Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — Q2 FY2017 Earnings Presentation
39 slides from Japan Airlines's earnings presentation, Oct 31, 2017
Slide 1: Financial Results 2nd Quarter Mar/2018 (FY2017)
JAPAN AIRLINES Co., Ltd. Financial Results 2nd Quarter Mar/2018（FY2017） October 31, 2017
Slide 2: Today's Topics
Today’s Topics P.1 P.2 P.7 P.8 P.9 P.17 ※JAL Corporate Website
Slide 3: Overview of Financial Results for 1st Half Mar/18
Overview of Financial Results for 1st Half Mar/18 1st Half Mar/18 (FY2017) 1st half resulted in an increase in both revenue and profit compared to the previous year. Operating Revenue Operating profit・Net profit （JPY Bn） （JPY Bn） （ Operating Profit Margin ） 700 692.3 120 20% Operating Net Operatin
Slide 4: Overview of 1st half financial results (speaker notes)
Now, I will present an overview of the 1st half financial results for the fiscal year ending March 31, 2018. Operating revenue increased 40.3 billion yen, up 6.2% year-on-year, to 692.3 billion yen. Operating profit increased 6.6 billion yen, up 7.2% year-on-year, to 99.0 billion yen, and net pro
Slide 5: Revised Consolidated Financial Forecast for Mar/18
Revised Consolidated Financial Forecast for Mar/18 Upward Revision for Operating Profit & Net Profit Forecast An upward revision for the financial forecast for FY17 has been made on the 1st half result. Operating profit・Net profit (JPY Bn) Previous Forecast New Diff. Forecast (JUL 31) （ JPY Bn ） （
Slide 6: Revised earnings forecast (speaker notes)
Given our 1st half results, exchange rate and fuel price projections, we have revised FY2017 earnings forecast to announce today. We have revised upward operating revenue by 18 billion yen to 1,366 billion yen, operating profit by 13 billion yen to 166 billion yen, and net profit by 13 billion yen
Slide 7: Revised Consolidated Financial Forecast: Changes in Operating Profit
Revised Consolidated Financial Forecast for Mar/18 Changes in Operating Profit ＋ stands for profit increase (revenue increase, cost reduction) 【Revenues／Expenses】 ▲ stands for profit decrease (revenue decrease, cost increase) ＋13.0Bn (＋8.5%) Fuel Others (Excl. Fuel) *FSC=Fuel Surcharge Other Revenue
Slide 8: Changes in operating profit forecast (speaker notes)
Now, I would like to explain changes in our operating profit forecast. Revenues are expected to increase 18 billion yen. This is because international passenger revenue declines 3 billion yen in total, including the effects of fuel surcharge and exchange rates. Domestic passenger revenue is increa
Slide 9: Revised Dividend Forecast
Revised Dividend Forecast Dividend forecast FY2016 Previous New Results Forecast Forecast (JUL 31) Net Profit (1) (JPY Bn) 164.1 108.0 121.0 Dividends per share Income Tax-Deferred ▲31.6 5.0 2.0 （JPY） (JPY Bn) Income available for 132.5 113.0 123.0 dividends (JPY Bn) 105 Payout Ratio × 25% × 30% × 3
Slide 10: Dividend forecast revision (speaker notes)
On the basis of the upward revision in earnings forecast, we have also revised the annual dividend forecast for the fiscal year ending March 31, 2018 to 105 yen per share. Regarding the interim dividend, it was resolved at the Board of Directors meeting on October 31, 2017 that the Company pay an
Slide 11: Benefit: Innovation of Passenger Service System
※Reproduce, announced on July 31, 2017 Recent Topics（Innovation of Passenger Service System） New system* will go live on Nov 16, 2017 Aim to increase our passenger revenue by 1% or more as early as possible. As from FY19, the Benefit will exceed the Cost to contribute to our profitability. Total Inv
Slide 12: New passenger service system (speaker notes)
This page shows an image of the impact of migration to the new passenger service system, shown in our first-quarter earnings announcement material, on profitability improvement. Preparations to launch the new system are going smoothly. We will do our best to ensure a successful go-live for our sta
Slide 13: Progress of Strategic Expenditures
Progress of Strategic Expenditures ※Reproduce, announced on April 28, 2017 Strategic Expenditures（y/y +21.5Bn） IT upgrade : as planned Others : Slightly higher than the plan due to higher utilization ratio of free Wi-Fi services Maintenance（y/y +10.0Bn） As planned Others（y/y +10.0Bn） As plan
Slide 14: Strategic expenditures progress (speaker notes)
This page shows the progress we have made with respect to “strategic expenditures” that we presented at our briefing on April 28th. These “strategic expenditures” are expenses for future growth and one of the reasons for cost increases this fiscal year. Strategic expenditures, engine maintenance c
Slide 15: Financial strategy
Financial strategy Maintain both strong financial structure and high capital efficiency Financial structure Capital efficiency Shareholders’ Decrease cost of capital・ Credit rating Utilize debt Liquidity equity ratio Equity ratio reached Aim to achieve and Decrease cost of equity Maintain ap
Slide 16: Financial strategy (speaker notes)
In this page, I will explain our way of thinking so that we may hold constructive and interactive dialogues with our shareholders and investors concerning our financial strategy. In order to strike a balance between building a strong financial structure and improving capital efficiency, we will
Slide 17: Recent Topics
Recent Topics JAL Focus Refine our full service carrier business and Expand business domains Route Network Alliances Fleet Launch Narita – Melbourne JAL×Hawaiian Airlines Increasing No. of 787-9s for （2017.9.1～） ・Signed a comprehensive new partnership international routes Launch Narita – Kon
Slide 18: Recent topics (speaker notes)
In this page, I will explain about recent topics in core business domain and new business domain which we announced in our medium term management plan. In our core business domain, we will work to improve and expand our route network by opening new routes, increasing flight frequency, and joining
Slide 19: Consolidated Financial Results
Consolidated Financial Results Consolidated Financial Results 1st Half Mar/18 1st Half 1st Half 2 nd Quarter （JPY Bn） Diff. y/y Diff. y/y Mar/17 Mar/18 (Jul-Sep)(5) Operating Revenue 651.9 692.3 ＋40.3 ＋6.2% 377.5 ＋22.7 ＋6.4% Air Transportation Segment 585.6 627.3 ＋41.6 ＋7.1% 341.4 ＋24.1 ＋7.6% Operat
Slide 20: Intentionally left blank
‘2 Neen JAPAN AIRLINES INTENTIONALLY LEFT BLANK
Slide 21: Changes in Operating Profit (Revenues/Expenses)
Changes in Operating Profit（ Revenues ／ Expenses ） 1st Half Mar/18 （ JPY Bn ） ＋ stands for profit increase (revenue increase, cost reduction) ▲ stands for profit decrease (revenue decrease, cost increase) ASK y/y： ＋0.5% ＋6.6Bn RPK y/y： ＋3.5% (＋7.2%) Other Revenues Fuel ▲2.9 Maintenance ＋7.0 Cargo &
Slide 22: Changes in operating profit (speaker notes)
Now, I will explain the changes in operating profit. Revenues from International Passenger increased by 16.1 billion yen due to strong high yield demand out of Japan as well as more fuel surcharge revenues and such. Revenues from Domestic Passenger increased 11.6 billion yen year on year, becaus
Slide 23: Changes in Operating Profit (Market/Others)
Changes in Operating Profit（ Market ／ Others ） 1st Half Mar/18 (JPY Bn） ＋ stands for profit increase (revenue increase, cost reduction) ▲ stands for profit decrease (revenue decrease, cost increase) Impact from Currency Market ▲4.7Bn +6.6Bn Revenue ＋1.7Bn (+7.2%) Cost ▲6.4Bn (Excl. Market Impact) Fu
Slide 24: Market impact and others (speaker notes)
This page explains changes in operating profit from the viewpoints of market impact and others. Despite fuel cost increase for higher fuel prices, fuel surcharge revenue and the hedging effect also contributed to increase operating profit by 5.1 billion yen compared to the previous year. Apart fr
Slide 25: International Passenger Operations
International Passenger Operations International Passenger Change in Revenue （JPY Bn） 1st Half 1st Half 2ndQuarter ＋16.1Bn y/y y/y Mar/17 Mar/18 (Jul-Sep)(4) (＋7.6%) Passenger Revenue 213.1 229.3 ＋7.6% 123.7 ＋8.9% ▲0.1 229.3 (JPY Bn) Passengers ＋16.2 4,213 4,210 ▲0.1% 2,172 ＋0.5% (’000) 213.1 ASK 25
Slide 26: International routes (speaker notes)
On international routes, as demand remained strong on Europe and US routes, RPK increased 1.8% year on year despite a slight decrease in number of passenger. Revenue per passenger rose by 7.7% year on year for our revenue management initiatives and such. As a result, international passenger revenu
Slide 27: Domestic Passenger Operations
Domestic Passenger Operations Domestic Passenger Change in Revenue （ JPY Bn ） 1st Half 1st Half 2ndQuarter y/y y/y Mar/17 Mar/18 (Jul-Sep)(4) ＋11.6Bn Passenger Revenue (＋4.6%) 253.3 265.0 ＋4.6% 148.8 ＋3.4% (JPY Bn) ・Increase in individual passengers (+) Passengers ・Recovery from a plunge in demand b
Slide 28: Domestic routes (speaker notes)
Next, on domestic routes. While number of passenger increased 6.4% as a result of increased group passengers due to the recovery from a plunge in demand by the 2016 Kumamoto Earthquakes, new demand creation through increased use of promotional fares, and positive results achieved by providing infl
Slide 29: Major Operating Expense Items
Major Operating Expense Items Operating Expenses 1st Half 1st Half 2nd Quarter (JPY Bn) Diff. y/y Diff. y/y Mar/17 Mar/18 (Jul-Sep)(3) Fuel 99.0 101.9 ＋2.9 ＋2.9% 51.6 ＋1.9 ＋3.9% Landing and navigation fees 40.6 41.2 ＋0.6 ＋1.5% 21.1 ＋0.4 ＋2.4% Maintenance 27.6 35.8 ＋8.1 ＋29.6% 18.0 ＋4.4 ＋32.3% Sales
Slide 30: Operating expense items (speaker notes)
Please refer to page 14 for major operating expense items, which stood almost as planned. We will continue to make utmost efforts to control our costs. 14-S
Slide 31: Impact of Fuel and FX Markets
Impact of Fuel and FX Markets Hedging Ratio for Fuel Costs Transition of Fuel Cost by Factors (as of end of September 2017) (JPY Bn) Volume 100% 120 FX loaded/ Fuel FX Hedging Market +3.4 80% ▲9.9 100 +9.4 60% Approx. Approx. 40% 40% ＋2.9Bn 101.9 40% Approx. Approx. 80 99.0 (＋2.9%) 20% 20% 20% Appro
Slide 32: Major Balance Sheet Items and Cash Flow Items
Major Balance Sheet Items and Cash Flow Items Balance Sheet End of Mar/17 End of 1st Half Mar/18 (JPY Bn) Diff. 2017/3/31 2017/9/30 Total Assets 1,728.7 1,786.9 ＋58.1 Cash and Deposits (1) 404.0 418.1 ＋14.1 Balance of Interest-bearing Debt (2) 116.0 102.9 ▲13.1 Future Rental Expenses under Operating
Slide 33: FY2017 (Mar/18) Revised Earnings Forecast
《 References 》 FY2017 (Mar/18) Revised Earnings Forecast P/L Operational Preconditions FY2017 FY2017 FY2017 FY2017 FY2016 (JPY Bn) Result Previous New y/y Diff. Previous New Forecast Forecast Forecast Forecast Operating Revenue 1,288.9 1,348.0 1,366.0 ＋77.1 +18.0 ASK* Int’l +2.7% ＋2.7% International
Slide 34: FY2017 (Mar/18) Revised Earnings Forecast: Balance Sheet and Cash Flow
《 References 》 FY2017 (Mar/18) Revised Earnings Forecast Balance Sheet End of FY2016 End of FY2017 End of FY2017 （JPY Bn） Diff. Results Previous Forecast New Forecast Total Assets 1,728.7 1,803.0 1,820.0 ＋17.0 Balance of Interest-bearing debts 116.0 133.0 130.0 ▲3.0 Shareholders’ Equity 972.0 1,038.
Slide 35: Earnings Forecast Mar/2018 (Air Transportation Segment)
《 References 》 Earnings Forecast Mar/2018（ Air transportation Segment ） y/y （%） Mar/2017 Mar/2018 International Passenger Operations Full-year 1st Half 2nd Half Results Forecast （Forecast） （Result） (Forecast) Passenger Revenue (JPY Bn) 415.2 453.0 ＋9.1% ＋7.6% ＋10.7% Passengers (’000) 8,394 8,468 ＋0.
Slide 36: Revenue of International Routes by Geographic Segment
《 References 》 Revenue of International Routes by Geographic Segment Passenger Revenue Proportion of whole Int’l 1st Half 2nd Quarter (%) Mar/17 Mar/18 y/y y/y 2nd Quarter 1st Half 1st Half America ＋11.7% ＋11.2% 27% 28% 27% Europe ＋17.4% ＋19.6% 16% 17% 18% Asia/Oceania ＋2.8% ＋5.6% 32% 31% 29% China
Slide 37: Number of Aircraft
《 References 》 Number of Aircraft End of Mar/17 End of 1st Half Mar/18 (2017/3/31) (2017/9/30) Diff. Owned Leased Total Owned Leased Total Boeing 777-200 12 0 12 12 0 12 - Boeing 777-200ER 11 0 11 11 0 11 - Boeing 777-300 4 0 4 4 0 4 - Boeing 777-300ER 13 0 13 13 0 13 - Large-sized Total 40 0 40 40
Slide 38: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations, Japan Airlines
Slide 39: Disclaimer
Disclaimer This contents contains descriptions of the future expectations, outlooks, objectives and plans etc. of Japan Airlines Co., Ltd. (hereafter “the company”) and related Group companies (hereafter “the Group”). These are based on information available at the time when these materials were cre