ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Japan-Update

Japan Airlines' operating profit seen sinking 20%

Crew wage increases, price wars weigh on Japanese carrier's earnings

Low oil prices have cut into Japan Airlines' revenue from fuel surcharges.

TOKYO -- Japan Airlines' group operating profit likely fell 20% on the year to around 135 billion yen ($1.17 billion) for the nine months ended Dec. 31, amid such headwinds as mounting labor costs and intensifying domestic competition.

The carrier's revenue probably slid 5% to about 970 billion yen. The yen's strength in the first half of the fiscal year eroded the value of foreign-currency revenue, and low crude oil prices reduced income from fuel surcharges.

Swelling labor costs ate into profits as well. JAL cut employee wages after its 2010 bankruptcy to boost earnings. But with talent -- particularly pilots -- getting tougher to retain of late, the carrier implemented strategic pay raises in a bid to hold on to staff. Labor costs for the fiscal year ending in March are expected to grow about 21 billion yen.

Revenue per passenger likely slumped as well. JAL took such steps as offering seats with more legroom in hopes of getting customers to shell out more. But price wars on domestic routes have stymied these efforts. On the international side, per-passenger revenue growth has been more sluggish for Narita Airport routes than for those involving Haneda Airport, which is closer to downtown Tokyo.

JAL plans to release April-December earnings Tuesday. It will likely maintain full-year forecasts calling for revenue to dip 4% to 1.28 trillion yen and operating profit to drop 19% to 170 billion yen. Since the January-March quarter is typically a slow time for the carrier, boosting revenue from international flyers will be key to meeting these targets.

(Nikkei)

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more