Japan’s JAL Group revised upwards its profitability expectations, based on its latest forecasts for both domestic and international demand.

For its 2023 financial year ending 31 March, JAL expects earnings before interest and taxes (EBIT) to reach Y140 billion ($924 million), up from its previous forecast of Y130 billion, according to a company strategy update.

JAL 787-9 Interior Boeing

Source: Greg Waldron/FlightGlobal

Given strong forecast demand, the group has updated its EBIT expectations

For its 2024 financial year, which runs from 1 April to 31 March 2025, the carrier forecasts EBIT of Y170 billion, increasing to Y200 billion, up from Y185 billion previously, for the 2025 financial year.

The figures mark the group’s recovery from the coronavirus pandemic. In its 2019 financial year, its last profitable year before the pandemic, JAL Group generated EBIT of Y132 billion.

For the coming 12 months, JAL indicates that the business environment will be characterised by high foreign exchange costs, a shortage of manpower in the aviation and tourism sectors, and increased environmental considerations with the implementation of ICAO’s market-based CORSIA carbon-offset and reduction scheme.

As for the passenger market, inbound demand for travel to Japan should remain strong, although the recovery of outbound traffic will remain slow. Good e-commerce demand is also expected to boost cargo operations.

More broadly, JAL foresees society continuing to emphasise the reduction of carbon emissions, as well as continued geopolitical risks.

“Through the promotion of [environmental, social and governance] strategies, business model reforms will be carried out to achieve the profit targets for FY2025 and realize a business model with resilience and growth potential,” says JAL.

JAL aircraft -c- KITTIKUN YOKSAP Shutterstock

Source: Kittkun Yoksap/Shutterstock

Mainline carrier will be main growth driver in coming years

“Specifically, in the full-service carrier and cargo and mail domain, the profit structure will be restructured to generate profits even in the new post-Covid-19 environment. In the LCC and mileage, lifestyle and Infrastructure domains, the business will be further expanded and grown, aiming to achieve an EBIT of approximately 85 billion yen in total.”

In addition to the full-service JAL brand, JAL Group includes the low-cost unit Zipair Tokyo. JAL also has stakes in Jetstar Japan and Spring Airlines Japan.

For the full-service carrier’s international business, JAL will focus on maintaining unit prices, capturing inbound demand, and stimulating outbound demand. Domestically, the full-service carrier will strengthen profitability and attract demand to local areas.

On the LCC front, JAL plans an “expansion of business scale and aggressive international flight development.”

JAL will also prioritise the development of an air taxi business and of drone usage in local areas.

JAL’s release of its strategy document coincided with its 21 March announcement that it will order 42 new aircraft from Airbus and Boeing, comprising 11 A321neos, 21 A350-900s, and 10 787-9s.