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Fuel costs weighed on JAL's first-half operating profit

TOKYO -- Japan Airlines is expected to report a consolidated operating profit of roughly 90 billion yen ($825.9 million) for the April-September half, down nearly 10% on the year.

     Passenger demand was solid, as seen in the influx of foreign visitors to Japan, but fuel costs mounted as the yen depreciated.

     Sales apparently edged slightly higher than last year's 659.3 billion yen tally, with the number of passengers ticking up 1% on both domestic and international flights. Demand for business travel remained solid, along with the increase in foreign tourists visiting Japan. Still, cost cuts were not deep enough to absorb higher fuel prices.

     For the year ending March 31, JAL sees sales climbing 3% to 1.35 trillion yen and operating profit falling 16% to 140 billion yen. An exchange rate of 107 yen to the dollar and a crude oil price of $107 a barrel were assumed for the calculations. However, the recent drop in oil prices could lift the airline above its profit forecast.

     Travel demand continues to be resilient. The carrier will continue to cut a range of costs and may upgrade its full-year sales and operating profit forecasts.

(Nikkei)

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