be thetarget for FY2025.
Community : D ue to the prolonged impact of the COVID-19 pandemic, the volume of transportation
decreased compared to FY2019.
People : Ratio of female managers rose 0.9 points to 22.8% from FY2021.
We are working to achieve our 2025 target of 30%.

See pp.81-110 for information on sustainability initiatives.

Finance

FY2022 Results

We will achieve the level before the COVID-19 pandemic in each indicator. The indicators in FY2023
maintain and improve them thereafter. In particular, we aim to achieve Earnings Per Share (EPS) to
counteract the stock dilution caused by the public offering in November 2020.
EBIT for the full year was 64.5 billion yen, which achieved profitability.
In terms of EBIT margin, ROIC and EPS, we aim to achieve these targets in FY2025 while
simultaneously strengthening risk tolerance and achieving sustainable growth.

See pp.77-80 for our efforts to achieve our financial goals.

47

JAL REPORT 2023

Recognition and Award from Outside Parties
JAL is the only Japanese airline to be certified as APEX *1"WORLD CLASS" for two consecutive years following 2021.
APEX "WORLD CLASS" is an award established in 2021
to evaluate airlines in the post-COVID-19 era, and only
airlines that provide high-quality services in line with thesenew values have been selected due to growing interest in
sustainability, safety and security, and well-being.
For the sixth consecutive year, SKYTRAX *2 has recognized
us as a "5 Star" airline that provides the highest quality inthe world, and we are recognized for our staff's consistentknowledge of products, services and safety from the airport
to the cabin.
*1 The Airline Passenger Experience Association (APEX) is based in North America and is one of the world's largest airline industry associations.
*2 SKYTRAX is an international air transport rating organization based in the U.K.

■ Creating a Safe Environment
During the COVID-19 pandemic, to ensure cleanliness, the JAL Group cooperated with Kao Groupand carried out hygiene management based on expert knowledge, including supervising thecleaning manual of cabin attendants and airport staff.
In August 2022, we completed the introduction of an advanced security inspection system with
X-ray inspection equipment, a passable lane (smart lane), and JAL SMART SECURITY equippedwith a UV disinfection system for domestic flights at Haneda Airport to enable smooth and hygienic
security systems.
As COVID-19 was downgraded to common infectious disease on May 8, 2023, daily life is gradually
returning to normal. The JAL Group, however, will continue to ensure that all customers can enjoy
safe and comfortable air travel through the utilization of the latest technology and the creation of aclean environment.

Data Section

FY2025 Targets

To prevent turbulence during flights, we havedeveloped a system to obtain the latest weather
information in a timely manner through the evolutionof observation and communication technology

Sustainability

Safety and Security

 chieve a clean record free of aircraft accidents and serious incidents during the period covering theAmedium term plan, and create a comfortable world-class customer experience that provides peace ofmind in all settings.
Safety：We fell short of our target due to three aircraft accidents that caused injury to persons on board
from the shaking of the aircraft. In response, we stepped up measures to prevent injury causedby the shaking of the aircraft to protect the safety of our assengers and crew members.
Peace of Mind：H
 uman services at airports and in the cabin were highly rated, but there were challenges
in dealing with service changes due to COVID-19 and congestion due to rapid demand
recovery, and we will make improvements this fiscal year.

See p.19 for Safety Culture.

Leveraging the know-how cultivated in airtransportation business to create sustainable logistics
using drones and eVTOL and promote initiatives tosupport local communities

Growth Strategy

Finance（Return on Invested Capital）• Diversification and manifestation of global risks• Development and penetration of digital technologies

819 million tons

Cargo and Airports: 100% switch to eco-friendly materials

30％

Changes

Domestic +3.0pt

45% abolished+10％ vs FY2019• Promotion of ESG-based management strategies

Changes• Progress in business model reform (expansion of business areas)
定し、最重要経営課題として取り組んでまいりました。

international -3.3pt

Cabin and Lounge: No use of virgin petroleum-based plastic

Domestic Passenger*2 and Cargo transport volume

Top ESG Strategies
Global Risk and Technologyのそれぞれに目標値を設
重要性などをもとに、2025年度に達成を目指す経営目標として、
「安全・
安心」、
「財務」、
「サステナビリティ」
Internal Environmental
External Environmental

The JAL Group Value Creation Story

Peace of Mind

JAL

Environmental Changes Surrounding Safety and Security 事業を通じた影響度合い、JALグループは、事業を取り巻く環境、国際社会の動向やステークホルダーからの期待、経営にとってのAircraft Accidents and Serious Incidents

SafetyPeace of Mind

FY2022 Results

Introduction

Management Targets ―Work Steadily Towards their Achievement by FY2025―TOP

JAL REPORT 2023

48

Chapter 3 Growth Strategy

ESG Strategy
Strategy
2.2.ESG

1. Overall Strategy

3. Business Strategy

4. Financial Strategy

2. ESG Strategy―Creating Social and Economic Value and Improving Corporate Value by Creating Relationships and Connections Through Air Transportation―
The JAL Group has positioned ESG strategy as its top strategy for growth toward 2030. We will address
important social issues we face by creating relationships and connections through air transportation, while
creating sustainable social and economic values and enhancing corporate value.

The movement of people and goods, which the JAL Group has provided mainly for air transport, creates societal connections.
This transportation and connection will solve various social issues, such as revitalizing the regional economy, and creating social value, such asenhancing people's well-being.
To create economic value, we will develop businesses that expand societal connections. By expanding our business in this area, we aim to establish

In order to create connections and relationships through air transportation, we will work together across business domains to realize our value
creation story for ESG by promoting initiatives to offer more choice, remove constraints, and create purpose.

Offer more choices

Remove constraints

Create purpose

By various means

For everyone

Many times

FSC[Social Value of the Societal Connection]

As a safe and secure social infrastructure, we will provide networks and achievecarbon neutrality through the introduction of fuel-efficient aircraft and the use ofSAF.

We will conserve the environment and biodiversity, which are also tourism
resources, revitalize regions by stimulating interacting communities, namely
people who have continuous and diverse relationships with specific regions, andimprove people's well-being by creating social connections.

New Tourism workcations, etc.
Create a new purpose of movement

Cargo

LCC

Modal shift from trucks to airplanes

Low price range
Mileage[Social Value of Movement of People and Goods]

FSC

Travel, Region

Improving accessibility

Diverse fares and services
Network

new sources of revenue and achieve growth as a corporate group by leveraging these societal connections to drive increased demand for air travel
and expand the profitability of our aviation business.

FSCFSCFSC

Various products and services
Diversification of payment instruments

The JAL Group Value Creation Story

Value Creation and Sustainable Growth by Building Relationships andConnections through Air Transportation

Introduction

Initiatives to Create Connections and Relationships Through Air Transportation

×We will increase the number of ways totravel and connect, including the choiceof airfares at different price points by FSC
and LCC, and the ability to use a variety of
products and mileage.

Air Mobility, MaaS
Infrastructure development in remoteislands and mountainous areas
Seamless travel×

Create new logistics (relationships withlocal communities) through productdevelopment and discovery

In order to create a purpose of movement
and connection that makes people wantto move many times, we will create new
movement objectives such as New Tourism
and workcation.

Growth Strategy

By improving accessibility so that anyone
can move and connect, we will eliminate
restrictions such as enabling customers
with travel barriers to move without stress.
We are also working to achieve new forms
of seamless mobility through air mobility
and MaaS.

Cargo, CommerceSocial values

Movement of People and Goods

Societal Connection✓ Safety and security✓C onserve the environment and✓ Social infrastructure network

biodiversity✓ Carbon neutrality

Customer base

Air Transportation✓ Revitalize the local economy✓ Improve of people's well-being

Societal Connections

Expand New Air Transport Demandby Societal Connection

Develop New Businesses that Expand
Societal Connection

Expansion of aviation revenues

Turn non-aviation business into a new revenue sources

FSC

LCC

Cargo and Mail

Mileage, Lifestyle, and Infrastructure

Economic values[Non-Aviation Business Growth (Economic Value)]

Air transport demand will acquire new movement of people and goods createdby our efforts to create societal connections between people and goods, thereby
achieving increased revenue and further growth in the aviation business.

To grow our non-aviation business, we will expand the opportunities for customers
to use the JAL Group and expand our customer base through the development of
new businesses in our Mileage, Lifestyle, and Infrastructure business that create
societal connections between people and goods.

■ Providing Information to Relieve Concerns
We have created Sky Challenge Video, a video that summarizes the sequenceof events from check-in to baggage pick-up. It is posted on our website forcustomers who require special assistance. This video was made to help
eliminate any pre-flight concerns our customers may have.
We are continuing to implement the Airport Experience Program, which allows
customers to experience the sequence of events from booking to boarding torelieve anxiety.

■ Providing Accessible Tour Products
With the aim of providing safe and comfortable air travel for our customers with
developmental disabilities, we have integrated valuable information into ourprograms to identify and eliminate the barriers faced during travel.
Together with the Chuo University Research and Development Organization andthe Transportation Ecology and Mobility Foundation, we developed a program forpeople with disabilities to participate in tours through pre-experience sessions
at airports and on planes, and practice wearing seatbelts at home. In October
2022, we held an Autumn Accessible Tour in Yamagata.
In this joint project, experts including advisors and researchers whose children
have developmental disabilities took part from the planning stage.
As a first step to expand this program to other regions, in FY2023, we areplanning a tour to depart and arrive from Osaka (Itami) Airport as a first step inregional development and reflect the awareness we gained last year.

Data Section[Growth of Aviation Business (Economic Value)]■ Creating a More Comfortable Environment
In order to provide stress-free access for all our customers, for customers who
require sign language and subtitles, we have introduced a safety video with sign
language interpretation and subtitles.
At the airport, we are working to create an environment that is comfortable andeasy to use by setting priority seats at Diamond Premier domestic flights and
Sakura lounges.
We will also strive and continue to provide intangible services and hospitality.

Sustainability

Human capital base

Efforts to Improve Accessibility

Narration: Press this blue button when flushing.

49

JAL REPORT 2023

TOP

JAL REPORT 2023

50

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy■ Changes in EBIT from FY2023 to FY2025
Profit Target (bn. JPY)

To promote ESG strategies, we will promote business model reform, DX strategies, human resources strategies(human capital management), and GX strategies.

Profit growth by steadily
capturing recoveringinternational demand

15.0
LCC

55.0

Cargo and Mail

Profit growth by developing
new business models

LCC

Expansion of ZIPAIR, andprofit growth of SPRING
JAPAN due to demand
recovery of China routes

Mileage, Lifestyle and Infrastructure

Steady profit growth in the
Mileage business

15.0
Mileage, Lifestyleand Infrastructure

100.0(1) Business Model Reform
We will restructure our business portfolio by promoting our ESG strategies and address social issues in our four business areas. While changing ourrevenue structure, we will realize our medium- to long-term profit growth.
In FY2025, we plan to record about half of our profits in the LCC and Mileage, Lifestyle and Infrastructure business areas.

FY2023

FY2025(Plan)Air Passengers

Profit Trends by Business Domain

185.0

EBIT (bn. JPY)

FSC, Cargo and Mail

Maintain and expand networks while reducing environmental impact byintroducing fuel-efficient aircraft, and stimulate interactive community

or above

LCC

Aircraft

A350-1000, 737MAX, ATR

Network

Expand domestic and international networks on our own andthrough alliance

Mileage, Lifestyle andInfrastructure

100

132.0

Leverage the advantages of air transportation to resolve issues in
the logistics industry, and create a sustainable logistics network

Achieving Sustainable Growth by Connecting People with the World and Regions

FSC and LCC will maintain and expand networks connecting cities, regions, Japan, and the world, while strengthening cooperation withpartnership airlines, to create value for mobility and connection. By updating to fuel-efficient aircraft strategic fleet allocation will strive forsustainable growth that combines network expansion with environmental measures.

Meeting the Needs of a Wide Range of Customers Through the FSC and LCC Lineups
Full Service Carrier (FSC) maintains and expands high-quality products, and services and a highly convenient network. Each airline operates flights according to the scale of demand
and route characteristics.
We will deepen our cooperation with partnership airlines, build essential networks for business, tourism and daily life. This will contribute to stable human flow and logistics byconnecting cities, regions, Japan, and the world.
The three LCCs, namely ZIPAIR Tokyo, SPRING JAPAN, and Jetstar Japan, aim to expand their associated demand by offering reasonable prices for tourists and demand for VFR *1,
which is expected to grow. LCCs will make air travel easier and more accessible.
Based on the diversified needs for prices and services, the JAL Group will provide a wide range of prices and services, covering the entire international and domestic markets.
Relatives*1. Visit Friends and140
140
※2

*2
Business Scale（ASK※2）

Operation of 767 and A321 freighters,
partnership with Yamato Holdings etc.

Note: Including ZIPAIR,SPRING JAPAN. Excluding Jetstar Japan.
Note: Including ZIPAIR,SPRING JAPAN. Excluding Jetstar Japan.

(%)
(%)
140
140

100.0

126
International 126
International
120
120

Create new flows of people
through flexible business development in response to the market

15

64.5

45

100
100

100
100

Aggressively expand North
American and Asian routes

Develop routes to large
cities/regions in China

100
100

Introduce new aircraft,
redeployment of Asian routes

70
55

Approx.
40%

2025(Plan)(Plan)*1 Pre-pandemic: figures deducting impact of COVID-19 from FY2019 results (earnings forecast
figures disclosed at the announcement of FY19Q3 financial results (IFRS)Create commercial activities that connect people and regional
communities by developing diverse products and services

JAL REPORT 2023

2022
2022

99
99

2023
2023

2025
2025

(Plan)(Plan)(Plan)(Plan)

TravelNew tourism that creates an interacting community

Regions

Maximize the value of regions through solution sales marketing

Contracted Services

Contribute to an increase in Japan-bound passengers throughcontracted services for overseas carriers' flights

Air Mobility

Revenues
Note: Excluding Jetstar Japan
Note: Excluding Jetstar Japan(bn,JPY)
JPY)
(bn,
1,200
1,200

1,015.9
1,015.9

1,250.0〜
1,250.0〜

1,176.0
1,176.0
900.4
900.4

International
International

800
800

LCC
LCC

400
400

Domestic
Domestic

Establish transportation infrastructure for remote islands,
mountainous areas, etc.
00

51

80
80

100
Domestic 100
Domestic

Data Section

2023

99
99

*2 Available Set-Kilometer (ASK): Unit for capacity to carry passengers. Total number of seats x distance (km)Mileage/Commerce Develop Mileage and Lifestyle services that create connections

FY2022FY2019FY2019108
108

Sustainability

Approx.
10%00Pre-pandemic*1

Growth Strategy

Approx.
50%

The JAL Group Value Creation Story

FSC

185.0 or above

FSC
Cargo and mail

Introduction

3. Business Strategy ―Business Strategies to Promote ESG Strategies―

FY2019FY2019

2022
2022

2023
2023

2025
2025

(Plan)(Plan)(Plan)(Plan)TOP

JAL REPORT 2023

52

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy(i) Portfolio
Enhance Reciprocal Customer Transfer

International

Stability

MaDomestic-oriented routes

LCC

LCC

China-oriented routes

Codeshare partners

CO2 emissions will be reduced by replacing the existing Boeing 777 and Boeing
767 with the new Airbus A350 and Boeing 787.
These new aircraft will improve fuel consumption per aircraft by about 20
percent.
In FY2025, 47 percent of the total fleet will be replaced with new models.
Specifically, from the second half of FY2023, we will introduce Airbus A3501000 on international long-haul routes to reduce environmental impact andimprove cabin comfort.
Furthermore, from FY2026, Boeing 737-8, a new small aircraft, will gradually
renew the conventional Boeing 737-800. Looking ahead to our Medium-Term
Management Plan, we will promptly introduce and renew aircraft over the
medium to long term.

Rate of New Passenger Aircraft (with over 100 seats)

33
companies*

Price range

FY201929%

High

Domestic Flights

Distance

Upgrade results in
20% improvementin fuel efficiency
per aircraft

FY2025

53%

Low
Short

71%

*Overseas: 30 companies
Japanese: Three companies(FDA/AMX/ORC)

Long

International Flights■ FSC▶Domestic
Maintain the same level of supply as before the COVID-19 pandemic by maximizing the resources of Group airlines.
We will create new demand for travel through co-creation with local communities and promote inbound regional travel.
We will also implement code sharing using the framework of Essential Air Service Alliance (EAS LLP), which is composed of three regional airlines in
Kyushu with outlying island routes (JAC, Amakusa Airlines Co., Ltd. (AMX), ORIENTAL AIR BRIDGE CO., LTD. (ORC)), JAL, and All Nippon Airways
Co., Ltd. (ANA). JAL and ANA will work hand in hand to contribute to regional revitalization by creating human flows to cities and outlying islands.

47%

ATR aircraft operated by JAC and HAC are turboprop aircraft with low CO2 emissions.
HAC decided to introduce its fourth ATR aircraft in January 2023 and is preparing for the start of operations in the fall.
Maintaining and expanding routes in Hokkaido will improve convenience for citizens and residents as they are important routes for business, medicalcare, hospital visits, and other social activities.

■ Deployment of Aircraft to Growth Areas (International LCC and Cargo Aircraft Business)
We will actively deploy aircraft in our growth areas of international LCCs and cargo flights.
In FY2025, six cargo aircraft will be upgraded from being passenger aircraft. To stimulate growth in international flights with ZIPAIR and SPRING
JAPAN, 16 to 20 aircraft will be introduced in FY2025, up from two in FY2020.

6

Freighters

Convert passenger aircraft to freighters
767 freighters: Introduce 3 aircrafts
A321 freighters: Introduce 3 aircrafts

20(ii) Aircraft Build a Network with 229 Group Aircraft
Aircraft will be placed in growth areas and fuel-efficient aircraft will be introduced to maintain and expand our business scale and create mobility andconnections while reducing our environmental impact.

16

LCC

Sustainability

Through collaboration with JAL, we aim to improve the visibility of each company and the convenience of customers by strengthening our sales
power and improving our brand strength. We will also ensure that the three LCCs capture the tourists and VFR markets, which are expected to growfurther in the future, and expand our business scale.

Increase LCC aircraft for the growth of international flights
Introduce 16 to 20 aircrafts■ Number of Aircraft for the Entire JAL Group*By the end of FY2025, the JAL Group plans to build up its fleet size to 234
aircraft, the same as the pre-COVID-19 era.
We will strategically utilize FSC and LCC using different aircraft to respond tochanges in the business environment and fluctuations in demand trends.

Introduce
A350-1000
234

224

229

FY2019Recovery before the
COVID-19 pandemic
232-238

Freighters
LCC

International

1

Topic

2022

2

2025

3

Note: All figures are for the number of aircrafts at the end fiscal year

Noise Reduction

We are steadily upgrading to the most advanced aircraft that complies with noise standards* (ICAO
Chapter 4, Chapter 14).
The flagship carrier will be upgraded to the state-of-the-art Airbus A350, which is efficient in fuelconsumption and low in noise.
We are also actively working on reducing noise sources with noise abatement operational procedures,
which are the responsibilities of the International Civil Aviation Organization (ICAO) Balanced Approach to
Aircraft Noise Management.
* Standards established by ICAO. Chapter 4 applies from 2001 and Chapter 14 applies from 2017

FY2019

2022

2023

2025

Percentage of Aircraft Complying with ICAO Noise Standards
(%)
100

100

100

100

40

41

42

FY2020

FY2021

FY2022

100

80
60
40

Data Section

Domestic

JAL REPORT 2023

Increase
new model
aircraft■ Existing aircraft: 777, 767, 737-800■ New aircraft: A350, 787

■ LCC

53

FutureGrowth Strategy▶ International
By expanding routes to and from Haneda, which were planned to be expanded in FY2020, and improving the convenience of connecting todomestic flights, we will contribute to the expansion of human flow and logistics in Japan and overseas.
We will also work with our joint business code share partners to increase the share of transit demand between North America and Asia, where
demand is recovering quickly, on routes to and from Narita.

Source: Airbus JapanThe JAL Group Value Creation Story

GrowthLCC

Joint VenturePartners

High

FSC

Entered into same routes to maximize shares

Domestic

Introduction■ Reduction of CO2 Emissions by Upgrading to New Models① Portfolio/Aircraft

46

20
0

Chapter 4 Standard Equivalent Aircraft

FY2025Chapter 14 Equivalent Aircraft(Plan)*The number of aircraft in operation, taking into account decommissioning.
TOP

JAL REPORT 2023

54

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy② FSC
Continuously Create Value by Capturing Recovery and Growing Demand for Mobility and Connections

Progress Towards Achieving FY2025 Targets
FY2022

FY2023

Improve profitability by maximizing
JAL Group companies' resources

Accelerate efforts to reduce environmental
impact and restore/expand demand・Swiftly adjusting the flight schedule in response
to demand recovery
・Expanding domestic services, including the
introduction of First Class on the Haneda –Hiroshima route and the Haneda – Kagoshimaroute, and the introduction of JAL SMART
AIRPORT in major domestic cities

・Airbus A350, a fuel-efficient aircraft, to improve
preference・Promote the development and provision of
products and services that reduce environmental
impact・Promote further ESG strategies using alliancesand joint business・Expand networks in response to demand recovery

FY2025 Targets

Medium-term Approach

Profittarget （EBIT）(EBIT)
利益目標(bn, JPY)

Total FSC business and Cargo and Mail business

150

100.0

100
50
0

24.9
FY20222025

Promoting the Development and Provision of Products and Services that Reduce Environmental Impact

We will eliminate the use of new petroleum-based plastics completely in in-flight services and lounges by FY2025.
In order to reduce food waste, the lounge will gradually have staff serve certain buffet menus and introduce online
orders.
For in-flight meals, JAL Royal Catering will recycle the composts of food residues from the in-flight meal manufacturing
process in Haneda and Narita.
In December 2022, we expanded the JAL Meal Skip Option for international in-flight meals to all routes to reduce foodwaste.
We are also expanding the use of carbon offset services for individuals and businesses.
In November 2022, we conducted a sustainable Charter Flight to realize carbon neutrality. We aim to realize asustainable society not only with our own efforts but also by cooperating with our customers, companies, and local
communities.
In addition, the interest in environmental measures is growing year by year. We view this as an important purchasing
decision factor and will promote initiatives to encourage customers to choose the JAL Group.

For more information about security,
visit our company website.
WEB

Growth Strategy

・Maintain and expand networks while
reducing environmental impact tocreate a relevant population

Smart lanes

The JAL Group Value Creation Story

We will increase profitability by expanding our international network in response to the recovery
and expansion demand from the COVID-19 pandemic, maintaining and expanding domestic route
networks as social infrastructure, and improving our preferences through service innovation. To achievesustainable growth, we will also promote the development of products and services that reduce
environmental impact, and ESG initiatives utilizing alliances and joint businesses.

Following Haneda Airport, JAL SMART SECURITY will be introduced at Naha Airport Domestic Flight A security
checkpoint in March 2024 (scheduled).
By introducing advanced X-ray CT inspection equipment, we will realize safer and more secure inspection without
removing liquid materials, personal computers, and plastic bottles.
In addition, our customers will be able to prepare and pass the inspection smart lane quickly as three people can go
through the lanes.
The JAL Group will continue to provide safer, more secure and stress-free airport services for our customers.
Starting with our 2023 Winter Schedule, the Airbus A350-1000 will be introduced on the New York route and theaircraft flight will be expanded gradually.
As for domestic flights, we have already introduced sixteen A350-900 aircraft, and will steadily upgrade the aircraftwith less noise and using less fuel consumption to reduce environmental impact.
We also decided to introduce the Boeing 737-8 in March 2023, with the aim of starting operation in 2026.
By deploying aircraft with as little environmental impact as possible, we will promote compliance with futureenvironmental regulations and create a foundation for sustainable air transportation. We will also enhance customer
preference and comfort, thereby strengthening the business demand, which is the basis of our revenues.

Introduction

Medium-term Approach Improve Customer Preference by Introducing New Flagships and Renewal of Services

https://www.jal.com/ja/sustainability/kakure/*Japanese only

For details, please refer to Sustainable Charter Flight on pp.81-82.

Medium-term Approach Expand Networks in Response to Demand Recovery

Medium-term Approach■ International Flights■ Domestic Flights

55

JAL REPORT 2023

Estimated total passenger demand (total market demand)

Air transport demand is steadily recovering
International

FY2025 end: Recovery to 90% level

Domestic

FY2023 medium: Recovery to 90% level

JAL and oneworld alliance members Alaska Airlines, American Airlines, British Airways, Finnair, and Qatari Airlines have jointly announced their intention
to purchase SAF Ziebo. from Gevo Inc., a renewable fuel manufacturer in Colorado, United States.
Over the next five years, starting in 2027, the Alliance plans to procure a total of approximately 750,000 kiloliters of SAF, which JAL will ship to Los
Angeles on the west coast of the United States, to scheduled flights at Los Angeles, San Francisco, and San Diego International Airports.

Voice(%) Note: Compared to CY2019 (pre- COVID-19 pandemic)
100
90

80
70
Domestic
International60
500FY2022

FY2023

FY2025MIYABE Yuka
Route Strategy
Assistant manager

Contribute to Regional Revitalization Through Code Sharing (Joint Operations) beyond the GroupAs part of a new initiative by EAS LLP, we began codesharing (joint operations) on October 30, 2022.
Although there were variety of systems and airport operations due to the different lineages, we were able to overcome many barriers throughcooperation and consultation.
In addition, ANA was able to sell seats on AMX and JAC flights and JAL was able to sell seats on ORC flights.
This has enabled us to expand our network to areas where we do not operate, and has enabled more customers to travel to outlying islands.
In addition, we believe that the increase in the number of passengers using outlying island routes will lead to the revitalization of the service areaand enable the stable operation of life routes.
JAC and other community-based airlines play a role as a transportation infrastructure closely related to people's lives, and we feel thatmaintaining these routes has great social significance.
We will continue to work with airlines that play such a role to ensure sustainable route management.

TOP

JAL REPORT 2023

Data Section

Domestic flights maintain and develop networks as an important infrastructure that supports society.
In particular, regional airlines, namely J-AIR, JAC, HAC, JTA, and RAC, have a social mission of
supporting daily life routes. We will make the most of their resources to maintain the same supply of
total seats as before the COVID-19 pandemic, optimize their networks, create travel demand, andcreate and disseminate regional attractiveness.
The Sapporo (Okadama) -Nemuro Nakashibetsu Line will open from the 2023 winter schedule. By
strengthening ties between Sapporo City, which supports medical and disaster prevention, and the
Nemuro area, including Nakashibetsu Town, we will contribute to the promotion of local industries andthe development of local communities while enhancing the convenience of local medical services.
In addition, together with neighboring Memanbetsu Airport, Kushiro Airport and Obihiro Airport, we will
enhance wide-area tourism in Higashi Hokkaido and revitalize the Doto area.
In addition, we will expand New Tourism by co-creating with local communities based on creating new
demand opportunities.
Creating new flows of people by countryside stay, anime tourism, travel subscriptions, eco tourism.
They will contribute to solve social issues at the same time as increasing the number of passengers
on domestic flights and revitalizing the local economy. We will also promote workcation and adventure
tourism.
In addition, for inbound travel, we will set priority destinations for each country of departure and promote
inbound travel.

We will strengthen our network with partner carriers, joint businesses and partnerships, with the aim of enhancing customer convenience and attracting a strong numberof international visitors to the region.
As for ESG, we will deepen our understanding of our mutual ESG strategies and consider opportunities for collaboration.
Using the oneworld framework, we will conduct joint procurement of SAF in the United States and expand its presence in scheduled flights. We will also consider
promoting SAF production in regions with low manufacturing capacity and making strategic investments with SAF manufacturers.

Sustainability

For international flights, the total passenger demand is expected to recover 90 percent of the 2019 level (pre- COVID-19 pandemic) by the end of FY2025.
As COVID-19 is now classified as Class 5 infectious disease in Japan, we will plan routes and number of flights in response to the recovering travel demand.
With the expansion of the Haneda Airport Departure network, which had been suspended during the COVID-19 pandemic, and the introduction of the new flagship Airbus
A350-1000, we will develop new services to strengthen the uptake of Japanese business and tourism demand.
In addition, we will strive to capture inbound demand and transit demand between North America and inbound demand by code sharing with other Asian airlines as wellas route network expansion to and from Narita.
By strengthening cooperation with joint business partners and expanding new code shares, we aim to increase customer options and build a highly convenient network.
In addition, in 2024, we will open the new Haneda – Doha route in our summer flight schedule, the first direct flight to the Middle East by a Japanese airline.
Through the international network of Qatar Airways, which is a member of oneworld Alliance with JAL, it will be possible to connect from Doha to the Middle East, Africa,and South America.

Further Promotion of ESG Strategies Using Alliances and Joint Businesses

56

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy

Cargo and Mail

Based on the Growth in Demand, Generate a New Flow of LCC Passenger Traffic
In the growing market, the three LCCs will create value for human mobility and connections withothers by offering reasonably priced tickets on their respective network. We will also contribute to the
expansion of inbound traffic and the creation of international transit demand with Narita Airport as ourhub, thereby achieving high profitability and expanding the scale of our business.

Connecting Goods, People and Communities with High Quality Transport and New Business Models

Air freight is expected to play an ever-increasing role in high-speed transportation to connect goods with people andcommunities. We will strengthen our handling of high-value-added products such as pharmaceuticals and Japaneseregional products that require high quality transport, which is a strength of the JAL Group. In addition, we will establish asustainable logistics network based on a new business model to solve social issues in logistics.
Progress Towards Achieving FY2025 Targets
FY2022

FY2022SPRING JAPAN:

Stabilizing the business foundations andfinancial conditions of the three LCCs

Expansion of Business Scale andRealization of High Profitability

Profittarget （EBIT）(EBIT)
利益目標(bn. JPY)

Number of aircraft:11 aircraft*
Number of routes in service:13 routes*

20

15.0

15

Capturing inbound demand
Building a production system for expansion:

Expand networks in Asia, North America,and China:

10

Proactively reform the cost structure by reviewing
fleet and route strategy based on actual demand andchanges in the market environment.

Enhancing competitiveness and reducing
environmental impact through the introduction of
Airbus A321 LR:

0

5

FY2022-8.0

the expansion of the JAL Group's business areas through the acquisition of new
customer segments. Our goal is to create a "NEW BASIC AIRLINE" that provides

China-specific LCC

200.0*

200
190
180

FY2022

2025*Plan as of May 2, 2023 publication

・Contributing to the establishment ofa sustainable distribution network*

North America +Southeast Asia
U.S.: the world's largest
airline market
Asia=North America
demand: high growth
Narita Airport
Japan's first mediumand long-haul LCC

・In response to the 2024 logistic problem in Japan,, we will begin tooperate cargo-only flights in cooperation with Yamato Holdings, Inc.
・Utilizing the assets and know-how of both companies, we will attempt
to solve social issues centering on logistics, such as securing stabletransportation capacity, maintaining and improving service quality, andrevitalizing local communities.
* Aircraft refurbished from passenger to cargo planes

Growth Strategy

network from Japan to North America and Southeast Asia. This will contribute toexpanding and growing inbound traffic from China.

210■ Boeing 767-300ER BCF Aircraft*

Cities in China
Set to become the world's
largest airline market in a
few years

220

Compared to revenue
plan of FY2023*

JAL to Launch Cargo Flights for Further Growth in the Cargo and Mail Business■ Airbus A321ceo P2F Aircraft: As the JAL Group's medium- and long-haul LCC, we will expand ourwill leverage Spring Group's sales and brand capabilities to contribute to the・By operating our passenger aircraft, our Boeing
767F and cargo aircraft belonging to othercompanies, to achieve a level of revenue higher
than pre-COVID-19 times.
・Maximize revenue across the network byusing IT to determine freight rates and space
management
・Building a system for the commencement ofdomestic cargo operations

224.7

・By building strong partnerships with logistics partners, our company will begin operating our own cargo flights on both international and domestic
routes, focusing on a network strategy based on stable and high-growth demand, such as e-commerce and home delivery. This new businessmodel reduces business risks from fluctuations in demand and market conditions.
・We will attempt to secure profitability by offering flexible charter and temporary flights to meet customer needs.

Medium-term Approach Route Network Expansion in Asia, North America, and China

gradually expand the network to China's metropolitan and regional routes, we・Cargo flights by our passenger aircraft andcargo aircraft by other companies. Revenue will
surpass pre-COVID levels through flexible unit
pricing and securing cargo volume
・Development of an environment to transporthigh value-added goods and fresh goods
Example: Pharmaceutical dedicated temperature
controlled warehouse at Narita Airport(JAL MEDI PORT), one-stop logistics
serviceMedium-term approach

Number of aircraft : 16-20 aircraft: In line with the recovery of the market in the Japan-China route, to

230

2025

-5
-10

* Excluding Jetstar Japana high quality of service at the best value for the money paid.

(bn. JPY)

Jetstar Japan:

FY2025 Target

FY2023

貨物郵便収入Cargo
and Mail Revenue

Implementing New Business Models
Towards Solving Social Issues

The JAL Group Value Creation Story

ZIPAIR:

FY2025 Target

FY2023

Capturing Demand through Active Supply andPromoting New Logistic Businesses

Progress Towards Achieving FY2025 Targets

Introduction③ LCC●2024 logistics problem of Trucking Industry

External
environment

The 2024 logistics problem is the issue of labor shortage and cost
increase that may occur in trucks and transport companies following
the revised Labor Standards Act.

●Secure transportation capacity for growing EC

The EC market is growing at an annual rate of over 15%. To capitalizeon this strong demand for growth, it is urgent to address the 2024
logistics problem.

●Steadily implement the Medium Term Management Plan

: We will certainly capture the recovering domestic tourism demand

Sustainability

To accelerate business model reform, we will pursue growth initiatives.
High-speed air transport solutions can help solve the 2024 logistics
problem.

and drive the growth of the domestic LCC market, especially in the Tokyo
metropolitan area. We will also resume international flights in order to captureadvantage by introducing the most environmentally friendly aircraft.
In addition, using Narita Airport, where the three LCC companies are based asa hub, we will utilize the strong network that each has to promote the flow ofpeople between the world and Japan. This will contribute to the expansion of

Build a sustainable logistics network throughfreighter operations

Best LCC domestic route
network from Tokyo
metropolitan area

the strong inbound demand from Asia. We will strive to improve our competitive

Cities in Japan* Three LCCs transport passengers
from Narita Airport

Boeing 767 300ER BCF (Image)

Airbus A321 ceo P2F (image)Markets with stable profitability

inbound traffic and the creation of international transit demand.

Voice

Voice
Towards the Return and Increase of Flights on the Chinese Routes
SPRING JAPAN is making concerted efforts to restore and increase the number of flights to China.
marketing activities in which I am in charge, such as our efforts to increase the sales share of our official website, package sales
including connections with JAL Group LCC companies, and various marketing initiatives in cooperation with JAL's China branches.
Going forward, we will actively expand our Chinese route networks and use our pricing and marketing strategies to attract more
XU Zhihan
Sales and Marketing Department
SPRING JAPAN Co., Ltd.

57

JAL REPORT 2023

customers, thereby contributing to regional revitalization through inbound travel to Japan and improving the JAL Group's profits.

YOSHIZAWA Yuto
Senior Staff
Cargo Route Marketing Route OfficeTOP

JAL REPORT 2023

Data Section

As an LCC, we are not only striving to maintain and improve our price competitiveness, but we are also preparing for the sales andSolving Social Issues Through Our Own Freighter Operations
In order to further expand out Cargo and Mail business, we will begin operating our own cargo fligihts based on our strategy of steadily
capturing demand through strong cooperation with logistics companies. Under our mission of never stopping logistics, we proposed
during the COVID-19 pandemic, we were able to secure supply in line with customer needs by operating cargo flights with our own
passenger aircraft and chartering cargo planes. This experience has made us aware that our responsibilities are to ensure a stabletransport capacity and to maintain supply chains. In preparation for the launch of our own cargo aircraft, we are currently studying our
flight schedule to meet customer needs and coordinating with airports and other relevant parties to establish a handling system.
The new cargo operations will contribute to solving social issues in response to the expected growth in e-commerce and airtransportation demand stemming from the 2024 logistics problem, and contribute to the sustainable development of society throughthe growth of our Cargo and Mail business.

58

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy② Air Mobility/MaaS① Mileage and Lifestyle

Facing the Challenges of Local Mobility Through Realizing a Future where People and Goods Travel without Restraint

Growth Through Expansion of Mileage and Lifestyle Services that Create New Connections

In order to provide new value in mobility, we will utilize the JAL Group's know-how on aviation safety topromote the social implementation of drones and eVTOL. In addition, we will expand JAL MaaS, which
provides seamless travel to destinations by connecting with diverse transportation services, in an effort
to create a new regional flow of people.
Progress Towards Achieving FY2025 Targets
FY2022

Progress Towards Achieving FY2025 Targets
FY2022

Promoting the JAL Mileage and Lifestyle Initiatives to expand the savings and making use of mileage
to realize the well-being of customers and society and to lead business model reform

Profit Target Business area expansion⇒Profit increase(bn.JPY)・Expansion of services in non-airline domains
JAL Denki, JAL Mortgage, JAL Pay
・Strengthening EC Businesses
Making JALUX a consolidated subsidiary
・Increase the attractiveness and value of mileage
Partnership promotes cross-exchange with majorcommon points
Issuance of Green Life Mileage

・Enhancing awards and expanding the membership
base(Introduction of new status program)・Expanding the e-commerce business by utilizing
our member base(launch JAL Mall)・Continue to strengthen mileage partnerships in avariety of areas

Note: Mileage, Finance andCommerce Total

50.0

2022

2023

Medium-term Approach

Utilizing JAL Group Know-how to Establish an Operation Platform and Provide New Value in Mobility

Sustainability

and・We will realize a world where our customers will be able to access one-stop service with a single smartphone by expanding our existingtransportation services between airports and collaborating with all modes of transportation from origin to destination, utilizing our aviation expertisein DX and PR.
・Taking the opportunity of the Expo 2025 Osaka, Kansai, we will promote the commercialization of eVTOL and contribute to the realization of an
exciting society and future in which people and goods can travel without restraint.

■ MaaSIn the future, we will pursue further business expansion and profit growthby combining the expansion of frequent flyer services into new fields
such as nursing care and entertainment with investment in these new
businesses. At the same time, we will launch a new status program thatwill reflect not only airline used but can also be use in non-airline domains,
as well as a new smartphone application for JMB members.

Provide diverse services in everyday life and all life stages andexpand ways to earn and use miles

Customer Touchpoints, not Just in the Sky, but in Everyday LifeWe are working hard with our co-workers daily to build attractive frequent flyer programs that can be thought of as a need to saveand use more JAL mileage not only in an inflight menu but also in everyday life. The new status program, which is scheduled to be
introduced in January 2024, will add status points that are accumulated in everyday life, such as paying with JAL cards, shopping at
JAL Mall, and participating in environmentally friendly activities recommended by JAL, as well as boarding flights.
Going forward, we are trying to find out how to encourage non-flying JAL customers to enjoy their JAL status, and how to continue
using JAL services. We are also trying to improve our business to make the system easy to understand. In order to encouragecustomers to choose JAL throughout their daily lives, we will continue to promote the Mileage and Lifestyle concept from thecustomer's perspective.

・We will expand our existing transportation services between airports, utilize our aviation
expertise in DX and promotions to realize a world where customers can use our onestop services with a smartphone by linking with all modes of transportation fromdeparture to destination.
・Focusing on the needs and challenges of travel, we will realize new travel and travelingexperiences by providing seamless baggage-free transportation and last-mile services.

Voice
New Mobility in Remote Islands

SASAHARA SaoriBusiness Development Group Grand Crew
Air Mobility Business Creation Department

For me, Amami Oshima is an island of healing with its abundance of natural resources and the warm greetings by the islanders
that cannot be found in urban areas. However, due to the declining birthrate and aging population, there are many daily issues
such as shopping, medical care, and disaster response that need to be addressed. I am currently working on an initiative to solve
regional problems using drones in the town of Setouchi, Amami. I can't forget the wonderful smiles on the children's faces when
the drones delivered ice cream, which can't be bought at shops on the island. We hope to integrate drone services into the island
lifestyle and expand a sparkling future for children into the skies.

TOP

JAL REPORT 2023

Data Section

JAL REPORT 2023

■MaaS
• Connect with diverse transportation services to travel
seamlessly to your destination with just a smartphone■ Air mobility■ Future Initiatives

59■Air mobility• Provide safe drone operations and management
systems to support regional logistics• eVTOL to offer new traveling experiences

2025

JAL Mileage and Lifestyle Concept~make everyday life and all life stages even better with miles~

We will continue to promote the JAL Mileage, Lifestyle and Infrastructure,
which provide a variety of services in daily life and life stages. It also
expands the scene of savings and using mileage to expand our customer
base and achieve profit growth.
Specifically, we will work with our group companies to enhance thefunctionality of JAL Pay and establish an online shopping mall (JAL Mall) inorder to improve the ease and usability of mileage in our daily life.

YAMASHITA Nao
Senior Staff
Mileage・Practical use of drone service in Amami
Setouchi-cho
・Study business models to create new last-mile
projects for local logistics
・Promote preparations to realize eVTOL
operations
・Expand MaaS services in collaboration withlocal communities and existing businesses
・Realize seamless travel with the introductionof digital tickets

Contribute to the realization of a future/society where people and goods come andgo freely by connecting with new mobility.

To Promote the JAL Mileage and Lifestyle Initiative, We Seek to Ease Of Saving and Use Of Mileage and to Expand the Customer Application■ Expansion of Creating New Flow of People andContributing to Regional Revitalization Mileage andLifestyle Initiatives

Voice・Together with Amami Setouchi-cho, testing use ofdrones to support life on the island
・Development of operation control technologies
and methods to support drone operations
・2025: Selected the eVTOL operator of Expo 2025
Osaka, Kansai・JAL MaaS launches new services to pursue andarrange airport-based travel

FY2025 Targets

Growth Strategy

40.0

25.0

FY2019Medium-term Approach

39.0

FY2023

Expand the Air Mobility Market by Establishing an Operational Platform

FY2025 Targets

FY2023The JAL Group Value Creation Story

We will provide a variety of services that will enrich your daily life and expand the scene of saving and theusage of mileage outside of air travel. We will expand our customer base with a new status program thatreflects our daily use. We will also realize growth by expanding our commerce business by utilizing theknow-how of JALUX, a core non-aviation company.

Introduction

Mileage, Lifestyle, and Infrastructure

60

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy

Support the Restart and Recovery of the Coming and Going of People and Goods as an Infrastructure Supporting the Entire Aviation Industry

Providing Solutions to Solve Problems by Creating Relationships and Connections through Mobility

We will support the restart of flights by overseas airlines and contribute to the revitalization of the flow ofpeople and logistics. We provide high-quality services for airports, maintenance, and cargo with the skills
and assets that the JAL Group has developed. We will also expand our market share by building a systemthat can respond flexibly to changes in demand through cooperation with partners.

We will expand our business in problem-solving solutions in response to the diversifying issues andneeds. In order to create a flow of people, we will create new travel goals, known as New Tourism, suchas workcation and Adventure Travel, and will realize well-being based on these values. In addition, we will
maximize regional value by supporting local industries and promoting attractiveness through commercial
channels to expand the relevant population.

The JAL Group Value Creation Story④ Travel and Regional Revitalization

Introduction③ Contract Business

Progress Towards Achieving FY2025 Targets
FY2022

FY2023

FY2022

Expanding Business to Meet the Demand and Capitalize on Strengths as an Infrastructure to Support
Growth in Society and the Airline Industry(Airport)
Maintenance and strengthening of the current groundhandling system through own efforts such as airport support,
recruitment, and external cooperation(Maintenance)
Wide range of support for overseas airlines in the event ofaircraft and component problems
Launch of new businesses utilizing our technological knowhow(Goods)Responding to customer needs through the provision of highquality integrated logistics services, including enhanced
pharmaceutical handling

Progress Towards Achieving FY2025 Targets

FY2025 Targets
Revenues(Airports)
Steady response to return of flights by overseas airlines, tolead a tourism-oriented nation and inbound traffic(Maintenance)
Providing a wide range of aircraft maintenance andcomponent-related technical services for flight support(Goods)Creation of a highly productive work environment andexpansion of demand capacity through warehouseupgrading to be labor-saving and improve efficiency

150%

100%

Trends in
Revenue

125
100

FY19

90

FY22

FY23

FY24

FY25

[Demand Environment] Recovery of inbound demand, needs for maintenance and technical services through return flights, and flexible response to cargo demand
Partnerships

Skills/assets

FY2025 Targets

Expanding the Business of Problem-solving Solutions by Working Together with Local Communities
to Create Relationships and Connections through Mobility

Capacity that responds flexibly to changes in demand

・Provide peers and public agencies with various services leveraging our facilities/equipment and human skills cultivated in air transportation operations
・Build a solid supply structure in alliance with partners to flexibly respond to changes in demand trends and seek larger shares

Development of business centered on human andcommercial styles(Flow of People)
Creating a new travel style to create a populationthat is related to the region
・Advanture Travel and Sauna Travel
・JAL FURUSATO Hometown Working Holiday
・Conclude partnerships with Japan Agricultural
Cooperative Tourism, primary industries andregional revitalization businesses(Flow of Goods)
Disseminate regional attractiveness and businessexpansion and growth・Expand the number of registered municipalities
and reciprocating products in JAL hometown tax
payment
・Brand JAL Sweets Box using local ingredients・Propose Goshoin, a stamp book, at "FURUSATO(hometown) no Wa," an all-employee community(Flow of People)
To expand the new tourism product lineup, we will
provide inspirational trips and promote inboundregional attractions.
・Advanture Travel・Countryside Stays(Flow of Goods and Logistics)
In addition to the development of new products
utilizing attractive local products, the background andclimate of the products are introduced to convey thecharm of various parts of Japan and also to attract
local customers.
・J AL hometown tax payment and Travel Tax
Payment

Domestic Passenger and Cargo Trafficplus 10% from FY2019(management targets)
Growth Strategy

Medium-term Approach Building a System to Respond to the Restoring Demand and Providing High-Quality Services using JAL's Strengths

JAL's strengths

FY2023

135

50

50%

0%

+35% from
FY2019 to FY2025

Medium-term Approach Providing Solutions for Local Issues Through the JAL Group Products and Services that Lead to the Creation of the Flow of People and Goods
MRO

Cargo Warehouse

Steadily respond to air travel demand recovery, promote Japan as a
tourism-oriented country and attract inbound demand

Offer various maintenance and technological services
from operations support to equipment services

Provide comprehensive and high-quality logistics
services to meet cargo demand■Increased profitability and sustained growth■Expansion of services provided■Expansion of logistics services

・ P romote improvement of contract terms with overseas airlines・ S trengthen volatility resilience with cooperation from local
governments and other businesses・ E stablish and attract ground handling systems at regional
airports

・ I rregular handling provides extensive flight support, including
the loan of facilities and tools
・ E ngine landing gear, among others, component maintenance・ I nitiatives for new businesses utilizing technical knowledge
gained through aircraft maintenance・ E xpansion of cargo handling entrusted business mainly in hub
airports in Japan・ E nhancing integrated logistics services utilizing the locationof airport cargo warehouses・ I mprove safety and transport quality with new technologies

Create flows of people and distribution channels
Growth of society and the airline industry
Sales target+35% increase売上高目標
vs. FY2019 by FY2025

Solution Sales(JAL's Offered Solutions)Route Network
Human Resources and Customer Base

Solve Issues by Creating Relationships andConnections through Mobility
Diverse needs and issues are emerging with the growing awareness of the environment by the customers, the diversification of lifestyles due to the
influence of the COVID-19 pandemic, changes in the passenger structure demand due to changes in work styles and attitudes, the diversificationof purchasing channels, and changes in sales methods due to rapid growth in the e-commerce market. The JAL Group aims to sustainably expand
and grow its business by providing solutions utilizing its products and services through dialogue. We will use our long-established sales capabilities

Customer Touchpoints, not Just in the Sky, but in Everyday Life

to meet the diversifying needs and issues of customers.

When we were entrusted with ground handling operations by a newly serviced overseas airline at Haneda Airport, we developed a systemthat included planning and setting up education and formulating a manual for the operation at Haneda Airport. In addition, we took on thechallenge of being entrusted with the task of overseeing the entire maintenance. As part of our new challenge, we were able to make themost of the JAL Group's knowledge and experience in contracting at other airports and successfully started this business smoothly. We willcontinue to provide services that meet the demands and contribute to the development of society and the airline industry.

To address regional issues, we will provide solutions that take advantage of JAL's strengths in contributing to the creation of the flow of people andData Section

Voice

Expand contracted services

JAL's Strengths

Issues Facing Local
Communities andCustomers

Sustainability

Ground Handlinggoods, and work together with local communities to resolve issues by creating value for relationships and connections through mobility.

FUNATO Manami Customer Service Group Supervisor
JAL Sky Haneda Airport Operations Administration Co., Ltd.

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62

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy■ Contributing to the Local Economy Through the Creation of New Business Streams

We aim to revive the tourism industry and revitalize the local economy by

In order to create relationships and connections with local communities, wecreating new demand through the expansion of thematic and optional products,

will provide an e-commerce site for customers who use JAL Hometown Tax

including the creation and provision of attractive products centered on

Payment and local products, as well as inbound passengers, so that they canworkcation, Adventure Travel, and Countryside Stay. We also aim to respondcontinuously purchase local products. In order to make people want to visit theto diversifying needs and resolve local issues by developing inbound local

production areas, we will introduce the background and climate of the products

tours and experiential educational trips. We aim to realize sustainable tourism,

and convey the charm of various parts of Japan through local products, which

revitalize local communities, and improve well-being through relationships andwill lead to attracting customers to the area. We will also create added value by

connections created through the creation of new flows of people, in othercreating products with regional characteristics.

words, mobility.

Precious Earth

Tourism Nation

Regional Revitalization

Fulfilled Hearts

Based on the policy to "realize a prosperous and sustainable society by reducing the distance between people, things andpeople around the world", we are working to create new businesses and services for the JAL Group that can play a part in
the expansion of business areas set forth in the Medium-Term Management Plan. While actively utilizing internal innovation
platforms such as the JAL Innovation Lab and the JAL Innovation Fund, as well as external know-how and knowledge, wewill promote initiatives in a wide range of areas, from space in the distance to sauna facilities in the vicinity, whether virtualor real.

Protection of nature, cultural properties and traditional industries/Recovery of tourism industry/Revitalization of local economy/Promote the attraction ofregions and products/Expand product sales channels/Diversification of lifestyle ......

Domestic DP

Visiting Japan DP

*

Topic

Problem resolution framework

Problem resolution framework*

Public sector
collaboration

Businesscollaboration

Assets and know-how
provided by the
JAL Group*Dynamic package

×

Public sector
collaborations

×

Businesscollaborations

Provided Assets (example)

Provided products and services
Workcations

Adventure Travel

Eco Tourism

Travel Subscription

Countryside Stay

Anime Tourism

JAL Hometown Tax

Travel tax

JAL Mall (EC Mall)

Cross border EC

Creation of new demand and regional revitalization through the flow of goods

Topic

2

Connect the Real and Virtual

Connect Earth and Space

JAL aims to create people who do not live in the area but
come to work and play, and people who have relationships
with the people who live there. To this end, we see JAL'srole as creating connections and are promoting projects toform various connections with customers. We are working
to co-create special experiences and products with local
communities through digital technology, and to provide new
unique digital products by utilizing JAL assets.
Going forward, we will continue to deepen similar initiatives
and take on the challenge of creating value through newconnections between the real and virtual.

Using the JAL Group's air transport know-how and experience, we are pursuing future
space business possibilities such as space transport and space travel.
In 2017, we began a capital and business alliance with ispace, inc. In 2022, the
HAKUTO-R Mission 1 Lunar Lander, in which the JAL Group was involved in the assembly
and inspection, was launched, marking a dramatic step forward in space development.
In addition, we are participating in partnership with Sierra Space of the United States andKanematsu Corporation with the Dream Chaser® spaceplane, which is the beginning of a
new challenge in realizing space transportation from Oita Prefecture.
Looking ahead to the future, when economic activities and people's lives will spreadto outer space, we will continue to shape the JAL Group's space business in order tobecome a player in the safe and secure movement of people and goods.

KOKYO NFT is a project where you can connect withlocal experiences and specialty products.

(Left) T echnical cooperation with ispace’s commercial lunar exploration program"HAKUTO-R" (2020)(Right) D ream Chaser® space plane

Growth Strategy

Creation of a flow of people

Product development
utilizing local products

1

The JAL Group Value Creation Story

Social challenge

New Businesses Promoted Through Open
Innovation and Venture Capital

Introduction■ Creating New Flow of People and Contributing to Regional Revitalization

Created value
JAL

Regions

Creating new JAL flows

Customers

Revitalization of regional
economies

Improving customer
well-being

Voice
Challenges of Overseas Visitors to Local Areas

Topic

JAL Innovation Lab is promoting new business development utilizing advanced
technologies with various co-creation partners. Last year, we launched Tokyo
Saunist, a solution service that visualizes the rush in saunas in the Lifestyle
Area. This is an example of JAL's non-aviation business development utilizing theknowledge and network that JAL has cultivated in the aviation field as its sauna
tourism business Going forward we will promote the introduction of hot spring
facilities and create synergies with JAL's overall business, including the Mileage,
LIfestyle and Infrastructure.

JAL REPORT 2023

Training Programs for the General
Public by JAL instructors

Data Section

63

3Connect Aviation and Non-aviation Areas

Developing Outside Human Resources

The JAL Group makes use of the knowledge and experience it has gained through its
aviation business to focus on educating new university graduates. In particular, we aim
to contribute to the revitalization of the local economy and the promotion of industry by
deepening our understanding of the aviation business and fostering human resources that
contribute to the development of the entire tourism industry.
In addition, we take advantage of the know-how we have accumulated in providing
education to outsiders, such as lectures at universities, and are taking on the challenge of
expanding our education business to a wider audience.

Topic

Sustainability

HIGASHINO Hiromasa
Assistant Manager
Tourism Planning Group
Solutions Sales Promotion Dept.

As part of our efforts to attract overseas visitors to Japan, we strive to improve our travel products, which convey the appeal of theregion, and promote them to appropriate markets.
In refining our products, we aim to create products that make you want to visit Japan, where Adventure Travel in the rich nature ofJapan is one example. We will promote our products in appropriate markets, such as selling ski products at travel expositions inAustralia.
Through JAL Vacations, a dynamic package for visiting Japan, we will promote inbound tourism by selling the products we refine andsend as packages, along with airline tickets and hotel accommodation reservations.

High-precision sensors will be installed in front of the sauna room to detect
the flow of people and visualize the rush in real time.

A lecture by a JAL lecturer
at a university

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JAL REPORT 2023

64

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy(2) DX Strategy ―Accelerating the Creation of New Value Using Advanced Technologies―

Introduction

Value Created Through DX Strategy■Toward the Realization of DX
With the development of technology, we have become a society that enables us to realize new services and upgrade our operations. To adapt tochanges in the business environment, the JAL Group will focus on data, AI and advanced technology, and mobile as the three elements of DX aiming
to improve convenience for customers and productivity for employees. Furthermore, by further utilizing the data accumulated through customer
experiences and daily operations, we will create a virtuous cycle of the three elements and ensure the promotion of our DX strategy.

Advanced Technology

Changes in the Business Environment and Issues
SDGs

Diversification of customer needs

AI

Robot

Transition to online purchasing

Strengthen resilience

Cloud

Remote control technology

Maintaining the production system (decrease in the labor force)

Work style reform and improvement of job satisfaction

Metaverse

Web3/NFT

The JAL Group Value Creation Story

With big data, technology, and mobile as key drivers,
our employees work with motivation and enthusiasm tocreate new customer experiences that exceed customer
expectations. We will also work to expand new businessareas and take on challenges to solve social issues andchange through DX.

NODA Yasushi
Executive Officer
Senior Vice President,
Digital Innovation Division

AI and Advanced
Technologies▶Review of FY2022

In FY2022, we completely revamped our domestic airfares andimproved our website to make it easier to understand and use. We
also expanded our application functionality to make it mobile withsame-day upgrades and waiting lists. In the non-aviation businessarea, we launched JAL Pay, a smartphone payment service, topromote the JAL Mileage and Lifestyle Concept. In addition, we
worked to improve productivity by visualizing business processes
and utilizing digital tools to improve operational efficiency. In
addition, as a new business, we conducted demonstration tests forthe commercialization of drones.

CX

Technology(Customer Experience)

Creating newcustomer experience

Operation
Process
MaximizeEX(Employee Experience)

Digital Transformation (DX)Continuous improvementof employee experience

Advanced technologies
IT Platform
Open innovation

Embracing AI and advanced technologies,
Advancing data utilization

Data
Creating an environment for
big data utilization andpromoting data-driven management

Ensure promotion of DX strategy towardrealization of the Medium-Term
Management Plan

MobileEnhance customer experience andemployee productivity through theconvenience of digital touch points

DX HumanResources

Going forward, we will use our accumulated experience tostrengthen resilience and accelerate profitability, and work tocreate new social and economic value by adapting to the changing
business environments and diversifying customer needs.

▶Direction of DX Strategy
As the importance of connections between people and local
communities has been recognized following the COVID-19
pandemic, the JAL Group is working to enhance its corporate
value through ESG strategy. JAL's DX strategy aims to provide
customers with safe and secure transportation and new experienceby challenging social issues and changes through the use ofadvanced technologies with diverse human resources, which is
JAL's strength.
In order to maximize CX and EX, which are the objectives of DX, wewill work to create new experience for customers in the CX area,
and work to create an environment in the EX area where employees
can work with high productivity while maintaining high motivation
on an ongoing basis. Maximizing EX will lead to the development of
new services and the improvement of service quality, which in turnwill contribute to maximizing CX, thereby creating an upward spiralof EX improvement.

EX

CX
Personalized Service■ Recommendations■ Customization
We use AI to highly analyze customer dataand provide products and services that matchcustomer preferences, such as in-flight services, mileage, lifestyle, and travel. In addition, applications will support customers in all
situations so that they can freely choose
meals and necessary services.

Stress-Free, Anytime, Anywhere■ Enhancing Digital Touch Points■ JAL SMART AIRPORT
We will work to create smooth and consistentexperience by enhancing digital touch points
through the use of remote chatbot technology
and the expansion of application functions,with the aim of realizing stress-free services
for customers.

Improving Productivity and Value Creation■ Improving Productivity and Operational Efficiency■ Improving Employee Satisfaction

Sustainability

JAL was selected as one of the DX Stocks 2023 by the Ministry of
Economy, Trade and Industry, the Tokyo Stock Exchange, and theInformation-technology Promotion Agency.
In addition to JAL’s DX promotion system, the selection was basedon recognition of the deepening of existing airline services and thefull launch of initiatives in new business areas.

Maximize

Human
Resources

Growth Strategy

In order to promote ESG strategy that create connections throughAir Transportation and solve social issues, DX as stated in theMedium-Term Management Plan is aimed at maximizing Customer
Experience (CX) by providing new experience and the best
services to customers, maximizing the Employee Experience (EX)by improving business quality and productivity, and expanding
business areas.

Customer
Journey

We aim to maximize the value of the customer
experiences and improve the productivity of
on-site operations through the use of self-service and mobile procedures, and to improvethe efficiency of indirect operations throughthe use of End User Computing (EUC).
Through these measures, we aim to maximize
our employees' ability to create value andimprove their job satisfaction.

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JAL REPORT 2023

Data Section

To this end, it is essential to utilize advanced technologies such asdata and AI, and to foster the IT infrastructure, open innovation,
and DX human resources that support them. Specifically, we aim tocreate new value and businesses (p. 64) by strengthening security,
enhancing our database, and utilizing the JAL Innovation Fund andthe JAL Innovation Lab, which are innovative platforms. We will also
accelerate DX throughout the JAL Group by cultivating personnel
capable of promoting DX and new business creation throughout theentire company.

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66

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy

Aggressive Human Resource Investment-

SAEDA Naohito

Human resources that respect diverse values, challenge new value creation, and drive change

Issues to Specifically be AddressedInternal environmental
changeIssues to Specifically be AddressedEnlargement of thegrowing business area

Increased value creativity

in human resources in order to realize the "improvement of value creativity"

Business
structurereformFewer and more skilled humanresources for existing businesses

Drastic improvement inproductivity

by the COVID-19 pandemic and accelerating business model reform, wereform by expanding new business areas such as the Mileage, Lifestyle,divided our efforts into four elements to realize "creation of new value" andand Infrastructure business through "improvement of value creativity" and"continuous improvement of productivity": "allocation of human resourcesby "drastically improving productivity" in the existing air transport business,to growing business areas," "recruitment of diverse human resources andwhich is our main business. By doing so, we aim to create a virtuous cycle

provision of growth opportunities for employees," "business process reform,"that leads to further value creation by improving corporate value and returningand "basic initiatives."

the results to each employee, who is our human capital.

result of the expansion of job postings under the open recruitment system▶Strategies and KPIs

and the promotion of the active participation of women, the allocation

Diverse human resources are the JAL Group's greatest strength, and itsof human resources to growing business areas and the ratio of female

philosophy has not changed. In formulating the human resources strategy for

Human capital investment
Create a sustainable business environment and return the results to employees

Key measures and KPIs to solve problems and bridge the gap between the human resources vision
Measures
Human Resources Portfolio

managers were on track to meet the targets for FY2025. On the other hand,

Rolling Plan 2023, we adopted the concept of human capital management,

sales per capita was -2 percent in FY2022 (compared to FY2019), comparedwhich maximizes the value of human resources and improves corporate

to the target of +15 percent in FY2025 (compared to FY2019).

value, in order to reinforce this philosophy.

The ratio of employees with high engagement was -2.7 points (comparedIn the "Three Perspectives and Five Common Elements Required for Human

to FY2019) in FY2022, compared to the target of +10 points in FY2025

Resources Strategy" of human capital management, "Human Resources(compared to FY2019).

Portfolio," "DEI," "Career/Reskiling" and "engagement" as well as "working

Based on these results, and in order to respond to new internal and externalstyle independent of time and place" are listed as the five common elements

issues, in FY2023 we will deepen our efforts to materialize human capitalof human resources strategy. Based on the belief that the human resourcesmanagement.

portfolio and the activation of individuals and organizations ("DEI", "Career/▲

Reskilling" and "Engagement ") are particularly important in the promotion of

FY2022 + 2,200 employees

focusing on these four elements, and specific measures are formulated andrealizing value creation and growth, and positioned human resources strategy

implemented for each element.

as one of the business strategies to promote ESG strategy.

Although each element is related to the other, measures for internal

In promoting our ESG strategy, we first clarified the JAL Group's humanenvironmental change are mainly assigned to "Human Resources Portfolio"

resources vision as "Human resources that respect diverse values, challengeand "DEI," and measures for external environmental change are assigned to

new value creation, and drive change". Next, in the face of the rapidly"Career/Reskilling" and "Engagement".

changing environment, we recognized two particular issues that need to

In addition, we have set KPIs for each element so that we can quantitatively

be addressed. Inside the JAL Group, there was a lack of opportunities forgrasp the ideal state and the current state of affairs. Based on the results

diverse human resources to reach their potential.

of each KPI in FY2022, we have formulated various measures to close theTurning our attention to the outside world, we recognized that it will be

gap. In order to achieve our goals, we will backcast what we need to do anddifficult to secure human resources in the future as the birthrate declines andexecute with a sense of speed.

Career/Reskilling

Engagement

KPI
Manpower allocation to
growing business areas

3,500 employees(compared to FY2019)

FY2025 +Ratio of female
managers

30% at the end of

Increase in per capita sales
FY202515％

FY2025

improvement(compared to FY2019)22.8% at the end of

FY2022 -2%(compared to FY2019)▲

FY2022▲(compared to FY2019)

Percentage of highly engaged
employees

10

FY2025pt improvement(compared to FY2019)▲

FY2022 -2.7pt (compared to FY2019)

Concept of Investment in Human Resources
At the JAL Group, we will accelerate the development of a system that supports the active participation of employees, provides educational andtraining opportunities that contribute to the improvement of individual abilities, and develops a personnel evaluation system and a compensation
system that properly evaluates and rewards challenges. We will continue to actively invest in human resources with the aim of improving value
creativity and drastically improving productivity.

Data Section

The Rolling Plan 2023 positioned ESG strategy as the top strategy for

DEI

Sustainability

ESG strategy, the JAL Group's human resources strategy was formulated by

Growth Strategy

and "drastic improvement of productivity." We will accelerate business model▶Integration with Management Strategies

Difficulty in securing human resources under
declining population in Japan

In order to cope with this severe environmental change, we will actively invest

In FY2022, with the aim of responding to the environmental changes caused

For each element, we set numerical targets to be achieved in FY2025. As aExternal environmental
changeBased on the JAL Philosophy, Wellness Promotion and Health Management, we develop human resources who can take on challenges andfoster a culture that values challenges.

Executive Officer
Senior Vice President,
Human Resources Division▶Review of FY2022

Lack of opportunities for diverse human resources
to reach their potential

The JAL Group Value Creation Story

In promoting human capital management, we will work together
to improve value creativity, drastically improve productivity, andinvest in human resources to achieve this goal.
We aim to create a virtuous cycle that leads to further value
creation by creating an environment in which we can conductbusiness on a sustainable basis and by returning the results toeach employee.

JAL Group's Human Resources VisionIntroduction(3) Human Resources Strategy - Increasing Value Creativity and Productivity throughthe population ages.

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JAL REPORT 2023

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JAL REPORT 2023

68

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy

In order to realize business model reform, we will acquire, nurture, assign and treat personnel with diverse knowledge
and experience to support new business areas and personnel with high expertise in the aviation field to support
existing business areas. We will expand the recruitment of experienced personnel, expand the scope of areas andpositions covered by the performance-based remuneration system, and introduce a personnel wage system thatapplies to highly specialized personnel essential for safe operation, thereby placing personnel in optimal positions
and build a new human resources portfolio for the JAL Group.

Overseas employees working in JapanThe JAL Group Value Creation Story

Priority and Strategic Measures

In order to enable employees, recruited from regions outside Japan, to play an even more activerole, we are making efforts to relocate employees to locations outside of Japan, as well as to foster
the appointments of employees by providing seminars and training programs specific to eacharea. As of April 2023, approximately 30 percent of our employees held important positions, suchas District Managers and Business Directors. We, however, intend to increase this number during
the Medium Term Management Plan period.
The number of staff working in Japan is expected to reach 50 employees by 2025. The
opportunities to expand the range of work experience will be increased even further. The contacts
between our diverse employees are expected to grow, which is expected to develop global
mindsets.

Introduction▶Actively Recruiting and Appointing from Regions Outside Japan① Human Resources Portfolio▶Promoting Challenges by Employees with Disabilities■Acquisition and Placement of Human Resources to Realize ESG Strategies▶Recruitment and Promotion of Employees with External Experience
Many experienced employees are active in areas where high knowledge is required, such as business creation and digital promotion, and are working to create new value by
utilizing diverse external knowledge to promote JAL's growth strategy.
Many employees are promoted to the management level and are involved in important decisions at the company. In order to further promote value creation by utilizing internaland external knowledge, we will further promote the promotion of employees who are hired with experience by making fair and impartial appointments based on personnel.
In addition, JAL Next Career GATE was launched as a new platform for recruiting experienced employees, which resumed in 2022, and began recruiting throughout the year.
We will continue to make further efforts to recruit experienced personnel through the development of various recruitment methods with the aim of recruiting personnel with ahigh level of expertise and diverse knowledge and experience.

Shops servicing coffee and light snacks, and shoeshine services are popular among our
employees. These shops provide opportunities for employees with disabilities. They can use theirtalents and abilities to play active roles. It also provides opportunities for our employees to deepen
their understanding of DEI.
On the Sustainable Charter Flight, employees with hearing impairments served as cabin support
staff to express in-flight announcements in sign language. We will continue our efforts to create
opportunities for career advancement that are not limited to conventional stereotypes and tosupport career development that can be challenged by anyone regardless of disability.
Shoeshine services for employees▶Human Resources Placement in Growing Business Aeas
The JAL Group aims to expand growing business areas such as LCC and Mileage and establish a personnel system to diversify and maximize business income and expenditure.
In FY2025, we will increase the number of personnel allocated to growing business areas by +3,500 employees (compared to FY2019) through the transfer of personnel
from existing areas, mainly FSC, to growing business areas and the recruitment of personnel with diverse knowledge and experience.

Voice

② DEI

Priority and Strategic Measures■Measures to Deepen Diversity▶Promotion of Women in the Workplace

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JAL REPORT 2023

■ Number of female managers (person)
Proportion of female managers (%)

(%)

1,365

(persons)
1,300

30.0%

1,278

28

1,200

26

1,100

1,053

900

700

24

983

1,000

800

30

846

799

End of
FY2015End of
FY2016882853

15.6% 16.3%

21.9%

22.8%

19.5%

End of
FY2017

16.8%

End of
FY2018End of
FY2019

20
18

18.4%
16.3%

22

16
End of
FY2020End of
FY2021

End of End of
FY2022 FY2025

14③ Career/Reskilling
The work roles of our employees are changing with the optimization of human resource portfolios dueto the revisions in business structures and the rapid transitions in the social environment. To respond tothese changes, we support career development in job autonomy and reskilling. We support our employees
by implementing a job autonomous career development system, such as a human resource systemfor employees who want to nominate themselves to the department they wish to work in and a system
where the employees can use their skills and abilities in an in-house second job system, or providing DX
education and reskilling for a second career for our employees to shape their own careers responsibly.

Priority and Strategic Measures■Developing Human Resources to Realize ESG Strategies

Data Section

We are continuing our efforts to achieve our management goal of 30 percent
female managers in the JAL Group. There were 22.8 percent as of March 2023.
In addition, the ratio of women in organizational management positions basedon the provisions of the Act on the Promotion of Women's Participation andAdvancement in the Workplace is 28.4 percent.
As for the promotion of women to managerial positions, we conduct agespecific training for the purpose of job autonomy in stages from their twenties.
To nurture the initiative to chart their own careers at an early stage, we also
conduct study sessions for those returning to work from administrative
leave, and other initiatives to ensure that women's career advancement is notinterrupted by life events. At the same time, we have also established a system
to learn comprehensively about the qualities of leaders that are required for eachlevel of management, from the first to the senior management.
We are promoting the placement of female managers across job categories,
including the appointment of six out of twenty-four female managers as flightattendants to the general managers of sales branches in various regions.

We actively promoted women to executive positions by utilizing the Pipeline List
to nurture and promote women according to their individuality and aptitude. In
April 2023, JAL newly appointed three female executives, bringing the ratio of
women to 22 percent in the management.

I am deaf, but I was wondering about the lack of opportunities for employees to participate in DEI promotion.
By participating in the Job Autonomy Development Training Program by the D&I Promotion Group of the
Human Resources Strategy Department, I thought that I would be able to share my opinions as a personwith disabilities and also make use of my new knowledge and experience. In the barrier-free mindset project
I worked on, I eliminated barriers between the disabled and the abled by devising ways to communicate.
In the future, I would like to continue to engage in work that can create a climate of respect for others andacceptance of diversity regardless of our traits.

Sustainability

In order to improve corporate value over the medium to long term and to enhance the sustainability of our business, we willtransform from a company with highly homogeneous human resources to a highly diverse company with human resources withdiverse knowledge and experience such as experience, sensitivity, values, and expertise.
We will deepen diversity and create new values by intergroup secondments, the active recruitment of foreign employees in Japan,
and by expanding the employment of people with disabilities, through the creation of an environment where everyone can work withsatisfaction.

KONISHI Kenta
Tennozu Pioneer GroupJAL Sunlight, Inc. General Affairs Center

Growth Strategy− We support diverse employee challenges through the Job Autonomy Development Training Program, anintern type training program launched in 2022. Employees with disabilities can also participate in this program
to take on new challenges.

■Measures to Enhance Value Creativity of Human Resources Acquised and Placed▶Performance-based Remuneration System
Since the JAL Group expects high results from Group companies that are primarily responsible for business model reform, we introduced a performance-based
remuneration system in FY2022 for the positions of Presidents in some Group companies. This will encourage new value creation, such as business expansion in new
business areas and diversification of revenue sources.
In FY2023, the system will be expanded to other Group companies and other positions, not limited to the position of the President, in an effort to realize business model
reform.

Helping Employees Develop Job Autonomy▶DX Human resources Development
We will conduct basic DX education for our 36,000 Group employees in order to build services and business models that meet the needs ofcustomers and society through the use of digital technology as well as to develop DX human resources that create new value by transforming oldinternal processes and organizational culture. In addition, we will provide DX education tailored to each level, including management and business
staff.

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70

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy▶Developing Autonomous Employees

Introduction④ Engagement

The JAL Group has been conducting various activities to train managers to change their mindset and provide a place for practice toapply "JAL OODA", which is a form of autonomous thinking and action. One of these activities, W-PIT*, is an in-house venture groupthat enables employees to take on challenges of co-creation in different industries and to connect their excitement to business.

In order to maximize the power of diverse human resources, which is the JAL Group's greatest strength, we will create a highly engaged
work environment where each employee feels needed and rewarded.
We will improve employee engagement by implementing various measures such as the Human Resources Portfolio, DEI, and Career/
Reskilling. Also by promoting organizational revitalization through JAL Philosophy and Health Management. We will achieve a virtuous
cycle of increasing engagement by increasing productivity and appropriately transferring the results to human capital investment.

In addition, we continue to hold in-house entrepreneurship auditions Sozo no Tsubasa (Wings of Creativity) for employees to open
new business areas. In addition, in the Career Challenge, an internal recruitment program in FY2022, 23 divisions accepted 33 people
who had been selected internally to develop autonomous human resources.
*Abbreviation for Wakuwaku (exciting) Platform Innovation Team

▶Career Design

The JAL Group Value Creation Story

In order to encourage employees to develop their own careers, we have created opportunities for employees to think about their careers by disseminating information
through the CAREER Page on the company intranet, holding the JAL CAREER TALK LIVE where employees active in the JAL Group discuss their careers, and introducing
career development training. We also introduced a career consulting interview where employees can discuss career development with a nationally qualified internal career
consultant.

■Understanding Engagement Status▶Employee Engagement Survey

We will continue to create an environment where employees can form their own careers and aim to improve employee engagement.

Topic

The JAL Group regularly conducts engagement surveys as the basis for achieving a virtuous cycle in which productivity increases as a result of
increased engagement and business activities, and the results obtained are appropriately transferred to human capital investment to further increase
engagement.
In the survey, we conduct a company-wide survey of organizational activity, in which we identify questions that lead to engagement, such as careerand remuneration, and measure the percentage of employees who respond favorably to these questions.
FY2022 results are -2.7 points (compared to FY2019), which is far from the FY2025 target of +10 points (compared to FY2019). In order to improveengagement, the JAL Group believes that it is important to promote the aforementioned measures on the Human Resources Portfolio, DEI, andCareer/Reskilling, as well as the following measures on the Promotion of Diverse Workstyle, Health Management, and Occupational Health and
Safety Activities. By accelerating these measures, we will improve engagement.

Internal Career Consulting

Six employees with national qualifications in career consulting, selected through internal recruitment, provide support todeepen and clarify the awareness of career development by encouraging psychological self-insight of the counselor based on
expert knowledge such as career theory. A counselor said, "I now have a clear idea of what I value and focus on, how I want
to work in the future, and what I need to do in order to do so." We also plan to expand to JAL Group companies in the future.

JLCAREER Portal▶Expanding Training Programs
boundaries of companies and occupations within the Group. In addition, we train leaders and safety and service professionals through specialized training programs foreach job category and provide seminars and training programs specific to each company. We will continue to provide opportunities for employees to grow and learn inorder to build job autonomy. We will nurture human resources that will serve as a driving force to accelerate the diversification of the business areas listed in Medium Term
Management Plan.

Basic Education and Training System of the JAL Group in FY2023
Manager

Next generation training

New Employee
Orientation

Mental health management training for organizations

Training is provided according to each company's career path

Appropriate age group
25 to 34 years old

Airline Business Training
Time Management Training

Career development training 4

Appropriate age group
35 to 44 years old[Business Skills Training]
Logical-thinking training
Facilitation training

Appropriate age group
45 to 54 years oldLife Plan Seminar
Appropriate age group
55 to 59 years old

Problem-solving training
Diversity Equity Inclusion (DEI) Training

Support for personal development (Distance learning courses, learning English, among others)
DX Human Resources Basic Education and Professional Education▶Optimizing Working Hours
The JAL Group aims to be a company where everyone can play an active role,
including employees with time constraints such as childcare and nursing care.
For this reason, we have introduced a scheduled annual paid leave program andoptimized working hours. In spite of the recovery in passenger demand andvarious projects, there is an increase in workload particularly in the supporting
departments, however, with the implementation of a flexible workstyle, thepercentage of employees taking annual leave improved to 81.0 percent in FY2022(74.5 percent in FY2021).
On the other hand, the average monthly overtime and holiday working hours per
employee was 10.5 hours (FY2021: 9.9 hours), so we will continue to strive for
optimized working hours with flexible workstyle.

Leader's Workshop▶Health Management■Developing Human Resources to Support the Organization▶Development of Management Human Resources and Next Generation Leaders

71

JAL REPORT 2023

20Management human resources and next generation
leaders training

79.0%

16
12
8

100

86.0%

8.5

9.5

71.5%
74.5%
9.9

80

81.0%

60

10.5

8.0

40
4.0

4

2018

2019

2020

2021

*Japan Airlines Co., Ltd. only

2022

2025
Target20
0

For the diverse human resources to fully display their individuality and abilities, it is essential to create a safe and secure work environment and topromote the health of employees and their families. The JAL Group Health Promotion Project "JAL Wellness" was launched in conjunction with theMedium Term Management Plan in 2012. Currently, JAL Wellness 2025 continues to promote the health of employees and families based on the five
major indicators such as lifestyle-related diseases, cancer, mental health, tobacco control, and women's health.
In particular, we consider female-specific health issues to be most important as it is directly related to productivity improvement and organizational
revitalization. We have introduced a program to address symptoms of menstruation and menopause using femtech in collaboration with LIFEM Inc.
We are working to improve the health literacy of all employees toward "women's health" through the use of online medical services and the active
implementation of seminars.
With the "Occupational Health and Safety Activities" at the workplace and the "JAL Wellness" between employees and their families, we will provide
a stage for each member of the JAL Group to actively perform and shine.

Data Section

In order to nurture management human resources who are able to set the direction ofbusiness and steer management in a strategic and speedy manner despite rapid changes
in the social and business environment, and next generation leaders who understand themission of management, and respond flexibly to all changes while driving diverse businessareas, including FSC, we provide opportunities to work in other companies, study and train
outside JAL, and cross-industry exchanges for each working level. Each employee bringsback the knowledge and what they learnt during their employment in outside companies andapplies the schooling to transform it into their business structure and create new values.
We will continue to select better programs and expand the scope of our programs.

■ Average monthly overtime/working hours on holidays per employee
Percentage of annual paid leave applicants (%) 100%0

Safety education and safety awareness seminars
JAL Philosophy Workshop

Overtime Work and Annual Paid Leave Applicants*

Sustainability

Appropriate age group
Up to 25 years old

Career development training 2

Career development training 3

The JAL Group promotes diverse workstyles for everyone to play an active role.
In FY2022, looking ahead to the close of the COVID-19 pandemic, we established a basic policy for hybrid work, which
combines office attendance and telework, so that employees can choose where they work while being conscious of productivity
and communication in accordance with the content of their work.
In addition, we established guidelines for second jobs to create an environment in which employees can gain new insights andhuman networks through their other job.
The JAL Group will continue to promote diverse workstyles in order to foster an environment in which diverse human resources
can work actively.

Vice PresidentManager Follow-up Training
Area Manager training programs

D&I Lab ProjectCommunication Leader Training (CLT)Actvities
training

Hierarchicaltraining

New manager training

Career development training 1
Career improvement
reskilling

Director

Factor Class■Improving Engagement▶Promotion of Diverse Workstyles

Growth Strategy

Based on JAL Philosophy, we have established JAL Group's Human Resources Vision as our basic concept. We conduct personnel exchanges that transcend theGeneral employment

Priority and Strategic Measures

For details, see the following page.

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JAL REPORT 2023

72

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy❷Health Management for Flight Crew Who Supports Flight Safety

JAL was recognized as a brand in the 2023 Health & Productivity Stock Selection for the fifth time. Twenty-four

In addition to the annual physical examination, the flight crew also undergo annual medical examinations as stipulated by the Civil Aeronautics Act,
which is under the jurisdiction of the Ministry of Land, Infrastructure, Transport and Tourism (MLIT). The Flight Crew Wellness Promotion Department
follows up on the medical examinations and the results of the examination. In addition, an industrial physician always meets with the flight crew oncea year and conducts a medical interview, as well as confirming the physical and mental health of each individual and providing support for healthmanagement. Depending on the results of the medical examination, the flight crew may need to take a leave of absence based on the standards. In
this case, the flight crew will concentrate on medical treatment, among others, and will return as a flight crew through the return process prescribedby the MLIT and the company after confirming that the health condition has been restored and the numerical value has been improved. After
returning to service, the Flight Crew Wellness Promotion Department will carry out follow-ups as necessary.

companies in the JAL Group (20 last year) were recognized under the 2023 Certified Health & Productivity Management
Outstanding Organizations Recognition Program. They were highly praised for working actively under the strong
leadership of the Chief Wellness Officer（CWO）, Wellness Leaders in the workplace and further initiatives to improve
women's health, literacy on health through better use of the website, and mental health care during the pandemic.

Uterine cancer

Stomach

Women’s
Gastric cancer screening ratio [employees aged 35 and above]
health61.7%
66% or above
Re-examination ratio
70% or above
46.4%
Gastric cancer screening ratio [spouses aged 35 and above/special retired insured persons]
31.8%
46% or above
Re-examination ratio
58.8%
70% or above
Colorectal cancer screening ratio [employees aged 35 and above]
73.1%
77% or above
Re-examination ratio
Health literacy
24.7%
70% or above
Colorectal cancer screening ratio [spouses aged 35 and above/special retired insured persons]Wellness activities
39.5%
56% or above
Re-examination ratio
70% or above
24.6%

Mental health

Percentage of people with high stress [employees]
10.8% Less than 6%

Smoking

Male employees
25.4%
Less than 22%
Female employees
4.3% Less than 3.4%

Lifestyle(specific healthcheckupquestionnaire)

Breast cancer screening ratio [women employees aged 18 and above]
66% or above
62.0%
Re-examination ratio
70% or above
57.9%
Breast cancer screening ratio [spouses aged 35 and above/special retired insured persons]
34% or above
32.3%
Re-examination ratio
65.1%
70% or above
Uterine cancer screening ratio [women employees aged 18 and above]
57% or above
57.9%
Re-examination ratio
70% or above
60
57.8%

Topic

JAL Athletes Taking on the World Challenge

The JAL Group supports all athletes, including JAL Athlete Employees, by combining the image of athletes believing in themselves andcolleagues with JAL's aim to become "the world's most preferred and valued airline group."
At the Budapest 2023 World Athletics Championships, KITAGUCHI Haruka, a female javelin thrower, won the first gold medal in Japanesewomen's field history. We will continue to support our athletes and para-athletes who are taking on global challenges. JAL Athlete
Employees travel around Japan to launch the JAL Athlete Academy, which provides children with advice on how to enjoy sports and improvetheir athletic skills. We will work together with local residents to inspire and to experience the charm and enjoyment of sports as well as toexperience the attraction of areas they have never visited before.

Uterine cancer screening ratio [spouses aged 18 and above/special retired insured persons]
34% or above
27.9%
Re-examination ratio
70% or above
47.0%
Women with excessively low BMI [women employees under 34]
29.5%
Less than 22%

Growth Strategy

Colon

Cancerscreening

Obesity ratio [all employees]
19.3% Less than 17%
Specific health checkup ratio [families]
40.7%
60% or above
Specific health checkup ratio [employees, families, special retired insured persons]
72.5%
74% or above
Specific health guidance implementation ratio [employees]
49.2%
50% or above

The JAL Group Value Creation Story

Lifestyle-relateddiseases*FY2022 actual value in the frame, FY2023 target value outside white frame (FY2021 performance of specific health checkups and specific health guidance)

Breast cancer

JAL Wellness 2025 KPIs

Introduction❶JAL Wellness 2025 Initiatives

Percentage of e-Learning participants [employees]
65% or above
67.7%
Percentage of wellness activities by company and regions [employees]
70% or above
60.4%
Regularly exercise [employees]
60% or above
58.7%
Restful sleep [employees]
79% or above
67.7%
Moderatio eating speed [employees]
66% or above
64.7%
Consumption of alcohol within the recommended Government Guidelines [employees]
89.4%
89% or above
JAL Athlete Academy in Amami

Sustainability▶Occupational Safety and Health Activities
The JAL Group strives to ensure workplace safety and prevent industrial accidents by steadily implementing "Occupational Health and Safety
Management Activities" in all of its business areas, for all our active employees, as well as our contractors and partners.

❶Occupational Health and Safety Policy●We will strengthen safety and health systems in the JAL Group's business sites, for all our employees, working contractors and partners.
●In accordance with relevant laws and regulations, each workplace appoints a general safety and health manager, an industrial physician, a safety
manager, and a health manager according to the nature of the business and the number of employees. Also including employee representatives, laborand management work together to promote occupational safety and health activities, at the Safety and Health Committee and the Health Committee.
●In particular, in departments such as operations, cabin, maintenance, airports, cargo, loading and unloading, maintenance of vehicles dedicated to
ground operations, and catering, we will set up departments and personnel in charge of safety and health, conduct risk assessments, share safety

Data Section

hazard cases, and continuously implement PDCA through the Occupational Safety and Health Management System to prevent recurrence andreduce risks.
●The ultimate goal of the JAL Group is to achieve zero industrial accidents. To achieve this goal, each business site sets specific action plans forindividual issues, sets priorities and quantitative targets, and effectively conducts the PDCA cycle.
●This occupational health and safety policy is formulated by the JAL Wellness Promotion Committee, which consists of an Executive Officer in eachbusiness area. Led by Chief Wellness Officer (CWO), this policy serves as internal regulations such as the "Safety and Health Regulations" andguidelines for occupational health and safety activities at each site.
73

JAL REPORT 2023

KITAGUCHI Haruka, a female javelin thrower who
won the gold medal at the World Athletics
Championships in Budapest 2023.

JAL Athlete Employee. From left to right: YACHI Sora (Ski/Nordic Composite), KITAGUCHI Haruka(Athletics/javelin throw), KANO Koki (Fencing/Epe), TOBE Naoto (Athletics/High Jump), DOI Anna
(Athletics/short-haul Run), YAMAMOTO Ryoma (Athletics/Triple Jump), KORA Ayaka (Athletics/Long
Jump), SUZUKI Yudai (Para Track and Field, Long Jump, short-haul Run)TOPJAL REPORT 2023

74

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Business Strategy
3.3.Business
Strategy

4. Financial Strategy(1) Business Model Reform(2) DX Strategy(3) Human Resources Strategy(4) GX strategy

Roadmap for Reducing CO2 Emissions by FY2030

Introduction(4) GX Strategy -Accelerating Response to Carbon Neutrality by 2050 Through a Variety of Methods-- - - -：Expected emissions if no measures are taken(10,000 tons)
1,000

Upgrades tofuel-efficient p.97
aircraft

FY2019Levels

Reduction in
p.97
daily
operations:900

Use of SAF*

AOKI Noriyuki

Amount of obligated CORSIA offsets to be allocated from FY2024

Managing Executive Officer
Senior Vice President,
General Affairs Division

FY2022

FY2025

*Sustainable Aviation Fuelmedium to long term, we will promote cooperation with suppliers

business is the most important issue in order to realize an exciting
move around without restraint. The GX Strategy was formulated
in the Medium Term Management Plan Rolling Plan 2023 with theintention of addressing the issue as one of the pillars, which must
be resolved strategically.
At the 2022 General Assembly of the International Civil Aviation
Organization (ICAO), long-term targets, which aims to becomecarbon neutral in the field of international aviation by 2050, and
CORSIA*, which is a framework for reducing CO2 emissions, wereadopted.

and partners that have new technologies such as synthetic fuels
and negative emissions (such as CO2 capture) that are under

GX promotion
investment

In addition, Internal Carbon Pricing (ICP) was introduced toaccelerate efforts to reduce CO2 emissions from the perspectiveof how it contributes to the roadmap for reducing CO2 emissions,rather than focusing only on returns from initial investment. We will
aggressively pursue investments to promote GX, including projects
that will lead to the acquisition of CORSIA certification in the future.

▶Accelerate Response Through Technological Innovationand Stakeholder Collaboration

aircraft and technological innovations will reduce CO2 emissions. In

Green Operations, and utilize SAF, which reduces CO2 emissions

addition, in the face of the rapidly increasing recognition of SAF, it

by up to 80 percent compared to conventional jet fuel. One of thewill be extremely important to accelerate efforts to grasp trends inmost important issues is the production and utilization of domestic

technological innovation and ESG investments through cooperation

SAF, and it is important to see this as an opportunity to build awith stakeholders while maintaining firm communication withdomestic recycling-based society that is internationally competitive,

external parties. We will work together to realize a decarbonized

and work to establish a national circulation that transcends industry

society while gaining the understanding of all stakeholders,boundaries.

including our customers and shareholders.

In addition, as part of CORSIA's efforts to implement offset

We have introduced an ICP to estimate the quantitative effect of CO2
reduction and have set the standard amount of CO2 reduction effectat 15,000 yen/ton.
When making decarbonization investment decisions with a focus on
the future, we will not make capital investment decisions based solely
on economic value, but will actively use this information to identify
social value and profit opportunities and risks, balancing the level ofcompany-wide efforts and accelerating our efforts toward carbon
neutrality.

Prior to the baseline review, the ratio was 0 percent for Individuals and 100 percent for Sectoral until 2030, and 20 percent for Individuals and 80 percent for Sectoral since 2030. However, basedon the baseline review last year, the ratio was 0 percent for Individuals and 100 percent for Sectoral until 2033.

Baseline and Ratio of Individual Growth Factors After Review*Prepared based on information provided by IATA (International Air Transport Association)
CORSIA PROGRAM

Less than 2019 years ofemissions<2024 to2035>

Less than 85 % of 2019
emissions

GrowthFactor"Basic Policy for Realizing GX"

Second phase
Mandatory participation
Individual 20
Sectoral 80

Individual 70
Sectoral 30

After review
Individual 0
Sectoral 100

After review
Individual 15
Sectoral 85

Individual 0
Sectoral 100

100

Sectoral Growth Factor
Global growth rate ofinternational aviation

Baseline ifbase year 2019 continues
Baseline
after this review

85
Offsetting requirement (CO 2 tons)=(A: Sector excess x Sectorial %)+(B: Individual company excess emissions x Individual%)
A= individual company emissions x (sector-wide excess emissions/sector-wide emissions)
B= Excess emissions by individual companies*Excessive growth rate

2019

JAL REPORT 2023

First phase
Voluntary participation
Individual 0
Sectoral 100

100

Roadmap established for the next ten years to simultaneously
address climate change, ensure a stable energy supply, and achieve
economic growth*CORSIA ... A system requiring international flights to purchase emission credits for exceeding the 2019 CO 2 emission standards

75

Pilot phase
Voluntary participation
Individual 0
Sectoral 100

Data Section<2021 to 2023>

In addition to accelerating our existing efforts to achieve our CO2
emission reduction targets by 2030, we will actively promote theuse of new technologies in our medium- to long-term strategies,
such as synthetic fuels and Direct Air Capture (DAC) that directly
captures CO2 from the atmosphere, which are undergoing researchand development worldwide with the aim of commercializing thetechnology around 2030, with a view to achieving carbon neutrality by
2050.

What is CORSIA?
CORSIA is a system established by ICAO that requires offsetting requirements on airlines of participating countries by sharing the amount of CO2 emissions exceeding thebaseline on international flights. At the 2022 ICAO General Assembly, the baseline was revised to "85 percent of the 2019 emission level” after 2024. Since the baseline
was lowered 15 percent, airlines of participating countries are required to offset when exceeding 85 percent of the 2019 emissions.
There are two types of offset requirements: individual and sectoral. The former refers to the ratio of individual airlines to bear the amount of their own offset requirements,
and the latter refers to the ratio of airlines of participating countries to bear the amount of offset requirements of the aviation sector.

< Framework and Policy on GX >Government Policy

Promote coordination with suppliers and partners
who possess new technologies such as synthetic
fuels and negative emissions (CO2 capture, etc).

Sustainability

For the sustainability of the aviation business, we expect our new

emissions by upgrading to fuel-efficient aircraft, implement JAL

GX promotion
technology

Base price: 15,000 yen/ton

development worldwide, and promote the use of new technologies.

In this environment, we will accelerate our efforts to reduce our own

Review of ICAO CORSIA baseline

Introduce Internal Carbon Pricing (ICP) into
investment decisions

Growth Strategy

society and future where many people and various objects can

ICAO

10％ less

Measure tocomply withrevisedCORSIAbaselinecompared to FY2019

obligations, we will add the use of emissions trading. In the

We recognize that reducing CO2 emissions in the air transport

Utilization ofcarbon-offset p.95
program

FY2030Less than
FY2019CO2 emissions(actual)▶Background and Outline of GX Strategy

p.95

The JAL Group Value Creation Story

ー：Actual emissions
800

Reduction of direct emissions

The GX strategy was formulated based on businesscharacteristics and changes in the external environment,with the goal of realizing a 1.5°C scenario for carbon
neutrality by 2050. We will promote GX throughcooperation with suppliers and partners with GX promotion
technology. We will use ESG investment to lead theaviation industry's efforts to realize a decarbonized society
as a leading airline company.

2021

2024

2027

2030

2033

2035

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76

Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

3. Business Strategy

Financial Strategy
Strategy
4.4.Financial- Strengthen Our Risk Tolerance and Further Accelerate Sustainable Growth -End of FY2022

As the COVID-19 pandemic comes to an end and air transport demand recovers, the JAL Group will strengthen its
risk tolerance while accelerating its efforts for sustainable growth. In addition to investment, we will actively allocate
management resources to promote our ESG strategy and human capital management, by recognizing the use ofresources not as costs, but as “ investments to support the future of JAL”. As business performance recovers, wewill gradually expand shareholder returns for those who have supported us during the COVID-19 pandemic.

Liquidity
Stability（credit rating）

Credit Rating

Maintain A
RatingCapitalEfficiency

Resource
Allocation

Shareholder
ReturnExecutive Officer
Senior Vice President of Finance and Accounting
Senior Vice President of Business Administration

SAITO Yuji

YUMISAKI Masao▶Summary of FY2022

For the fiscal year 2023, passenger demand is also on a steadyrecovery trend. The JAL Group has overcome the unprecedented
situation of a sharp and significant decline in demand and is firmly inplace to fully capture the recovering demand, including resuming theAchieve “A Flat”
In addition, consider introducing “Sustainable ROIC (tentative name)”,

ROIC*1

3.3%

FY2025：9 % a new investment efficiency index that takes social values into account

ROE

4.3%

FY2025: 10% or more by surpassing cost of shareholders' equity

Capital
Allocation

Accelerate efforts to achieve sustainable growth while
improving risk tolerance

Financial
Discipline

Secure sufficient free cash flow for each fiscal period

Dividend

FY2022:25 yen/share

Achieve a dividend payout ratio of over 35%, as soon as possible* 1 Return on Invested Capital (ROIC) = EBIT (after tax)/average of fixed assets*2 at the beginning and end of the fiscal year
* 2 Fixed assets = Inventories + non-current assets - deferred tax assets - assets for retirement benefits

Although there are no major changes in our financial strategy, we will focus more on accelerating growth. As the COVID-19
pandemic comes to an end and demand steadily recovers, we will strengthen our risk structure and accelerate our efforts forsustainable growth.
We will strive to achieve our goals by fiscal year 2025, the final year of the Medium Term Management Plan, by implementing
business model reform and achieving sustainable growth in the post-pandemic period.
The target indicators for strengthening risk tolerance were set in preparation for events at pandemic-level scales, and will be followedin the “Medium-Term Management Plan FY 2021-2025 Rolling Plan 2023”. With regard to liquidity on hand, we aim to secure
approximately 5.0~5.6 months of passenger revenue while partially utilizing credit facilities, and aim to achieve approximately 50
percent in terms of our equity ratio (based on credit rating evaluation) by the end of FY2025.
While the credit facility was increased during the pandemic, this was reduced on June 30, 2023, upon reflecting the improvement in
performance and cash flow.
Set an Appropriate Level of Liquidity as 5.0～5.6 Months ofPassenger Revenues After the COVID-19 Pandemic● S ecure liquidity that will enable us to tolerate risks according to the size ofpassenger revenues subject to potentially significant impacts if any event
risk occurs (Including the use of credit facility)● S ecure an appropriate level of cash and deposits considering asset efficiency

Working capital ＋
Repayment/
Investment

Preparation for event risks
Liquidityon hand

Fixed Cost
Spending until
Financing
Refund ofIssuedTickets

Creditfacility

In order to maintain our financing capabilities, we aim to achieve an “A Flat” credit rating. At the same time, we will also work to

Data Section▶“Financial Strategy” as a foundation for Our ESG Strategy

End of FY2025: Over 50% (credit rating)

Sustainability

This fiscal year, air passenger demand in Japan and overseas
steadily recovered as the shift toward balancing the infection’s
prevention and socioeconomic activities gained momentum.
Amid the recovery trend, the JAL Group strived toward maximizing
revenue by capturing both passenger and cargo demand, as well as
by steady growth of ZIPAIR and its mileage business, both of which
are growth drivers. We also made every effort to improve revenue by
cost reduction to recover from the COVID-19 pandemic, achieving
profitability for the full year.
As for our financial strategy, in order to steadily upgrade our fleets tofuel-efficient aircraft, we implemented a financing of approximately
26.5 billion yen through a transition-linked loan with specific use ofproceeds in March 2023 as the first Japanese airline company touse such a loan.
In terms of shareholder returns, the JAL Group has not provided
dividends for fiscal year 2020 and fiscal year 2021, as it wasnecessary to place the highest priority on securing liquidity on handand strengthening its financial position.
However, the JAL Group provided its year-end dividend at 25 yen
per share for fiscal year 2022, as cash flow is steadily recovering,
positive profitability is achieved for the full fiscal year, and airtransport demand is expected to make a steady recovery toward
the next fiscal year.
We would like to express our deep appreciation to our shareholders
for their continued support during the pandemic.

recruitment of human resources toward medium-to long-term growth.
International routes have shown recovery above expectations.
We will expand our long-haul full service carrier routes and expand
the capacity and network of our LCCs, particularly ZIPAIR, above
pre-pandemic levels. As for domestic routes, we will introduce
fuel-efficient aircraft and maintain the same level of supply at prepandemic levels, and aim to create new demand, such as regional
movement within Japan of inbound passengers.
For the cargo business, we aim to expand business with a new
business model that suppresses volatility through partnerships.
The mileage business has recorded stable profits, and we willcontinue to take measures to improve convenience and expand ourcustomer base.
As part of our investment for our company's sustainable growth,
we plan to introduce the state-of-the-art flagship A350-1000 on ourinternational routes from the winter schedule of fiscal year 2023, inorder to enhance our product competitiveness. Also, we will aim
for expansion through the introduction of freighters refurbishedfrom a passenger plane. By partnering with our logistics partners,
we will build a new business model that reduces business risks
and contributes to solving the shortage of truck drivers in domestic
delivery, which has become a social issue.
In order to expand our non-airline business domain, we areinvesting in IT for the new mileage status program, which weplan to introduce. Furthermore, through the expansion of SMART
AIRPORT, we will aim for smooth procedures at airports andimprovement of efficiency regarding our human resources.
Regarding shareholder returns, the forecasted dividend for fiscal
year 2023 is 40 yen per share, and the forecasted interim dividend
is 20 yen per share, as steady recovery of cash flow is expected.
Going forward, we will strive to achieve our basic policy of acontinuous and stable shareholder return, that is in line with ourbusiness recovery.

Secure 5.0–5.6 months’ worth of passenger revenue(including credit facility)

Growth Strategy

Director, Senior Managing Executive Officer
Senior Vice President of Corporate Strategy and Planning
Chief Financial Officer

39.3%（Equity Ratio）

Overview and Goals of FY2023-2025 Strategies

The JAL Group Value Creation Story

Build Risk
Resilience andCapital Efficiency

639.2 Bn JPY
Credit Facility 250 Bn JPY

Introduction① Restructuring of our Financial Foundation - Toward Risk Tolerance and Growth -4. Financial Strategy

improve capital efficiency and asset efficiency, aiming to achieve a “ROIC of 9%” and “ROE of 10% or higher”.
In addition, in order to promote our ESG strategy, we are considering the introduction of a new investment efficiency indicator,“Sustainable ROIC (tentative name)”, which takes into account the social value generated by ESG investments.
With regard to shareholder returns, we aim to achieve a dividend payout ratio of approximately 35% or more as soon as possible.
We will continue to work to restore and improve our business performance and our ability to generate cash flows to achieve ourbasic policy of a continuous and stable shareholder return.

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Chapter 3 Growth Strategy

1. Overall Strategy

2. ESG Strategy

Financial Strategy
Strategy
4.4.Financial

3. Business Strategy

Communication with Institutional Investors- Gradually expand shareholder returns while accelerating ESG investments Conceptualization of FY2023–2025
Invest in human resources and expenses incurred to pushforward with ESG

Investment
in assets
Total

650 Bn JPY
Introduce new investment
efficiency index that takessocial values into account

Proportion of
investment ● Introduction of fuel-efficient aircraft
60 % ● Electrification of airport vehicles, etc.
Proportion of

S investment ● Introduction of freighters
25 % ● Expand JAL SMART AIRPORT, etc.
Proportion of
G investment ●15 %Achieve goals of social
impactReduction of CO2 emissions
Increase inbound demand● Increase related populations

IT systems, etc.

Shareholder Return
Approx. 100 Bn JPY
Debt
Financing

Debt Repayment
Approx. 300 Bn JPY

Cash In
Approx. 1,000 Bn JPY〜

Cash Allocation

Total Number of Events for Institutional Investors
FY2019FY2020

FY2021

FY2022

Earnings Announcement・Medium Term Management Plan Announcement for Institutional Investors

4

4

4

4

Events for Institutional Investors

4

3

3

3

IRDAY

1

1

1

1

Facility Tour

1

0

0

0

CEO Small Meeting・CFO Small Meeting

2

2

2

2

Conference hosted by Securities Companies

9

9

11

12

FY2019FY2020

FY2021

FY2022

Interviews with Domestic Investors

167

Interviews with Overseas Investors

219
386
63
16
0
43
4

209
262
471
173
42
0
68
63

188
164
352
91
12
1
74
4

162
230
392
112
17
7
86
2

FY2019FY2020

FY2021

FY2022

4

4

4

4

●
●

Achieve stable dividend
Dividend payout ratio ofover 35%

Rebuild financial
foundation* 1 Operating CF excludes investment in human resources and expenses incurred in pushing forward with ESG

well as gradually expand shareholder returns in line with the recovery of our business performance, and restructure and grow ourfinancial base.
In addition to asset investment, we will continue to pursue our ESG strategy and human capital management, considering the use ofresources not as costs, but as “investments to support the future of JAL”.
To further promote ESG management, we plan to invest a total of 650 billion yen in assets between fiscal year 2023 and 2025.
Investment amounts related to E , S and G are allocated as follows. We believe that investments in ESG management will
simultaneously play a role in risk management to reduce fluctuations in capital costs and enhance our customer preference.

Total Number of Interviews with Institutional Investors (Total)

Total
Interviews by Management
President
Vice-president
CFO・Senior VP of Finance & Accounting
Others*1* 1 Includes interviews with the Chairperson

Internal Feedback ConductedFeedback conducted at the Board of Directors Meeting*2

S

25% of Investments● Introduction of fuel-efficient aircraft including the Airbus A350-1000● Electrification of airport vehicles● Introduction of freighters toward solving the issue of shortage of domestic truck drivers in domestic delivery● Expansion of JAL SMART AIRPORT for airport procedures and improved productivity* 2 Refers to feedback sessions conducted at the Board of Directors meeting to internally share the opinions of institutional investors

Sustainability

E

60% of Investments

Growth Strategy

In terms of the allocation of management resources, we will proactively promote ESG investment to support our ESG strategy, as

The JAL Group Value Creation Story

OperatingCash Flow*1

Invest in
ESG

E

Promotion andacceleration of ESG
Strategy

We are committed to appropriate, interactive communication with our institutional investors. In addition to individual meetings
with our President, Executive Vice President, Group CFO and others, we hold regular events to provide institutional investors with
opportunities to deepen their understanding of our company.
In addition, we regularly provide feedback on issues of interest and opinions from institutional investors around the world to ourdirectors and management at Board of Directors meetings and Group Management Council meetings, to identify issues andimprove our management.
We will continue to strive to improve both the "quality" and "quantity" of our dialogues to help more investors understand ourcompany.

IR DAYAt “IR DAY” held in May 2023, 11 management members including President Akasaka,
discussed the contents of the “JAL Group Medium-Term Management Plan FY 2021-

G

15% of Investments

Introduction② Distribution of Management Resources

2025 Rolling Plan 2023” focusing on the mid-long term growth strategy and other● IT systems to support our businessrelevant topics. Participants deepened their understanding of the JAL Group throughvarious perspectives including Full Service Carrier/Cargo, LCC, Mileage Lifestyle andIn fiscal year 2023, we introduced ICP(Internal Carbon Pricing) into our investment decisions. We will accelerate ESG investment by
including ESG elements in our investment decisions. We are also considering the introduction of a new investment efficiency index,
the “Sustainable ROIC (tentative name)”, which takes into account the social value generated by ESG investments.
The total amount of debt repayment toward restructuring our financial base is expected to be approximately 300 billion yen overstrive to gradually expand shareholder return as profits recover to achieve a dividend payout ratio of approximately 35 percent ormore as soon as possible.

For more information on Internal Carbon Pricing, please visit the JAL website.
WEB

https://www.jal.com/en/sustainability/environment/

Facility TourAt the “facility tour” held on May 2023, analysts of security companies and institutional
investors were introduced to the aircraft of ZIPAIR, our growth driver in the LCC
Data Section

three years. At the end of FY2022, we were able to resume dividends for the first time in 3 financial years. Going forward, we will

Infrastructure, and strategies regarding ESG and human resources.

business, as well as SMART AIRPORT and SMART SECURITY, which are highly
effective as part of the company's DX strategy.

CEO Small Meeting and CFO Small Meeting
At “CEO Small Meeting” and “CFO Small Meeting”, dialogue sessions were held focusing on the ESG strategy, which is acentral theme of the “JAL Group Medium-Term Management Plan FY 2021-2025 Rolling Plan 2023”.

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