Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — H1 FY2021 Earnings Presentation
40 slides from Japan Airlines's earnings presentation, Nov 2, 2021
Slide 1: Financial Results 2nd Quarter Mar/2022 (FY2021)
JAPAN AIRLINES Co., Ltd. Financial Results 2nd Quarter Mar/2022（FY2021） Japan Airlines marked 70th Anniversary of the foundation on October 1, 2021 November 2, 2021 ©Japan Airlines, ALL rights reserved.
Slide 2: Agenda
SKYTRAX SKYTRAX SKYTRAX COVID-19 Excellence Award 2021 Covid-19 Safety Rating The World’s Best Economy Class 5 Star The Best Economy Class Seat SKYTRAX APEX 5-Star Airline Health Safety Powered by SimpliFlying Audit Diamond 1. PERFORMANCE OVERVIEW FOR 1st Half FY21 2. EARNINGS FORECAST The 8th IR Go
Slide 3: Performance Overview for 1st Half FY21
PERFORMANCE OVERVIEW FOR 1st Half FY21 ✓ Amid the COVID effects, Revenue and EBIT are on the rise toward recovery Revenue EBIT (1)/Profit or Loss (2) （JPY Bn）800.0 （JPY Bn） EBIT Profit or Loss 748.9 ▼458.2 Bn (▼61.2%) 100.0 82.9 54.1 0.0 +95.8 Bn EBIT Margin(3) 400.0 11.1% (+49.2%) ▼ 100.0 290.6 ▼10
Slide 4: Conference call commentary: 2nd quarter results
➢ Thank you very much for participating in our conference call for the 2nd Quarter Financial Result Reporting. ➢ The 1st Half Revenue was 290.6 billion yen, which was about 40% of pre- COVID revenue but it was about 1.5 times larger year-on-year. ➢ The COVID infection still affects us so EBIT ended
Slide 5: Earnings Forecast
1. PERFORMANCE OVERVIEW FOR 1st Half FY21 2. EARNINGS FORECAST 3. RECENT TOPICS 4. DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 5. REFERENCES ©Japan Airlines, ALL rights reserved. 4
Slide 6: Full-Year Performance Forecast Mar/2022
FULL-YEAR PERFORMANCE FORECAST MAR/2022 ✓ Full-year performance forecast is expected to improve significantly y/y to EBIT ▼198 billion yen and Net loss ▼146 billion yen ✓ The 2nd half is expected to improve from the 1st Half by about EBIT 100 billion yen ✓ Full-year actual fixed cost is expected to
Slide 7: Full-year forecast commentary
➢ We disclosed our full-year forecast today. ➢ We expect EBIT to be negative 198 billion yen and Net Loss to be negative 146 billion yen. ➢ The 2nd Half EBIT will be negative 46 billion yen, which will be improved by more than 100 billion yen from the 1st Half. We expect that our monthly EBIT will t
Slide 8: Full-Year Performance Forecast: Passenger Demand Forecast
FULL-YEAR PERFORMANCE FORECAST MAR/2022 Passenger Demand Forecast ✓ INT’L PAX. demand is expected to increase gradually with ease of border restrictions ✓ Dom. PAX. demand is expected to increase steadily along with vaccination ✓ Cargo demand is expected to remain strong throughout this fiscal year
Slide 9: Demand assumptions commentary
➢ I would like to explain our demand assumptions for both International Passenger and Domestic Passenger. ➢ For International Passenger, the 2nd Half demand will be 14% of pre-COVID level due to border restrictions in many countries. However, we hope recovery will be seen on routes between Japan and
Slide 10: An Updated Break-even Matrix
AN UPDATED BREAK-EVEN MATRIX ✓ EBIT・EBITDA (1) break-even Int’l PAX/Dom. PAX demand matrix (2) was updated as below ✓ The break-even points decreased from the initial plan by the good Cargo business and further fixed cost reduction. ✓ Positive monthly EBITDA by the end of the 3 rd Quarter and positi
Slide 11: Break-even matrix commentary
➢ We have shown the break even matrix, and we updated the matrix by reflecting the good Cargo business and further Actual Fixed Cost reduction. ➢ Accordingly, we assume EBITDA will turn positive with 20% International Passenger demand and 60% Domestic Passenger demand. Also, EBIT will turn positive
Slide 12: Initiatives for Liquidity at Hand
INITIATIVES FOR LIQUIDITY AT HAND Liquidity and cash burn ✓ Sufficient funds of more than 670 billion yen were secured as of the end of SEP/21 ✓ 200 billion yen will be added through hybrid financing from October ✓ Cash-burn will diminish in the 3rd Quarter, and it turns to be positive in the 4th Qu
Slide 13: Liquidity and cash-burn commentary
➢ Then, I would like to explain liquidity at hand and cash-burn. ➢ On the left-hand side, our liquidity as of the end of September is more than 670 billion yen including unused credit line, which is sufficient enough. ➢ The total hybrid financing amount was about 350 billion yen. We have already fin
Slide 14: Recent Topics
1. PERFORMANCE OVERVIEW FOR 1st Half FY21 2. EARNINGS FORECAST 3. RECENT TOPICS 4. DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 5. REFERENCES ©Japan Airlines, ALL rights reserved. 9
Slide 15: Recent Topics
RECENT TOPICS Initiatives for Safety and Comfort Initiatives for demand stimulation ✓ Sales Promotion in a timely manner for spurring demand recovery JAL is conducting thorough preventive measures The first Japanese airlines with 「JAL FLY SAFE」for safe the triple best rewards for and comfortable fli
Slide 16: Recent initiatives commentary
➢ I would like to explain our recent initiatives. ➢ First, we are taking various preventive measures called 「JAL FLY SAFE」for safe and comfortable flights in the COVID era. Those initiatives are highly awarded by external evaluation organizations. At airports, we are expanding “JAL SMART AIRPORT” na
Slide 17: JALUX to be a consolidated subsidiary
JALUX to be a consolidated subsidiary ✓ Conducts a joint tender offer with Sojitz Corporation to make JALUX a consolidated subsidiary ✓ Places JALUX as a “core company for non-aviation business” toward leaping business expansion and profit growth Objectives Outline of the tender offer General ◼ Stru
Slide 18: JALUX tender offer commentary
➢ Then, I will explain our plan of tender offer for shares of JALUX to make it our subsidiary, which has been disclosed at 3 o’clock today. ➢ In our Mid-term Management Plan, we aim to conduct business restructuring to increase non-aviation business domain profits. ➢ Today, we decided to conduct a j
Slide 19: Recent Topics: ESG
RECENT TOPICS ESG Address to Climate Change Improving Accessibility ✓ Contributed to Tokyo 2020 Paralympic by safe SAF(Sustainable Aviation Fuel) and comfortable transportation supports to the its development acceleration and use athletes ✓ Promotes SAF, together with the governments • Smooth airpor
Slide 20: ESG initiatives commentary
➢ On this slide, I will explain our ESG initiatives. ➢ Toward net-zero emission, we will strive to develop and use Sustainable Aviation Fuel widely in Japan, together with governments and various industries. One of the those initiatives is a joint report with ANA. ➢ Also, we have replaced more than
Slide 21: Details of Financial Results for 1st Half FY21
1. PERFORMANCE OVERVIEW FOR 1st Half FY21 2. EARNINGS FORECAST 3. RECENT TOPICS 4. DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 5. REFERENCES ©Japan Airlines, ALL rights reserved. 13
Slide 22: Consolidated Financial Results
DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 Consolidated Financial Results 1st Half 2nd Quarter （JPY：Bn ） FY19 FY20 FY20 FY19 FY20 FY21 FY21 Diff. y/y Diff. y/y Diff. y/y Revenue 748.9 194.7 290.6 ▼458.2 ▼61.2% +95.8 +49.2% 157.6 +39.2 +33.1% International PAX 272.9 9.1 29.8 ▼243.1 ▼89.1% +20.6 +
Slide 23: Financial results commentary
➢ I would like to explain the details of 2nd Quarter financial results. ©Japan Airlines, ALL rights reserved. 14-S
Slide 24: Changes in EBIT (Revenues/Expenses)
DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 Changes in EBIT (Revenues／Expenses) ASK y/y ： +78.1% + stands for profit increase（ revenue increase, cost decrease ) RPK y/y ： +66.3% ▼ stands for profit decease ( revenue decrease, cost increase ) ＋72.1 Bn （JPY:Bn） 10.6 Bn yen of Personnel cost reducti
Slide 25: Revenue and expenses commentary
➢ On this page, Ups and downs of Revenue and Expenses are shown. ➢ COVID is still affecting us, however, Revenue increased by 95.8 billion yen year-on-year through the passenger number increase and the good Cargo business. ➢ For Expenses, the increase of variable cost remained around 34% of the reve
Slide 26: International Passenger Operations (Full Service Carrier)
DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 International Passenger Operations (Full Service Carrier) ✓ Despite border restrictions, transit passenger demand and Tokyo 2020 Olympic and Paralympic athletes and staff demand were captured to increase revenue y/y ✓ Flight schedule was adjusted for tr
Slide 27: International passenger commentary
➢ I will explain International Passenger, Domestic Passenger and Cargo. ➢ Page 16 shows International Passenger results. ➢ Strict border restrictions still continue in many countries. We captured an expats and returnee demand and a transit passenger demand between Asia and North America. Also, we ca
Slide 28: Domestic Passenger Operations (Full Service Carrier)
DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 Domestic Passenger Operations (Full Service Carrier) ✓ Base demand was steadily captured amid the COVID spread nationwide and the repeated declarations of a state of emergency ✓ Swift capacity adjustment and revenue management were conducted in the rapi
Slide 29: Domestic passenger commentary
➢ On this slide, Domestic Passenger result is shown. ➢ In spite of the repeated declarations of a state of emergency, we were able to capture a base demand. The passenger number increased by 30% year-on-year. ➢ We reacted swiftly by flexible capacity adjustment and revenue management to this rapidly
Slide 30: Cargo
DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 Cargo ✓ An increase in volume vs. pre-COVID and high unit prices continued in the limited belly-hold capacity situations ✓ Achieved significant increase of revenue y/y through actively operating cargo flights with own passenger aircrafts and chartered f
Slide 31: Cargo commentary
➢ Then, I would like to explain Cargo. ➢ Cargo continues to be good. Last year was a good year when compared with the pre- COVID level, but this year it is getting even better. Revenue increased more than twice year-on-year. ➢ To capture this strong demand, we actively operated cargo flights to prov
Slide 32: Expenses
DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 Expenses Breakdown of Operating Expenses Actual Fixed Cost(1) Actual Fixed Cost Fixed Cost(except Actual Fixed Cost) ✓ Actual fixed cost for 1st Half FY21 was 230.9 billion yen. Revenue and Capacity Linked Cost 1st Half It is under control toward 475 bi
Slide 33: Expenses commentary
➢ This slides explains expenses. ➢ The Actual Fixed Cost was 230.9 billion yen. We are successfully controlling it toward the initial target of 500 billion yen, and the full year forecast is 475 billion yen. ➢ And, its ratio to the whole operating expense is 52%, which shows our resilience to extern
Slide 34: Summary of Consolidated Statement of Financial Position and Cash Flow
DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 Summary of Consolidated Statement of Financial Position and Cash Flow ✓ Equity ratio as 39.3%, and the financial foundation was enhanced by the hybrid financing ✓ Repayment within one year including lease payments is just 66.2 billion yen, while BS suff
Slide 35: Balance sheet and cash flow commentary
➢ This slides shows our balance sheet and cash flow. ➢ The interest-bearing debts are increasing, however, the net D/E ratio is still at 0.4 and Equity Ratio is about 40%, which show our robust financial foundation. Our operating cash flow is still negative but it was surely improved year-on-year. ➢
Slide 36: References
1. PERFORMANCE OVERVIEW FOR 1st Half FY21 2. EARNINGS FORECAST 3. RECENT TOPICS 4. DETAILS OF FINANCIAL RESULTS FOR 1st Half FY21 5. REFERENCES ©Japan Airlines, ALL rights reserved. 21
Slide 37: Operation Performance by Geographic Segment
《Reference》 Operation Performance by Geographic Segment (1) (Full Service Carrier) Passenger Revenue Revenue Passengers Carried 1st Half 2nd Quarter 1st Half 2nd Quarter (‘000) (%) FY21 FY21 FY21 Vs.FY19 Vs. FY20 FY21 Vs.FY20 Component Vs.FY19 Vs. FY20 Component Vs. FY20 America Ratio Ratio 146 ▼81.
Slide 38: Fleet Information
《 Reference 》 Fleet Information End of FY20 (March 31, 2021) End of 1st Half FY21 (September 30, 2021) Owned Leased Total 1 Total 2 Owned Leased Total 1 Total 2 Diff. retired aircraft retired aircraft Total2 of Mar/21 - excluded excluded and Sep/21 Airbus A350-900 4 4 8 8 8 4 12 12 +4 Boeing 777-300
Slide 39: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations, Japan Airlines ©Japan Airlines, ALL rights reserved. 24
Slide 40: 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