Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — Q2 FY2019 Earnings Presentation
51 slides from Japan Airlines's earnings presentation, Oct 31, 2019
Slide 1: Financial Results 2nd Quarter Mar/2020 (FY2019)
JAPAN AIRLINES Co., Ltd. Financial Results 2 nd Quarter Mar/2020（FY2019） JAL Supports Japan National Rugby Team and Japan National Wheelchair Rugby Team. October 31, 2019 JAL Supports Japan National Rugby Team and Japan National Wheelchair Rugby Team.
Slide 2: Today's Topics
Today’s Topics P.3 P.7 P.15 P.21 FlightStats SKYTRAX The best on-time Health and Productivity The World’s Best Economy Class Asia-Pacific Airline Management Brand The Best Economy Class Seat FTE SKYTRAX Accessibility Leadership Award 5-Star Airline (Note) Regarding figures in tables of this material
Slide 3: Overview of Financial Results for 1st Half Mar/20
Overview of Financial Results for 1st Half Mar/20 Combined with increase in Domestic Business and decrease in International Passenger and Cargo revenue altogether, Operating Profit decreased Operating Revenue Operating profit・Net profit (1)・Operating profit margin （JPY Bn） （JPY Bn） Figures in ( )
Slide 4: Overview of first half financial results (commentary)
I will explain the overview of the financial result of the first half of the fiscal year 2019, ending March 2020. Due to the world economy slowdown, International Passenger Demand was not strong. International Cargo Demand dropped largely year-on-year. Domestic Passenger Demand continued to be s
Slide 5: Air Transport Recent Topics
Recent Topics Allocation of Haneda Slots Environmentally friendly aircraft for domestic routes Toward Sustainable Development More accessible services for all passengers Haneda Int’l slot allocation Codeshare Expansion A350・787 Launch (※) Including 12 Slots Allocated late night slot Cath
Slide 6: Recent topics commentary
On this page, I will explain our recent topics. For International Passenger Business, Heneda slot allocation was determined and JAL was given 11.5 slots. Even though our allocation was 2 slots less than another Japanese airline, in fact, all slots we requested were given to us, so this is a very s
Slide 7: Dividends and Share Repurchases
Dividends and Share Repurchases Share Repurchases Total 20 Billion Share Repurchases and its Cancellation Considering the Current Share Price Level Aims for fair valuation on the equity capital market Resolution Date April 26, 2019 October 31, 2019 Duration May 7, 2019 to September 20, 2019 Novemb
Slide 8: Shareholder return commentary
Now I will explain shareholder return. Today we decided to conduct buyback of up to 20 billion yen. All stocks will be cancelled. We believe the current stock price does not reflect our company value properly. Our action to conduct additional buyback today, and the measures toward growth and thei
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Slide 10: Consolidated Financial Results
Consolidated Financial Results 1st Half 1st Half 2nd Quarter （JPY Bn） Diff. y/y Diff. y/y Mar/19 Mar/20 (Jul-Sep)(6) Operating Revenue 750.1 759.8 +9.6 +1.3% 404.1 ▲3.9 ▲1.0％ International Passenger 269.2 266.0 ▲3.1 ▲1.2% 138.1 ▲6.2 ▲4.3％ Domestic Passenger 268.1 276.8 +8.7 +3.3% 152.8 +2.0 +1.3％ Ca
Slide 11: Changes in Operating Profit (Revenues / Expenses)
Changes in Operating Profit（ Revenues ／ Expenses ） 1st Half Mar/20 （JPY Bn） ＋ stands for profit increase (revenue increase, cost decrease) ▲ stands for profit decrease (revenue decrease, cost increase) ▲15.5 Bn ASK y/y ： ＋2.2% (▲16.0%) RPK y/y ： ＋2.2％ ▲10.3 Bn (▲10.6%) Other Revenues Fuel Cargo & Ma
Slide 12: Operating profit changes commentary
For Revenue side, Domestic Passenger Business and Mileage Revenue raised Operating Revenue, up 9.6 billion yen year-on-year. Operating Expense was up 19.9 billion yen, 3.1% increase year-on-year to 673.3 billion yen because of preparation for airport capacity expansion next year. As a result,
Slide 13: Changes in Operating Profit (Market / Others)
Changes in Operating Profit（ Market ／ Others ） 1st Half Mar/20 (JPY Bn） ＋ stands for profit increase (revenue increase, cost decrease) ▲ stands for profit decrease (revenue decrease, cost increase) Impact From Currency Market ▲0.0 Bn ▲15.5 Bn Revenues ▲1.7 Bn (▲16.0%) Expenses +1.6 Bn ▲10.3 Bn Fuel
Slide 14: Market impact commentary
On this page, the market impact is negative 0.7 billion yen due to decrease of hedging gain. For the other effect, the increase of the revenue was not sufficient to recover the increase of the expenses. As a result, without the depreciation method change, it was negative 9.5 billion yen. 9-S
Slide 15: International Passenger Operations
International Passenger Operations International Passenger Change in Revenue （JPY Bn） 1st Half 1st Half y/y 2ndQuarter y/y ▲3.1 Bn Mar/19 Mar/20 (Jul-Sep)(4) (▲1.2%) Passenger The Passenger Service Revenue 269.2 266.0 ▲1.2% 138.1 ▲4.3% System Effects Included (JPY Bn) 269.2 Passengers 266.0 (’000) 4
Slide 16: International Passenger Business commentary
On this page, I will explain International Passenger Business. We increased capacity however, Japan-outbound business demand did not grow as much as our capacity increased. Also, because of the supply-demand imbalance on European route, China route capacity expansion since July or ex-China inbou
Slide 17: Domestic Passenger Operations
Domestic Passenger Operations Domestic Passenger Change in Revenue 1st Half 1st Half 2ndQuarter （JPY Bn） y/y y/y ＋8.7 Bn Mar/19 Mar/20 (Jul-Sep)(4) (＋3.3%) Passenger Revenue 268.1 276.8 +3.3% 152.8 +1.3% (JPY Bn) ・ Demand Rise during the Long Holidays(＋) The Passenger ・ Increase in Individual Passen
Slide 18: Domestic Passenger Business commentary
On this page, I will explain about Domestic Passenger Business. Passenger number grew by 3.4% year-on-year because consumer pattern is shifting from goods to experience, so our promotional fare sales increased. For Revenue per Passenger decreased by 0.2% year-on-year because of the demand mix
Slide 19: 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/19 Mar/20 (Jul-Sep)(4) Fuel 125.3 127.7 +2.3 +1.9% 64.0 ▲0.9 ▲1.4％ Landing and navigation fees 43.2 43.5 +0.2 +0.6% 22.0 +0.1 +0.7％ Maintenance 36.7 39.9 +3.2 +8.9% 20.7 +2.5 +14.3％ Sales
Slide 20: Operating expenses commentary
On this page, I will explain Major Operating Expenses. Numbers in brackets do not include the depreciation method change effect. Expenses other than fuel increased by 3.3% year-on-year, without the depreciation method change. It is larger than our capacity increase of 2.2%, however, without fron
Slide 21: Impact of Fuel and FX Markets
Impact of Fuel and FX Markets Hedge Ratio Fuel Cost Breakdown by Factors (As of End of Sep/2019) (JPY Bn) Volume 140 increase/ 100% Market Hedging Fuel FX 125.3 FX +9.0 127.7 80% ▲6.0 ▲0.6 60% Approx. Approx. 40% 40% 40% Approx. Approx. ＋2.3Bn 20% 20% (＋1.9%) 20% Approx. Approx. 5% 5% 0% 90 FY2019 F
Slide 22: Fuel cost commentary
Fuel Cost slightly increased because of hedging. The left bottom chart shows the future market impact on Operating Profit. 13-S
Slide 23: Major Balance Sheet Items and Cash Flow Items
Major Balance Sheet Items and Cash Flow Items Consolidated Balance Sheet End of End of 1st Half （JPY Bn） Mar/19 Mar/20 Diff. Remarks Total Assets 2,030.3 1,928.8 ▲101.4 Certificate of Deposits etc. included Cash and Deposits 522.0 395.9 ▲126.0 Including cash out of 82.7 bil. yen to Corporate Pension
Slide 24: Balance sheet and cash flow commentary
On this page, Consolidated Balance sheet and Cash Flow are shown. As we disclosed in the mid-term rolling plan, we injected 82.7 billion yen in September to our corporate pension fund to mitigate future financial risk. Excluding the cash injection to pension, Free Cash Flow is still positive.
Slide 25: FY2019 Earnings Forecast
FY2019 Earnings Forecast Only revenue forecast has been revised Future economic trends and air transport demand will be closely monitored under the recent unforeseeable circumstances Market assumption has been revised Actual results up to Q2, full-year ASK, and the recent trend of passenger and
Slide 26: Performance forecast commentary
On this page, I will explain our Performance Forecast. International Passenger Business and Cargo Business are becoming more unforeseeable as the world economy slows down and uncertainty rises. We have revised our revenue forecast of International Passenger, Domestic Passenger and Cargo, in accor
Slide 27: FY2019 Earnings Forecast (Reference)
《 Reference 》 FY2019 Earnings Forecast Consolidated Balance Sheet End of End of FY2018 FY2019 （JPY Bn） Diff. Previous New Results (1) Forecast Forecast (1) Disclosed on April 26, 2019 Total Assets 2,030.3 2,040.0 2,010.0 ▲30.0 Balance of Interest-bearing 142.3 167.0 171.0 +4.0 debts (2) NOPAT/Averag
Slide 28: FY2019 Earnings Forecast (Air transportation Segment)
《 Reference 》 FY2019 Earnings Forecast (Air transportation Segment) y/y（%） International Passenger FY2018 FY2019 Full-year 1st Half 2nd Half Operations （Forecast） （Result） (Forecast) Passenger Revenue (JPY Bn) 530.6 524.0 ▲1.3％ ▲1.2％ ▲1.4％ Passengers (’000) 9,128 9,165 +0.4％ ▲0.5％ +1.3％ ASK (MN seat
Slide 29: Revenue of International Routes by Geographic Segment
《 Reference 》 Revenue of International Routes by Geographic Segment Passenger Revenue Proportion of whole Int’l 1st Half 2nd Quarter (%) Mar/19 Mar/20 y/y y/y 2nd Quarter 1st Half 1st Half America +9.8% +4.0% 26% 29% 28% Europe ▲5.7% ▲8.1% 18% 17% 18% Asia/Oceania ▲2.7% ▲4.2% 30% 30% 29% China ▲2.1%
Slide 30: International revenue by routes commentary
Page 18 shows International Revenues by Routes. In the second quarter period, from July to September, mainly Japan-outbound demand slowed down and the supply-demand imbalance became clearer, so load factor dropped in many routes. This is not an easy situation but we will capture demand by using th
Slide 31: Number of Aircraft
《 Reference 》 Number of Aircraft End of Mar/19 End of 1st Half Mar/20 (March 31, 2019) (September 30, 2019) Diff. Owned Leased Total Owned Leased Total Airbus A350-900 0 0 0 3 0 3 +3 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
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Slide 33: ESG Management towards achievement of SDGs
《Reference》 ESG Management towards achievement of SDGs ※Originally disclosed on February 25,2019 In this Medium Term Management Plan, we look to identify priority issues from the viewpoint of ESG management. And strive to solve social issues through to achieve SDGs *1 in 2030. 2030 Fields Priority I
Slide 34: ESG
《Reference》 ESG Contribute to achieve SDGs, through our business activities, toward the realization of a sustainable society and corporate value increase Established The JAL Group Code of Conduct “Commitment to Society” Environmental Social Governance ・High transparency and strict ・Low-Carbon In
Slide 35: Financial Strategy and Capital policy①
《Reference》 Financial Strategy and Capital policy① ※Originally disclosed on February 25,2019 Capital investments will be made within cash flow from operating activities. Approximately 2/3 of the total investment will be actively used for growth investment to increase corporate value. Aircraft invest
Slide 36: Financial Strategy and Capital policy②
《Reference》 Financial Strategy and Capital policy② ※Originally disclosed on February 25,2019 We will strategically allocate capital to increase corporate value, while maintaining a firm financial structure with high capital efficiency. Improve asset efficiency Further increase Capital allocation and
Slide 37: Financial Strategy and Capital policy③
《Reference》 Financial Strategy and Capital policy③ ※Originally disclosed on February 25,2019 （Partial update ） Stable financial structure with high capital efficiency Enhancement of shareholder return and capital allocation for corporate value increases Financial structure Capital efficiency Shareho
Slide 38: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations, Japan Airlines ©Japan Airlines, ALL rights reserved. 26
Slide 39: ZIPAIR Presentation for Investors Meeting
ZIPAIR Presentation for Investors Meeting ZIPAIR Tokyo Inc. 2019/10/31 27 ©ZIPAIR Tokyo Inc.
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INTENTIONALLY LEFT BLANK ©ZIPAIR Tokyo Inc.
Slide 41: Progress of Preparation for Launching Routes
Progress of Preparation for Launching Narita = Bangkok May 14, 2020 (Plan) Routes Narita = Seoul July 1, 2020(Plan) 787-8 (290 Seats) Aircraft The first two aircrafts are ones used by JAL Newly painted aircraft arrived at Narita on 27 October LCC-specialized Passenger Service System (PSS, different
Slide 42: ZIPAIR preparation progress commentary
We would like to update the progress of ZIPAIR preparation tonight. ZIPAIR will fly to Bangkok, Suvarnabhumi Airport, from May 2020 next year and Seoul, Incheon Airport, from July 2020 next year. Both fly to/from Narita. ZIPAIR will use 787-8 with capacity of 290 seats. It will use a passeng
Slide 43: Profit making structure: Basic Structure
Profit making structure = Basic Structure = Toward destinations where there is no LCC competitors (ex. Transpacific) Topline ⇒ Superior competitive position (no competing LCC) ⇒ Demand capturing with low fares High Productivity Minimized Indirect Cost Productivity will be doubled Efficient Operation
Slide 44: Low-cost structure commentary
ZIPAIR will fly to long-haul destinations where there is less LCC competitors. By doing so, it can attract more demand because of its lower fare level than competing full-service carriers. Then, you may want to know why ZIPAIR has low-cost structure. I will explain four points. First, its asset
Slide 45: Revenue/Cost Structure (Conceptual Image)
Revenue/Cost Structure (Conceptual Image) ① Airfare Revenue (Fare multiplied by Passenger Number) covers operating cost ②Ancillary Revenue brings profits Cost Conceptual Image CASK Revenue JAL Seat Improved Lean ZIPAIR Conceptual Image CASK Number Turnover Back- CASK RASK Increase Office ZIPAIR Airf
Slide 46: Revenue and cost structure commentary
These two bar-charts show the conceptual image of ZIPAIR’s cost and revenue. For the cost-side, which is the bar chart on top, comparing with JAL’s CASK, Cost ASK, ZIPAIR can reduce it’s CASK by good aircraft turnover, large number of seats and very small indirect cost. Approximately, ZIPAIR’s C
Slide 47: CASK Comparison
CASK Comparison (EBIT used, ZIPAIR Fifth year forecast, fuel cost included) ZIPAIR will be at competitive level with other LCCs Japanese Yen Air Asia 3.9 Wizz Air 3.9 Noweigean 5.2 ZIPAIR approx. 5.5 Vueling 6.8 Easyjet 7.3 southwest 7.8 ※Source: Each Airlines’ Annual Report 2018 FX/ GBP-JPY: 140.05
Slide 48: CASK comparison commentary
You will see ZIPAIR’s cost structure is not bad. With this low-cost structure, ZIPAIR will enter a market where there is no LCC competitor. We believe it is clear that ZIPAIR will be very profitable. 31-S ©ZIPAIR Tokyo Inc.
Slide 49: (Reference) 787 Operators
(Reference) 787 Operators ZIPAIR will use JAL’s Know-how for 787 long-haul flight operations such as maintenance and flight operation 787 Operators Delivered Aircrafts 894 ANA 74 United 46 Ranking JAL 42 American 42 Air Canada 37 32 ※ Source: The Boeing Company; as of SEP 2019 ©ZIPAIR Tokyo Inc.
Slide 50: 787 operations support commentary
As I said, ZIPAIR will use 787, and its operation will be supported by JAL, who is the third biggest operator of 787 in the world. ZIPAIR can use JAL’s resources. ZIPAIR can fly long-haul flights easily. This is our winning story. Thank you very much for your attention. Thank you very much. 32
Slide 51: 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