JAL H1 net profit falls 18% to Y81.9bn

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Japan Airlines has recorded an 18% fall in group net profit for the first half of the financial year 2013, but upgraded its full-year profit forecast.

The Oneworld carrier posted a net profit of Y81.9 billion ($833 million) for the six months to 30 September 2013, compared with 99.7 billion the same period last year.

Operating revenue increased by 4% to Y659 billion, while operating expenses rose by 7.9% to Y563 billion over the six months.

JAL says that its revenue from international passenger operations rose by 5.7% to Y222 billion as the airline expanded its route network and welcomed the Boeing 787 back into operations.

On the domestic passenger network front, the airline says it adjusted capacity to better meet demand, and recorded a small increase in revenue to Y252 billion. Operating profit for the JAL group came in at Y95.8 billion, a decline of 15%.

The carrier ended the six months with cash and cash equivalents of Y108 billion.

JAL notes that the Japanese economy had been on a "moderate recovery track" during the first half of the year as household spending and business investment increased. It adds however that "the slowdown of overseas economies has been a downside risk to the Japanese economy".

Despite the fall in first-half profit, the airline upgraded its full year net profit forecast from Y118 billion to Y128 billion.

The airline says it expects to see “strong demand on Southeast Asia routes”, as well as a Y1 billion decline in operating expenses because of falling fuel prices and the continuing benefits of cost reduction initiatives. It adds, however, that "foreign currency rates may push costs upwards".

The upgrade comes as a surprise after rival All Nippon Airways announced a huge 67% downgrade for its own full-year forecast, citing the effects of a more competitive domestic market and cost increases because of the continued softening of the yen.

The financial results also come the same day that Qantas Airways and JAL announced that they will jointly invest a further Y11 billion into Jetstar Japan. The additional funds are aimed at supporting the low-cost carrier's growth plans.

JAL announced recently that it will start rolling out upgrades to the cabins of its domestic aircraft, bringing them to a similar standard to upgrades being rolled out on its international fleet.