Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — Q3 FY2022 Earnings Presentation
46 slides from Japan Airlines's earnings presentation, Feb 2, 2023
Slide 1: Financial Results 3rd Quarter Mar/2023 (FY2022)
JAPAN AIRLINES Co., Ltd. Financial Results 3rd Quarter Mar/2023（FY2022） On New Year’s Day, 2023 Mt. Fuji and the first sunrise from “New Year Sunrise Flight” February 2, 2023 Operated as a Sustainable Flight with SAF (Sustainable Aviation Fuel) ©Japan Airlines, ALL rights reserved.
Slide 2: Agenda and notes
SKYTRAX SKYTRAX SKYTRAX World Airline Star 2022 Covid-19 Safety SKYTRAX Rating Rating 5-Star World's Best Economy Class 5-Star COVID-19 Excellence Award ※ APEX APEX APEX 1. PERFORMANCE OVERVIEW FOR FY22Q3 WORLD CLASS FIVE STAR Health Safety Powered by SimpliFlying Audit Diamond 2. FORECAST FOR FY22
Slide 3: Performance Overview for FY22Q3
Performance Overview for FY22Q3 ✔ Demand for International and Domestic Passenger rapidly recovered since October ✔ Net profit turned black in the third quarter, following the positive EBIT in the first half Revenue EBIT (1) / Profit or Loss (2) (JPY Bn) (JPY Bn) +507.1 Bn (+101.7%) EBIT Margin(3) 3.5%
Slide 4: Third quarter revenue and EBIT commentary
● In the third quarter, our revenue was 1,005.5 billion yen, improving by 507.1 billion yen year-on year, due to the recovery of international passenger demand from the drastic relaxation of border restrictions by Japan from October, and the recovery of domestic passenger demand as new modes of beha
Slide 5: FY22Q3 Performance by Business Domain
FY22Q3 Performance by Business Domain ✔ Revenue/EBIT steadily improved as passenger demand recovered ✔ Mileage Business records stable profit FY22 Q3 Mileage, Lifestyle (Apr. to Dec.) Full Service Carrier Cargo / Mail LCC (1) and Infrastructure （JPY Bn） and others (2) Revenue 634.1 183.4 20.1 167.7 E
Slide 6: Business domain results commentary
● On this page, I will explain the result of each business domain using internal management figures. ● The full-service carrier business domain posted an EBIT profit of 8.8 billion yen. By taking all possible measures to utilize our resources, we were able to capture the recovering passenger demand,
Slide 7: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q3 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR SAF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q3 5. REFERENCES ©Japan Airlines, ALL rights reserved. 5
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Slide 9: FY22 Full-Year Performance Forecast Revision
FY22 Full-Year Performance Forecast Revision ✔ Downward revision conducted for revenue, EBIT and net profit to reflect latest demand trends for passenger and cargo ✔ Steady cost reduction, although not able to cover downturn of dom. passenger revenue ✔ We will strive to resume dividends despite the re
Slide 10: Forecast revision commentary
● On this page, I will explain the revision of the full-year consolidated earnings forecast for the fiscal year ending March 31, 2023. ● Based on the latest international and domestic passenger and cargo demand forecasts, we revised our full-year consolidated earnings forecast for the fiscal year en
Slide 11: Details of FY22 Full-Year Performance Forecast Revision
Details of FY22 Full-Year Performance Forecast Revision FY2021 FY2022 EBIT by Business Domain FY2022 (JPY Bn) (4) Previous New Diff. Diff. (JPY Bn) Previous(4) New Results Forecast Forecast Forecast y/y Forecast Forecast Revenue 682.7 1,404.0 1,358.0 ▼46.0 +675.2 Full Service Carrier 47.0 13.0 Full Se
Slide 12: Forecast revision points commentary
● On this page, I will focus on some points regarding the revisions made to the earnings forecast announced this time. ● Revenue is expected to decrease by 46 billion yen. International passenger revenue is expected to exceed the forecast by 3 billion yen, mainly due to higher unit prices, while dom
Slide 13: Premises of Forecast: Int'l & Domestic Passenger Operations
Premises of Performance Forecast for FY22 Full-year Int’l & Domestic Passenger Operations (Full Service Carrier) ✔ International Passenger number is less than the previous forecast but revenue is above the previous forecast due to increasing revenue per passenger ✔ Domestic Passenger number will ris
Slide 14: Passenger demand trends commentary
● On this page, I will explain the current trends in passenger demand for the full service carrier business. ● The number of international passengers is expected to fall slightly below expectations. Japan-bound demand excluding China is expected to recover to about 80% of pre-pandemic levels and exc
Slide 15: Premises of Forecast: Cargo, LCC, Mileage, Lifestyle
Premises of Performance Forecast for FY22 Full-year Cargo, LCC, Mileage, Lifestyle, Infrastructure and others ✔ Int’l Cargo volume maintains previous forecast levels amid declining market avg., but lower unit price from relaxation of supply-demand balance results in lower revenue than previously exp
Slide 16: Cargo, LCC and Mileage business commentary
● This page shows the performance of the international cargo business, LCC business and the Mileage, Lifestyle, Infrastructure and others business. ● As for international cargo business, the total demand for air cargo is on a downward trend due to the normalization of disruptions in marine transport
Slide 17: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q3 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR SAF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q3 5. REFERENCES ©Japan Airlines, ALL rights reserved. 10
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Slide 19: Initiatives for SAF
Initiatives for SAF(1) FY2018 FY2019 FY2020 FY2021 FY2022 SAF Procurement 1 from overseas • Invested in Fulcrum • Loaded SAF for flight • Joint procurement in • Fulcrum BioEnergy, Inc., BioEnergy, Inc., from San Fransisco the oneworld alliance starts production • Start loading SAF for 2 Aemetis Inc.,
Slide 20: SAF initiatives commentary
● On this page, we will explain our initiatives around SAF, sustainable aviation fuel. ● In our medium-term management plan, we have set a goal of reducing our net CO2 emissions to zero by 2050, and replacing 10% of all fuel on-board to SAF by 2030. ● Currently, we are continuing various initiatives
Slide 21: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q3 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR SAF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q3 5. REFERENCES ©Japan Airlines, ALL rights reserved. 12
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Slide 23: Details of financial results for FY22Q3: Consolidated
Details of financial results for FY22Q3 Consolidated Financial Results Q3 (Apr. to Dec.) Q3 (Oct. to Dec.) (JPY Bn) Vs. FY19Q3 Vs. FY21Q3 Vs. FY21Q3 FY19Q3 FY21Q3 FY22Q3 Diff. y/y Diff. y/y FY22Q3 Diff. y/y Revenue 1,112.7 498.4 1,005.5 ▼107.1 ▼9.6% +507.1 +101.7% 387.0 +179.2 +86.2% Full Service Carrie
Slide 24: Consolidated results commentary
● From page 13, I will show you the results for the third quarter. ● Page 13 shows consolidated results. ©Japan Airlines, ALL rights reserved. 13-S
Slide 25: Changes in EBIT (Revenues/Expenses)
Details of financial results for FY22Q3 Changes in EBIT (Revenues／Expenses) + stands for profit increase（ revenue increase, cost decrease ) RPK y/y ： +190.9% ▼ stands for profit decrease ( revenue decrease, cost increase ) ASK y/y ： +60.4% ＋218.0 Bn （JPY Bn） Mileage, Lifestyle and Infrastructure Full S
Slide 26: EBIT change factors commentary
● This page shows the factors behind the improvement in EBIT through revenue and expense. ● Revenue increased significantly by 507.1 billion yen. In addition to the significant increase in international passenger revenue from the easing of border restrictions, revenue in domestic passenger business,
Slide 27: Changes in EBIT (Market and other impact)
Details of financial results for FY22Q3 Changes in EBIT (Market and other impact) （JPY Bn） + stands for profit increase（revenue increase, cost decrease) ▼stands for profit decrease (revenue decrease, cost increase) Impact from ＋218.0 Bn Currency Market ▼41.7 Bn Revenue +34.5 Bn Cost ▼76.2 Bn (Excl. Mar
Slide 28: Market impact commentary
● This page shows the improvement of EBIT divided into market impacts and other factors. ● The impact of the market was a negative of 66.2 billion yen year-on-year. Although the negative impact of the rapid rise in the fuel market and the depreciation of the yen is significant, we worked to reduce i
Slide 29: Int'l & Domestic Passenger Operations (Full Service Carrier)
Details of financial results for FY22Q3 Int’l & Domestic Passenger Operations (Full Service Carrier) Q3 (Apr. to Dec.) Q3 (Oct. to Dec.) International Passenger FY19Q3 FY21Q3 FY22Q3 Vs. FY19Q3 Vs. FY21Q3 FY22Q3 Vs. FY21Q3 Passenger Revenue (JPY Bn) 401.3 47.0 287.1 ▼28.5% +509.7% 123.8 +589.7% Passen
Slide 30: Passenger business commentary
● This page shows the performance of the international and domestic passenger business. ● For international passengers, the number of passengers remained at a level of 40% compared to Fiscal Year 2019, but as unit price increased by 78%, the revenue recovered to 72%. This is about 6 times higher tha
Slide 31: Cargo
Details of financial results for FY22Q3 Cargo Q3 (Apr. to Dec.) Q3 (Oct. to Dec.) International Cargo FY19Q3 FY21Q3 FY22Q3 Vs. FY19Q3 Vs. FY21Q3 FY22Q3 Vs. FY21Q3 Cargo Revenue (JPY Bn) 44.7 133.3 156.2 +249.1 % +17.2 % 47.2 ▼10.1% Available Ton Km (MN ton km) 3,378 2,513 2,853 ▼15.5% +13.5 % 995 +11
Slide 32: Cargo business commentary
● This page shows the performance of the Cargo business. ● As for international cargo business, we were able to limit our transport volume to a decline of 9% compared to the same period of the previous year, despite the rapid decline in total demand for air cargo due to factors such as the normaliza
Slide 33: LCC
Details of financial results for FY22Q3 LCC ZIPAIR Spring Japan (1)(2) LCC Q3 (Apr. to Dec.) Q3 (Oct. to Dec.) Q3 (Apr. to Dec.) Q3 (Oct. to Dec.) FY21Q3 FY22Q3 Vs. FY21Q3 FY22Q3 Vs. FY21Q3 FY22Q3 FY22Q3 Vs. FY21Q3 Passenger Revenue（JPY Bn） 0.2 13.9 - 6.5 - 5.4 1.7 +153.9% Passengers（’000） 11 306 - 1
Slide 34: LCC business commentary
● This page shows the performance of our LCC business. ● ZIPAIR's San Jose route is performing well after starting service in December, and recognition in the market have progressed. Its non-consolidated performance continues to be profitable, and we look forward to its future growth. ● Spring Japan
Slide 35: Expenses
Details of financial results for FY22Q3 Expenses ✔ Actual fixed costs for FY22Q3 was 367.1 billion yen, on track to suppress it under the annual goal of 500 billion yen. Further cost control will be conducted to suppress increase in costs by the market. Major Operating Expense Items Q3 (Apr. to Dec.)
Slide 36: Cost breakdown commentary
● This page shows the breakdown of the cost and our cost management initiatives. ● Operating expenses rose by 43.9%, or 302.1 billion yen, to 990.1 billion yen. This is due to increased costs linked to the scale of operations and the number of passengers from a recovery in demand, in addition to the
Slide 37: Fuel Costs
Details of financial results for FY22Q3 Fuel Costs Changes in fuel costs Hedge Ratio (As of End of Dec/2022) (JPY Bn) Market +95.1 241.6 FX Hedging Volume increase +49.1 and others +44.7 ▼49.1 45% 45% 101.8 25% 25% ＋139.8 Bn 15% 15% (＋137.3%) FY21Q3 FY22Q3 FY22 FY23 FY24 Fuel Hedging FX Hedging Forei
Slide 38: Fuel cost and hedging commentary
● This page explains our fuel cost and hedging. ● Fuel costs for the third quarter was 241.6 billion yen, which increased by 139.8 billion yen year-on-year. While consumption did increase, the increase is mainly due to market situations such as fuel prices and FX. In addition to soaring crude oil pr
Slide 39: Balance Sheet and Cash Flow
Details of financial results for FY22Q3 Balance Sheet and Cash Flow BS ✔ Equity ratio is 39.5% and Net D/E ratio is x0.2 both in terms of credit evaluation basis, keeping a healthy level CF ✔ Cash flow from operating activities is 191.4 billion yen, Free cash flow is 117.3 billion yen of inflow, improvi
Slide 40: Balance sheet and cash flow commentary
● This page shows our balance sheet and cash flow. ● The equity ratio on a credit rating evaluation basis is 39.5% and the net D/E ratio on a credit rating evaluation basis is 0.2 times, kept at a healthy level. ● Our cash position at the end of December was 553 billion yen, a 58.8 billion yen incre
Slide 41: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q3 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR SAF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q3 5. REFERENCES ©Japan Airlines, ALL rights reserved. 22
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Slide 43: Operation Performance by Geographic Segment (Full Service Carrier)
[Reference] Operation Performance by Geographic Segment (Full Service Carrier) Passenger Revenue Revenue Passengers Carried Q3 (Apr. to Dec.) Q3 (Oct. to Dec.) Q3 (Apr. to Dec.) Q3 (Oct. to Dec.) ('000) (%） FY22Q3 FY22Q3 FY22Q3 Vs. FY19Q3 Vs. FY21Q3 FY22Q3 Vs. FY21Q3 Component Ratio Vs. FY19Q3 Vs. F
Slide 44: Fleet Information
[Reference] Fleet Information End of FY21 (March 31, 2022) End of FY22Q3 (December 31, 2022) Diff. Total2 Total2 Total2 of Retired Retired Dec/22 Owned Leased Total1 AircraftExcluded Owned Leased Total1 AircraftExcluded - Mar/22 Airbus A350-900 11 4 15 15 12 4 16 16 +1 Boeing 777-300ER 13 0 (1) 13 13
Slide 45: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations Japan Airlines ©Japan Airlines, ALL rights reserved. 25
Slide 46: Disclaimer
Disclaimer This content 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 crea