Andrzej Jeziorski/SINGAPORE

Japan's two largest carriers enjoyed improved financial fortunes last year. Flag-carrier Japan Airlines (JAL) reported a 26% increase in air transport-derived operating profits to ¥32.7 billion ($300 million) in the 12 months to 31 March, and All Nippon Airways (ANA) reported a figure of ¥36.5 billion, compared with the previous year's ¥25.6 billion.

ANA had major restructuring costs to absorb, producing a ¥15.2 billion group net loss, three times as bad as the previous year's ¥4.73 billion. JAL's net result also suffered, profit falling 26% to ¥19.74 billion, although this was "due mainly to a decrease in non-operating revenue", the airline says.

JAL's group operating profit - include non-airline hotel, resort and package holiday businesses - leapt 37% to ¥44.8 billion, and ANA's to ¥31.55 billion, reversing the previous year's loss.

JAL's turnover rose 2% to ¥1.59 trillion (a 5% rise in fuel costs producing a slight rise in operating expenses to ¥1.55 trillion), with the ANA figure up 12% to ¥1.2 trillion. Turnover at Japan Air System, the country's number-three carrier, was ¥390 billion, up 17%, while group operating profit surged to ¥9.57 billion from ¥1.15 billion.

JAL's performance reflected firm international demand, "particularly on Asian routes", and the more "gradual recovery of Japan's domestic economy", it says. Route transfers to low-cost subsidiary JAL Express, plus fare cuts, were also factors, although falling yields - due largely to poor premium-end demand - remained a problem.

ANA has proposed company-wide wage cuts as the antidote to its losses, despite the fact that one-off costs were essentially to blame. ANA says the 3-6% cuts, to be taken in the period to March 2003, would deliver ¥4.3 billion savings a year, or ¥10 billion in total. Board members have already taken big cuts.

Aviation accounts for 70% of ANA sales, and the airline reports "revived demand and a stabilisation of yields" from the second half. Airline revenue rose 2% to ¥980.5 billion. It foresees group sales of ¥1.22 trillion and a ¥16 billion net profit this year.

Source: Flight International