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JAL prepares cut-rate airline serving Asia for 2020 takeoff

Airline earmarks $200m for carrier that will also fly to Europe and US

Japan Airlines plans a low-cost carrier that will fly to greater Asian, European and American cities. (Photo by Keiichiro Asahara)

TOKYO -- Japan Airlines will apply in March for a license for a budget carrier to begin service next year, the company said Monday.

The new airline is expected to fly medium- and long-haul flights between the Tokyo area's Narita Airport and cities in greater Asia, Europe and the U.S. JAL sets aside 23 billion yen ($206 million) in initial investment for aircraft and other outlays for the low-cost carrier under its revised medium-term plan through fiscal 2020 announced Monday.

The Japanese carrier announced last May the planned launch of a medium- to long-haul budget airline, forming subsidiary T.B.L. that summer toward this end. The new airline will fly the fuel-efficient Boeing 787 midsize jet.

On the earnings front, JAL released fiscal 2019 plans as part of the medium-term document. Net profit would decline 17% on the year to 114 billion yen as tax breaks following its bailout roughly a decade ago expire. Revenue would rise 5% to 1.56 trillion yen with capacity expansion, mainly for international flights.

Operating profit would slide 3% to 170 billion yen as the airline steps up investment ahead of the rise in departure and arrival slots for international service at Tokyo's Haneda Airport in 2020. An accounting change for depreciation charges for aircraft parts is seen adding 10 billion yen in costs.

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