JAPAN'S BELEAGUERED airlines have posted a brighter set of figures in the latest round of results for the 1994/5 financial year. The improvements come largely from a mix of cost-cutting programmes and a gathering recovery in the Japanese passenger market.
Japan Airlines (JAL) managed to slash its net losses back to a more modest '1.2 billion ($14.45 million), while All Nippon Airways (ANA) moved back into the black with a '4.2 billion profit.
With reduced losses reported by Japan Air System, the country's big three carriers together ended the year at break-even, their best collective performance since problems set in three years ago.
The improved performance was helped by a strong recovery in the Japanese passenger market. International traffic for both JAL and ANA was up by around 11%, spurred on by the recent fall in the value of the US dollar against the yen, which has made foreign travel more attractive.
The strength of the yen and an improving world economy also helped JAL to raise cargo revenues. Tonnage by 11%, led by exports to the USA and Southeast Asia.
Domestic Japanese passenger traffic remained healthy, with JAL reporting a near 10% rise and ANA showing 6% growth on its more extensive system.
ANA, in particular, benefited from the disruption of rail and road transport in the wake of the Kobe earthquake earlier this year. More than one third of ANA's domestic routes compete with Japan's network of "bullet trains" and the carrier was well positioned to benefit, as passengers turned to air travel, suggest financial analysts.
The growth in domestic traffic helped ANA to push sales above the '800 billion mark for the year - almost '20 billion more than had been forecasted - and analysts estimate that as much as '15 billion of the rise was due to the Kobe factor.
Despite the encouraging traffic figures, analysts warn that longer-term fall-out from a stronger yen will be less beneficial, as it begins to lead increasing international competition and falling yields.
JAL is forecasting break-even for the latest 1995/6 financial year, as its cost-cutting measures take hold and sales rise another 5%. "I think JAL is going to have a difficult time reaching its target and getting back into the black this year, with the strength of the yen," warns Robert Rowland, analyst at BZW Securities.
He believes that ANA will have difficulty in meeting its target of improving on 1994's 3.6% rise in sales with a 4.4% growth for 1995/6.
ANA bases the forecast on a 27% increase in passenger numbers on its expanding international network and a 1% rise in domestic passenger services. While domestic traffic may be steady, Rowland warns that a continuing decline in yields seems "inevitable".
Source: Flight International
