Slide 1: Challenge, Leading to Growth
Challenge, Leading to Growth Fiscal Years 2017-2020 JAL Group Medium Term Management Plan ＆ Financial Results for Fiscal Year ended March 2017 Please be noted that a few corrections are made, April 28, 2017 Japan Airlines Co., Ltd. in red, on Pages 17 and 34.
Slide 2: Medium Term Management Plan 2017-2020 Contents
1-1 将来のありたい姿 Medium Term Management Plan 2017-2020 1 JAL Vision - What we aim to be 2 Review and Expected Environment 3 Essence of Strategies 4 Initiatives and Business Portfolio 5 Steps for growth 6 Financial Strategy – Financial Policy 7 International Passenger Operations 8 Domestic Passenger Oper
Slide 3: JAL Vision - What we aim to be
MEDIUM TERM MANAGEMENT PLAN 1 JAL Vision - What we aim to be 2017-2020 Medium Term Management Plan 2012-2016 Review Management Target Safety Customer Satisfaction Finance Achieve “10%+ or above operating Achieve “Zero Aircraft Accidents 1 Achieve “No. 1 in Customer Satisfaction 4” by FY2016 profit m
Slide 4: Review and Expected Environment
MEDIUM TERM MANAGEMENT PLAN 2 Review and Expected Environment 2017-2020 Refine JAL’s advantage and expand opportunities to leverage our strengths 2012 - 2016 2017 - 2020 Previous Medium Term Management Plan New Medium Term Management Plan Develop revenue sources besides Increase customer air transpo
Slide 5: Essence of Strategies
MEDIUM TERM MANAGEMENT PLAN 3 Essence of Strategies 2017-2020 2 key drivers for growth 5 key initiatives 3 management targets JAL Focus JAL Action JAL Target Top out Safety Safety Safety Refine our Realize “Zero Aircraft Accidents” Full Service Carrier and “ Zero Serious Incidents” business Networks
Slide 6: Initiatives and Business Portfolio
MEDIUM TERM MANAGEMENT PLAN 4 Initiatives and Business Portfolio 2017-2020 In addition to refining our Full Service Carrier business, we will expand in business domains for our future growth 2016 Revenue JAL Focus 2020 Revenue While passing on JAL’s strengths we developed so far, we will adapt to ch
Slide 7: Steps for growth
MEDIUM TERM MANAGEMENT PLAN 5 Steps for growth 2017-2020 To win the competition and prepare for sustainable growth, we will continue “necessary capital expenditures” and “adaption to markets” 2012 - 2016 2017 - 2020 2021〜 Previous Medium Term Management Plan New Medium Term Management Plan To the Ne
Slide 8: Financial Strategy
MEDIUM TERM MANAGEMENT PLAN 6 Financial Strategy 2017-2020 Increase our corporate value by growing continuously with a high profitability structure and strong financial stability. Studying the optional application of IFRS Profitability Stability Growth Pursue Profitability continuously Maintain
Slide 9: International Passenger Operations
MEDIUM TERM MANAGEMENT PLAN 7 International Passenger Operations 2017-2020 Outlook of Passenger Revenue・ Demand and supply projections Unit Price・Load Factor（L/F） Increase capacity to meet growth Maintain high load factors and unit price of total demand prospect (excluding FSC/exchange rates) 6000 1
Slide 10: Domestic Passenger Operations
MEDIUM TERM MANAGEMENT PLAN 8 Domestic Passenger Operations 2017-2020 Outlook of Passenger Revenue・ Demand and supply projections Unit Price・Load Factor（L/F） Maintain revenue load factors of roughly 70% Expand capacity primarily on Haneda and and current unit revenue levels Itami routes, which show
Slide 11: Fleet Plan
Medium Term Management Plan 9 Fleet Plan 2017-2020 Fleet Plan Detail End of FY16 End of FY17 Forecast End of FY20 Forecast Total 230 Total 226 Total 231 Total International 84 International 85 International 92 Domestic 146 Domestic 141 Domestic 139 （excl. Regional 174) (excl. Regional 174） (excl. Re
Slide 12: New Domain
MEDIUM TERM MANAGEMENT PLAN 10 New Domain 2017-2020 Increase revenues of airline-related businesses and develop new revenue sources by leveraging JAL’s strengths FY16 ×1.3 FY20 New Domain Flight crew training Collaboration with venture Point tie-up business Airline-related businesses inbou
Slide 13: Innovation of Passenger Service System
MEDIUM TERM MANAGEMENT PLAN 11 Innovation of Passenger Service System 2017-2020 Build an IT Platform as foundation for sustainable growth （Present） （Nov 2017~, scheduled） JAL self-operated Self-operated JAL A B spec spec spec New System（Outsource） System System ①②③ ①Aged, outmoded, External System 1
Slide 14: Profitability management, Cost management
MEDIUM TERM MANAGEMENT PLAN 12 Profitability management, Cost management 2017-2020 Divisional Profitability Management Maximizing Profit per ASK (Image) Realize “Maximize revenues, Minimize Make efforts to maximize Unit Profit （JPY） expenses” and “Lean management” 16 13.3 13.4 120 12 9.9 110 9.4 Man
Slide 15: Market Risk Management
MEDIUM TERM MANAGEMENT PLAN 13 Market Risk Management 2017-2020 Hedging Policy Overcome Market Risks There are impacts of fluctuating fuel prices and FX rates in a single ＜Fuel Hedge＞ fiscal year, but we were able to Impacts of fluctuating fuel & FX minimize impacts in the medium Amount of usage mar
Slide 16: Financial Strategy – Allocation of Cash Flow
MEDIUM TERM MANAGEMENT PLAN 14 Financial Strategy – Allocation of Cash Flow 2017-2020 Use cash for investment for growth, return to shareholders and maintaining the financial stability Regular Future Capex (image) Investment Growth Fleet Investment replacement Regular etc. Investment (JPY Bn) FY16 F
Slide 17: Financial Strategy – Return to Shareholders Policy
MEDIUM TERM MANAGEMENT PLAN 15 Financial Strategy –Return to Shareholders Policy 2017-2020 Stable dividend to shareholders Introduced interim dividend Consider additional shareholder return such as share repurchase based on financial foundation By containing seasonal Expanded Increase dividend Addit
Slide 18: Financial Strategy – Balance sheet
MEDIUM TERM MANAGEMENT PLAN 16 Financial Strategy –Balance sheet 2017-2020 Maintain shareholders’ equity ratio around 60% Improve credit rating, aim for “A flat” For Growth Investment, Utilize debts with strict discipline （JPY Bn） FY16 FY17 FY20 (Image) ROIC Cash and Interest-bearing Disciplined den
Slide 19: Financial Strategy – Cash Flow Plan
MEDIUM TERM MANAGEMENT PLAN 17 Financial Strategy –Cash Flow Plan 2017-2020 The dividend payment will exceed Free Cash Flow Manage to cover dividend payment with Free Cash Flow from FY18 FY16 FY17 FY18～FY20 Average (JPY Bn) 253.1 ▲215.5 231.0 ▲210.0 37.5 21.0 ▲49.1 ▲73.4 （Including FY17 interim divi
Slide 20: Financial Data: Earnings Forecast for FY2017
1-1 将来のありたい姿 中期経営計画 2017-2020 Financial Data 1 EARNINGS FORECAST FOR FY2017 3 - From FY2016, figures for Revenue Passengers Carried, ASK, RPK and Load Factor include “Marketing Carriers’ on code-sharing flights operated by JAL”. The past fiscal years also shows the figures after reflecting this chan
Slide 21: Overview of FY2016 Financial Results and Earnings Forecast for FY2017
Overview of FY2016 Financial Results and Earnings Forecast for FY2017 Operating Revenue Operating Profit・Net Income （JPY Bn） （OP Margin） （JPY Bn） 250 25% 1,500 Operating Profit Net Income 209.1 200 20% 1,400 174.4 1,336.6 1,339.0 170.3 164.1 1,288.9 150 142.0 15% 1,300 15.7% 13.2% 100.0 1,200 100 10
Slide 22: FY2017 Earnings Forecast
FY2017 Earnings Forecast Revenue and Expenditure Plan Operational Preconditions FY2016 FY2017 FY2016 FY2017 (JPY Bn) Difference y/y Result Plan Result Plan Operating Revenue 1,288.9 1,339.0 +50.0 +3.9% ASK* Int’l +0.1% +2.7% International Passenger 415.2 455.0 +39.7 +9.6% Doms ▲1.2% +1.4% Domestic P
Slide 23: FY2017 Changes Forecast in Operating Profit
FY2017 Changes Forecast in Operating Profit FY2017 forecast expects lower earnings due to increases in IT system costs for building a platform to support future growth and maintenance costs. Aim to further accumulate profit through enhanced yield management and continued productivity improvement
Slide 24: Dividend Forecast
Dividend Forecast Dividend Forecast FY2015 FY2016 FY2017 New Results Announcement Forecast 2 Net Income*1 (JPY Bn) 174.4 164.1 100.0 Income Tax-Deferred (JPY Bn) ▲0.4 ▲31.6 5.0 Income available for dividend (JPY Bn) 174.0 132.5 105.0 × 25% × 25% × 30% Total amount for dividends (JPY Bn) 43.5 33.2 31
Slide 25: FY2017 Earnings Forecast: Balance Sheet and Cash Flow
FY2017 Earnings Forecast Balance Sheet End of FY2016 End of FY2017 （JPY Bn） Diff. Results Forecast Total Assets 1,728.7 1,793.0 +64.2 Balance of Interest-bearing debts 116.0 133.0 +16.9 Shareholders’ Equity 972.0 1,031.0 +58.9 Shareholders’ Equity Ratio(%) 56.2% 57.5% +1.3pt ROE(%) (1) 18.1% 10.0% ▲
Slide 26: Supplemental Reference: Earnings Forecast Mar/2018 (Air Transportation Segment)
《Supplemental Reference》 Earnings Forecast Mar/2018（ Air transportation Segment ） y/y（%） FY2016 FY2017 International Passenger Full-year 1H 2H Results Forecast （Forecast） (Forecast) (Forecast) Passenger Revenue (JPY Bn) 415.2 455.0 +9.7% +7.5% +11.9% ASK (MN seat km) 50,621 51,981 +2.7% +0.9% +4.4%
Slide 27: Financial Data: Details of FY2016 Financial Results
1-1 将来のありたい姿 中期経営計画 2017-2020 Financial Data 1 DETAILS OF FY2016 FINANCIAL RESULTS 2 3 - From FY2016, figures for Revenue Passengers Carried, ASK, RPK and Load Factor include “Marketing Carriers’ on code-sharing flights operated by JAL”. The past fiscal years also shows the figures after reflecting
Slide 28: Consolidated Financial Results
Consolidated Financial Results FY2016 Consolidated Financial Results （JPY Bn） 4Q FY2015 FY2016 Diff. y/y ratio Diff. y/y ratio (Jan-Mar)(5) Revenue 1,336.6 1,288.9 ▲47.6 ▲3.6% 313.4 +0.2 +0.1% Air Transportation Segment 1,205.2 1,159.3 ▲45.8 ▲3.8% 282.1 +0.1 +0.1% Operating Expense 1,127.4 1,118.6 ▲
Slide 29: FY2016 Changes in Operating Profit
FY2016 Changes in Operating Profit + stands for profit increase (revenue increase, cost reduction) ▲ stands for profit decrease (revenue decrease, cost increase) Market FY2015 FY2016 Singapore Kerosene 60.0 57.2 Dubai Crude Oil 47.2 45.6 ▲38.8Bn FX Rate (▲18.6%) 120.5 108.6 (JPY/USD) Int’l +15.1 Dom
Slide 30: FY2016 International Passenger Operations
FY2016 International Passenger Operations International Passenger FY2016 Full-Year (Change in Revenue) （JPY Bn) FY FY 4Q ▲33.5 Bn y/y (Jan-Mar) y/y 2015 2016 FY2016 (1) (▲7.5%) 448.7 Passenger Revenue （JPY Bn） 448.7 415.2 ▲7.5% 100.7 ▲2.0% ▲30.4 ▲3.1 415.2 ASK ▲1.0% 50,563 50,621 +0.1% 12,417 (MN se
Slide 31: FY2016 Domestic Passenger Operations
FY2016 Domestic Passenger Operations Domestic Passenger FY2016 Full-Year (Change in Revenue) 4Q FY FY y/y (Jan-Mar) y/y 2015 2016 FY2016 (1) Passenger Revenue （JPY Bn） （JPY Bn） 501.2 498.6 ▲0.5% 117.7 +0.5% ▲2.6 Bn ASK (▲0.5%) 35,869 35,423 ▲1.2% 8,678 ▲0.3% (MN seat km) RPK 501.2 (MN passenger km)
Slide 32: FY2016 Major Operating Expense Items
FY2016 Major Operating Expense Items Operating Expenses （JPY Bn） FY2016 4th Quarter FY2015 Diff. y/y ratio Diff. y/y ratio (Jan-Mar)(4) Fuel 228.1 198.7 ▲29.3 ▲12.9% 50.9 3.4 +7.3％ Landing and 82.2 81.1 ▲1.1 ▲1.4% 20.1 +0.1 +0.7％ navigation fees Maintenance 47.9 48.9 +1.0 +2.2% 8.0 ▲2.2 ▲21.9％ Sales
Slide 33: FY2016 Maximizing Profit per ASK
FY2016 Maximizing Profit per ASK （JPY） 20 120 100 110 99 100 15 90 13.3 13.3 80 ユニットレベニュー Air transportation revenue per ASK ASKあたり航空運送収入(左軸) 12.3 12.5 12.6 (Left) 70 9.4 ユニットコスト Unit Cost (Left) 10 60 8.6 8.7 9.1 8.4 50 ASKあたり利益 ユニットプロフィッ （右軸） Profit per ASK (Right) 40 （Figure （2012年度を100とした指数） in
Slide 34: FY2016 Impact of Fuel and FX Markets
FY2016 Impact of Fuel and FX Markets Transition of Fuel Cost by factors Hedge Ratio of Fuel Costs (As of End of FY Mar/2017) (JPY Bn) 2,500 250 100% FUEL FX Market FX Volume increase/ 80% ▲6.0 Hedging 2,000 228.1 200 ▲17.4 60% ▲5.9 Approx Approx 40% 40% 40% 1,500 ▲29.3 Bn 198.7 150 (▲12.9%) Approx A
Slide 35: Supplemental Reference: Major Balance Sheet Items
《Supplemental Reference》 Major Balance Sheet Items Consolidated Balance Sheet Summary as of FY2016 (JPY Bn) End of FY2015 End of FY2016 Diff. Total Assets 1,578.9 1,728.7 +149.8 Cash and Deposits (1) 420.3 404.0 ▲16.2 Balance of 92.6 116.0 +23.4 Interest-bearing Debt (2) Future Rental Expenses under
Slide 36: Supplemental Reference: FY2016 Major Cash Flow Items
《Supplemental Reference》FY2016 Major Cash Flow Items （JPY Bn） FY2015 FY2016 Diff. Net income before income taxes and 207.3 162.7 ▲44.6 minority interests Depreciation and Amortization 88.5 95.7 +7.2 Other 16.4 ▲5.4 ▲21.8 Cash Flow from Operating Activities 312.3 253.1 ▲59.2 Capital Expenditure(1) ▲2
Slide 37: Supplemental Reference: Revenue of International Routes by Geographic Segment
《Supplemental Reference》 Revenue of International Routes by Geographic Segment Passenger Revenue 4Q 4Q Component Ratio - From FY2016, figures for Revenue Passengers Carried, ASK, (%) Cumulative 3Months 4Q 4Q 4Q RPK and Load Factor include “Marketing Carriers’ on code-sharing y/y y/y FY2015 FY2016 3
Slide 38: Supplemental Reference: Number of Aircraft
《Supplemental Reference》 Number of Aircraft End of FY2015 End of FY2016 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 0 40 - Boeing 787-8 23
Slide 39: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations, Japan Airlines
Slide 40: 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