Paul Lewis/SINGAPORE Kevin O'Toole/LONDON
GROWING international traffic has helped Japan Airlines (JAL) return to profitability for the first time in five years and has further strengthened the recovery at All Nippon Airways (ANA)
JAL bounced back into the black for the first time since 1990, with a net profit of ´492 million ($4.5 million) for its financial year to the end of March 1996.
ANA also saw an underlying improvement, although its overall net profit dipped slightly from 1994/5, when asset sales helped to boost the total. The carrier forecasts that net earnings will leap this year, to ´18.5 billion.
JAL's improvement comes as international passenger numbers break the 10 million barrier, setting a company record. Revenues from international traffic also show robust growth, of nearly 12%, while load factors edged up to 72%.
Kleinwort Benson analyst Laurant Del Grande says that a major factor was the strength of the yen, making overseas travel more affordable for Japanese travellers. Local passengers account for about 80% of Japan's outbound traffic.
JAL's turnaround was helped, however, by changes to its accounting method for depreciating aircraft, which helped trim ´11 billion from costs. Without that, the group would again have edged to a net loss of around ´6.6 billion.
ANA also continued to forge ahead on international routes, particularly from Kansai, with a 32% increase in passenger numbers. Traffic is expected to grow by another 13% this year as Japan's economy strengthens, although ANA warns that competition remains fierce and that yields will stay under pressure. On its dominant domestic network, ANA managed a 3.6% growth, but passenger revenues were flat at ´632 billion. Gradual deregulation of the Japanese market will lead to more intensive competition from Japan Air Systems (JAS) and JAL.
A new domestic-air-fare structure and discount system introduced from June will have an impact, with JAL already hinting that it will begin to use pricing to sharpen up its competition. "The increase in profitability from new fares is not going to be very substantial," warns Del Grande.
Both ANA and JAL say that they are now reaping rewards from cost-cutting programmes. ANA says that it is on course to achieve a 20% cut in unit labour costs and a 10% rise in aircraft use. Preliminary results from JAS show a profit of ´71 million for the year, against 1995's ´3 million loss. The turnaround appears to come from financial gains, however. Sales were up by nearly 6%, to ´298 billion.
Source: Flight International
