Japan's "big three" carriers have revealed mixed financials for the 12 months ending on 31 March.
Japan Airlines (JAL) and All Nippon Airways (ANA), the country's two largest carriers, both saw operating revenue shrink marginally last year, while Japan Air System (JAS) was able to report a small rise in sales, which it says reflected the success of its restructuring efforts.
The trio endured a severe buffeting during 1998 as a result of a competitive operating environment and continued weak demand due to a national recession.
In terms of profitability, the picture was also a confused one, with JAL able to report a major turnaround from 1997's big loss, albeit aided by aircraft sales and credits from Boeing which were together worth ´24 billion ($200 million). JAS also sneaked back into the black, with its operating costs dropping 0.6% as a result of cost-cutting initiatives.
ANA suffered the most during the past year, reporting its first operating loss since 1982 - of ´13.1 billion - and its second successive year of net losses, which rose almost threefold. The carrier has also halted dividend payments after what president Kichisaburo Nomura called "a challenging year".
ANA's revenue peformance highlighted the key problem for the Japanese majors last year. Although international passenger traffic increased by 11% and domestic traffic by 2%, sales dropped 1% because of intense competition on domestic routes, which prompted a wave of fare discounting and severely depressed yields. The company has responded with a new corporate strategy aimed at hauling it back into profit
All three airlines are cautious in their predictions for the current year, with JAL envisaging continued difficulties because of the Japanese slump, which it fears may halve its net profit. JAS expects its net profit to double to ´600 million on a 2.7%rise in sales.
Source: Flight International