Japan Airlines Co., Ltd. · TSE:9201

Japan Airlines — 1H FY3/14 Earnings Presentation

27 slides from Japan Airlines's earnings presentation, Oct 31, 2013

  1. Slide 1: Financial Results 2nd Quarter Mar/2014 (FY2013)

    JAPAN AIRLINES Financial Results 2nd Quarter Mar / 2014 (FY2013) Yoshiharu Ueki, President Norikazu Saito, Managing Executive Officer 31 October, 2013

  2. Slide 2: Contents

    Contents 2) mm JAPAN AIRLINES OVERVIEW OF 187 HALF FY3/14 FINANCIAL = RESULTS REVISED CONSOLIDATED FINANCIAL FORECAST FOR FY3/14 PLAN DETAILS OF 187 HALF FY3/14 (1H FY13) FINANCIAL RESULTS PROGRESS OF MEDIUM TERM MANAGEMENT w SUPPLEMENTAL REFERENCES =

  3. Slide 3: Overview of 2nd Quarter FY3/14 Financial Results

    Overview of 2nd Quarter FY3/14 Financial Results Operating Revenue Operating Profit Operating Profit (JPY Bn) (JPY Bn) Margin 659.3 115 112.1 20% 660 ＋4.0% 634.2 17.7% 95.8 630 95 15% 14.5% 600 75 10% 1H FY3/13 1H FY3/14 1H FY3/13 1H FY3/14 FX Markets  Despite weak Yen, Operating profit for 1H FY3/

  4. Slide 4: Revised Consolidated Financial Forecast for FY3/14

    Revised Consolidated Financial Forecast for FY3/14 Revised Operating Profit Forecast Operating Profit Margin  Revised our Forecast based on the Result of 1H and Operating Profit Margin (JPY Bn) 11.0% 12.1% change in Fuel and FX market. +15Bn 155.0  Operating Profit: 155.0 Bn JPY, OPM 12.1% 150 140

  5. Slide 5: Progress of Medium Term Management Plan

    Progress of Medium Term Management Plan Product and Service Enhancement International Domestic  Improved comfort and functionality by  Refurbishment of our cabin interior revamping all class of 767-300ER • Expand the leg room of economy class for 5cm  Starting with Narita = Vancouver (maximum) fr

  6. Slide 6: Introduction of Airbus A350

    Introduction of Airbus A350 • Replacing long range aircraft • High levels of safety performance, inflight comfort, and operational efficiency • Entering into service from 2019, gradually replacing aging aircraft over approx. 6 years periods Current As of A350- 777- 777- A350-900 787-8 TYPE FIRM OPTI

  7. Slide 7: Details of Financial Results 2nd Quarter Mar/2014 (FY2013)

    Details of Financial Results 2nd Quarter Mar / 2014 (FY2013) Norikazu Saito, Managing Executive Officer Finance and Accounting

  8. Slide 8: Consolidated Financial Results

    Consolidated Financial Results Consolidated Financial Results 2nd Quarter FY3/14 2nd Quarter (JPY Bn) 1H FY3/13 1H FY3/14 y/y y/y (Jul-Sep) (1)  Revenue: Revenue 634.2 659.3 +4.0% 365.1 +5.1% 659.3 Bn JPY, Air Transportation Segment 571.6 589.0 +3.0% 326.1 +4.3% y/y +4.0% Operating Expense 522.0 56

  9. Slide 9: Changes of Operating Profit

    Changes of Operating Profit 1st HALF FY3/14 ASK y/y: +3.7% RPK y/y: +3.7% ▲16.3 Bn (Bn JPY) (▲14.6%) Other Revenue Fuel Domestic Int’l Int’l Cargo +10.9 ▲16.9 Passenger Passenger Operation +1.2 +1.0 Coupled Cost Revenue Other +11.8 Coupled Cost ▲3.4 Cost +7.4% ▲2.3 112.1 +0.5% +4.0% ▲13.7% ▲18.6 ▲8.

  10. Slide 10: Impact from Currency Market

    Impact from Currency Market Breakdown of the Impact on Our Operating Profit FX Impact Excl. FX (Bn JPY) ▲23.2 +6.9 Expenses Revenue (Excl. Fuel) 112.1 +11.6 ▲9.9 Fuel Revenue Expenses ▲24.9 95.8 88.9 +13.4 ▲6.5 1H FY3/13 1H FY3/14 Estimated Operating Profit (80.3 JPY/USD) without FX Impact (98.5 JPY

  11. Slide 11: International Passenger Operations (Operating Results)

    International Passenger Operations (Operating Results) International Passenger 2nd Quarter 1H FY3/13 1H FY3/14 y/y y/y (Jul-Sep) (1) Passenger Revenue 210.3 222.2 +5.7% 123.2 +7.8%  International Passenger (JPY Bn) Revenue: ASK (MN seat km) 22,127 23,089 +4.4% 11,829 +4.9% JPY 222.2 Bn y/y +5.7% RP

  12. Slide 12: International Passenger Operations (Changes of Revenue)

    International Passenger Operations (Changes of Revenue) 1st HALF FY3/14  Strong Demand on Europe and (Bn JPY) Southeast Asia Routes +11.8 Bn (+5.7%)  Load Factor Europe 79.0% (y/y +2.6%) 222.2 Southeast Asia 75.6% (y/y +3.7%) +3.4  Expansion of SKY SUITE 777 +8.4  Expanded to JFK and Paris - Str

  13. Slide 13: Domestic Passenger Operations (Operating Results)

    Domestic Passenger Operations (Operating Results) Domestic Passenger 2nd Quarter 1H FY3/13 1H FY3/14 y/y y/y (Jul-Sep) (1) Passenger Revenue 250.4 251.7 +0.5% 142.9 +0.5%  Domestic Passenger (JPY Bn) Revenue: 251.7 Bn JPY, y/y +0.5% ASK (MN seat km) 18,668 19,229 +3.0% 9,784 +2.2% RPK (MN passenger

  14. Slide 14: Domestic Passenger Operations (Changes of Revenue)

    Domestic Passenger Operations (Changes of Revenue) 1st HALF FY3/14 (Bn JPY) +1.2 Bn (+0.5%)  Group Passenger Growth 251.7  Tie-up with Tokyo Disney Resort® 30th Anniversary 250.4  “Sengu” Ceremony at Izumo Taisha Shrine ▲8.5 +9.7 - Passenger Mix - Increase in supply - Other Measures 1H Revenue pe

  15. Slide 15: Major Operating Expense Items

    Major Operating Expense Items Operating Expenses 2nd Quarter  Fuel cost increased by (JPY Bn) 1H FY3/13 1H FY3/14 difference % y/y difference (Jul-Sep) 16.9 Bn JPY due to an increase in supply and Fuel 124.1 141.1 +16.9 +13.7% 72.8 +10.3 weak yen Landing fees 37.9 40.7 +2.8 +7.4% 20.7 +1.3  Mainte

  16. Slide 16: Major Balance Sheet Items

    Major Balance Sheet Items Consolidated Balance Sheet Summary as of End of 1st Half FY3/14 End of FY2012 End of 1H FY3/14  The balance of interest- (JPY Bn) difference 2013/3/31 2013/9/30 bearing debt is reduced to 137.3 Bn JPY after Total Assets 1,216.6 1,261.4 +44.8 repayment Cash and Deposits 347

  17. Slide 17: FY3/14 Earnings Forecast (Consolidated)

    FY3/14 Earnings Forecast (Consolidated) FY3/13 FY3/14 FY3/14 FY3/14 FY3/14 (JPY Bn) difference Results New Forecast Prev. Forecast New Prev. Forecast Forecast Revenue 1,238.8 1,286.0 1,272.0 +14.0 ASK Int’l 103.3 103.9 Operating Expense 1,043.5 1,131.0 1,132.0 ▲1.0 Doms 102.5 104.5 Operating RPK Int

  18. Slide 18: Intentionally Left Blank

    Intentionally Left Blank 2) JAPAN AIRLINES

  19. Slide 19: Contents (Supplemental References)

    OVERVIEW OF 157 HALF FY3/14 FINANCIAL RESULTS REVISED CONSOLIDATED FINANCIAL FORECAST FOR FY3/14 PROGRESS OF MEDIUM TERM MANAGEMENT PLAN DETAILS OF 187 HALF FY3/14 (1H FY13) FINANCIAL RESULTS SUPPLEMENTAL REFERENCES 2) JAPAN AIRLINES

  20. Slide 20: Supplemental Reference: FY3/14 Earnings Forecast (Air Transportation Segment)

    《Supplemental Reference》 FY3/14 Earnings Forecast（ Air transportation Segment ） International Domestic y/y (%) 1H 2H FY3/14 1H 2H FY3/14 (Exclude Load Factor) (Result) (Forecast) (Forecast) (Result) (Forecast) (Forecast) ASK +4.4% +2.2% +3.3% +3.0% +1.9% +2.5% RPK +4.5% +4.2% +4.3% +2.7% +3.0% +2.8%

  21. Slide 21: Supplemental Reference: Major Cash Flow Items

    《Supplemental Reference》 Major Cash Flow Items (JPY Bn) 1H FY3/13 1H FY3/14 difference Net income before income taxes and minority interests 110.6 90.8 ▲19.7 Depreciation 40.7 40.5 ▲0.1 Other 1.6 6.8 +5.2 Cash Flow from Operating Activities 152.9 138.3 ▲14.6 Capital Expenditure (1) ▲45.8 ▲56.2 ▲10.4

  22. Slide 22: Supplemental Reference: FY3/14 Earnings Forecast (Balance Sheets / Cash Flow)

    《Supplemental Reference》 FY3/14 Earnings Forecast (Consolidated Balance Sheets / Cash Flow) Consolidated Balance Sheet (JPY Bn) End of FY3/13 Result FY3/14 New Forecast difference Total Assets 1,216.6 1,289.0 +72.3 Interest-bearing Debt 160.1 137.0 ▲23.1 Shareholders' Equity 565.0 646.0 +81.0 Shareh

  23. Slide 23: Supplemental Reference: Impact from Fuel and Currency Markets

    《Supplemental Reference》 Impact from Fuel and Currency Markets Sensitivity for Fuel Costs Hedging Ratio for Fuel Costs (As of End of 2Q FY3/14) (Without Hedging) 90% Approx.85% Crude Oil 2.0 Bn JPY 80% Fuel FX (Change in 1 USD/bbl） Per Year 70% Approx. FX 2.5 Bn JPY 60% Approx. 45% (Change in 1 JPY/

  24. Slide 24: Supplemental Reference: Revenue of International Routes by Geographical Segment

    《Supplemental Reference》 Revenue of International Routes by Geographical segment Passenger Revenue (% of the whole int’l revenue) Passengers (%) 1H FY3/13 1H FY3/14 Y/Y 2Q FY3/14 Y/Y (‘000) 1H FY3/13 1H FY3/14 Y/Y 2Q FY3/14 Y/Y Trans Pacific 34.0% 34.5% +0.5pt 35.5% +0.0pt Trans Pacific 843 870 +3.2

  25. Slide 25: Supplemental Reference: Number of Aircraft in Service

    《Supplemental Reference》 Number of Aircraft in Service End of Mar/2013 End of Sep/2013 2013/3/31 2013/9/30 Changes Owned Leased Total Owned Leased Total Boeing 777-200 15 0 15 15 0 15 - Boeing 777-200ER 11 0 11 11 0 11 - Boeing 777-300 7 0 7 7 0 7 - Boeing 777-300ER 13 0 13 13 0 13 - Large-sized Tot

  26. Slide 26: Fly into tomorrow.

    Fly into tomorrow. Contact: Finance, Japan Airlines +81-3-5460-3068

  27. Slide 27: Forward-looking statements 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 created by the

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