Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — H1 FY2022 Earnings Presentation
44 slides from Japan Airlines's earnings presentation, Nov 1, 2022
Slide 1: Financial Results 1st Half Mar/2023 (FY2022)
JAPAN AIRLINES Co., Ltd. Financial Results 1st Half Mar/2023（FY2022） 「JAL SKY MUSEUM」 received the Kids Design Award 2022 “JAL SKY MUSEUM” received the “Good Design Award” and “Kids Design Award” for 2022 November 1, 2022 ©Japan Airlines, ALL rights reserved.
Slide 2: Agenda
SKYTRAX SKYTRAX SKYTRAX 2022 Covid-19 Safety World Airline Star SKYTRAX Rating Rating World's Best Economy Class 5-Star 5-Star COVID-19 Excellence Award ※ 1. PERFORMANCE OVERVIEW FOR FY22Q2 APEX APEX APEX WORLD CLASS FIVE STAR Health Safety Powered by SimpliFlying Audit 2. FORECAST FOR FY22 FULL-YEA
Slide 3: Performance Overview for FY22Q2
PERFORMANCE OVERVIEW FOR FY22Q2 ✔ Revenue・EBIT improved and EBIT turned into the black for this first half despite the increase in fuel prices and depreciation of the yen, as the shift toward balancing the infection prevention and socioeconomic activities gained momentum Revenue EBIT (1) / Profit or L
Slide 4: In the 2nd quarter, EBIT was profitable on a quarterly basis
● In the 2nd quarter, EBIT was profitable on a quarterly basis for the first time after the pandemic. We achieved a cumulative profit of 300 million yen in the second quarter, improving by 152.2 billion yen year-on-year. The net loss was 2.1 billion yen, just one step away from turning into black. ● De
Slide 5: FY22Q2 Performance by Business Domain
FY22Q2 Performance by Business Domain Full Service Carrier LCC LCC Profitability steadily improved and Flight restrictions for China and difficult turned into the black in 2nd quarter environment for dom LCCs continue, but alone with demand at 40% for int’l steady growth for mid-long int’l LCC & 75% fo
Slide 6: Explanation of results of each business domain
● 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 loss of 15 billion yen. The cargo business continued to perform strongly, but the recovery in passenger demand was delayed due to continued bor
Slide 7: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q2 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR THE SECOND HALF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q2 5. REFERENCES ©Japan Airlines, ALL rights reserved. 5
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Slide 9: FY22 Full-Year Performance Forecast
FY22 Full-Year Performance Forecast ✔ To reflect the current situation, the forecast for revenue & operating expense is revised, while forecast for EBIT & Profit/Loss remains unchanged ✔ We will strive to achieve the profit forecast through rapid increase in int’l & dom demand and int’l unit revenue, a
Slide 10: Revisions made to the earnings forecast
● On this page, I will focus on some points regarding the revisions made to the earnings forecast announced this time. ● The full-year consolidated earnings forecast for EBIT of 80 billion yen and Net Profit of 45 billion yen is not changed. Regarding revenues, we expect an increase in international
Slide 11: Premises of Performance Forecast: Int'l & Domestic Passenger Operations
Premises of Performance Forecast for FY22 Full-year Int’l & Domestic Passenger Operations (FSC) ✔ For Int’l, higher revenue than the initial forecast is expected through significant increase in unit revenue despite lower number of passengers than initial forecast ✔ For Dom, although rapid recovery is
Slide 12: Current trends in passenger demand
● On this page, I will explain the current trends in passenger demand for the full service carrier business. ● For international, due to factors such as the border restrictions in China, we do not expect the number of passengers to reach the initially-forecasted level for this fiscal year. ● On the o
Slide 13: Premises of Performance Forecast: Cargo, Fuel/FX Markets
Premises of Performance Forecast for FY22 Full-year Cargo, Fuel/FX Markets ✔ International cargo is expected to maintain high unit prices and revenues are expected to exceed the initial forecast, despite a loosening supply-demand balance. ✔ FX is set at 145 JPY per USD, fuel at 125 USD per barrel of
Slide 14: Cargo business and fuel/FX impact
● This page shows the performance of the Cargo business and the impact from the fuel and FX market situations. ● Regarding the international cargo business, although the extremely tight supply-demand situation has been gradually settling down, we will work to continue to maintain volume and unit pri
Slide 15: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q2 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR THE SECOND HALF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q2 5. REFERENCES ©Japan Airlines, ALL rights reserved. 15
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Slide 17: Initiatives for the Second Half
INITIATIVES FOR THE SECOND HALF Full Service Carrier LCC International ZIPAIR ❏ Increase supply for strong N. American routes ❏ Strong sales toward San Jose flights ❏ Strengthen overseas revenue management ❏ Increased flights to capture inbound demand Domestic Spring Japan ❏ Larger aircraft and increa
Slide 18: Explanation of second-half initiatives
● On this page, we will explain our initiatives for this second half. ● For the full service carrier business domain, we will aim to increase revenues by expanding our supply in response to the rapidly recovering demand and by improving unit prices through appropriate revenue management. ● For the i
Slide 19: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q2 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR THE SECOND HALF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q2 5. REFERENCES ©Japan Airlines, ALL rights reserved. 11
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Slide 21: Consolidated Financial Results
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 Consolidated Financial Results 1st Half 2nd Quarter (JPY Bn) Vs. FY19Q2 Vs. FY21Q2 Vs. FY21Q2 FY19Q2 FY21Q2 FY22Q2 Diff. y/y Diff. y/y FY22Q2 Diff. y/y Revenue 748.9 290.6 618.5 ▼130.4 ▼17.4% +327.8 +112.8% 349.6 +192.0 +121.8% Full Service Carrier 612.2 219.1 50
Slide 22: Introduction to second quarter results
● From page 12, I will show you the result of the second quarter. ● Page 12 shows consolidated results. ©Japan Airlines, ALL rights reserved. 12-S
Slide 23: Changes in EBIT (Revenues/Expenses)
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 Changes in EBIT (Revenues／Expenses) + stands for profit increase（ revenue increase, cost decrease ) RPK y/y ： +227.7% ▼ stands for profit decrease ( revenue decrease, cost increase ) ASK y/y ： +64.6% ＋152.2 Bn （JPY Bn） Mileage, Lifestyle and Infrastructure and o
Slide 24: Factors behind EBIT improvement
● This page shows the factors behind the improvement in EBIT through revenue and expense. ● Revenues increased in all areas, by 327.8 billion yen year-on-year. Due to the recovery in passenger demand, the increase in international passenger and domestic passenger revenues may stand out, but cargo re
Slide 25: Changes in EBIT (Market and other impact)
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 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 ＋152.2 Bn Currency Market ▼24.3 Bn (Excl. Market Impact) Revenue +19.8 Bn
Slide 26: EBIT improvement by market impacts and other factors
● This page shows the improvement of EBIT divided into market impacts and other factors. ● The impact of market was a negative of 45.3 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 its im
Slide 27: Int'l & Domestic Passenger Operations (Full Service Carrier)
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 Int’l & Domestic Passenger Operations (Full Service Carrier) 1st Half 2nd Quarter International Passenger FY19Q2 FY21Q2 FY22Q2 Vs. FY19Q2 Vs. FY21Q2 FY22Q2 Vs. FY21Q2 Passenger Revenue (JPY Bn) 272.9 29.1 163.2 ▼40.2% +460.3% 100.7 +462.4% Passengers (’000) 4,
Slide 28: Performance of international and domestic passenger business
● This page shows the performance of international and domestic passenger business. ● International passenger revenue was 163.2 billion yen, recovering to approximately 60% compared to fiscal year 2019. ● Domestic passenger revenue was 208.6 billion yen, recovering to approximately mid-70% of fiscal y
Slide 29: Cargo
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 Cargo 1st Half 2nd Quarter International Cargo FY19Q2 FY21Q2 FY22Q2 Vs. FY19Q2 Vs. FY21Q2 FY22Q2 Vs. FY21Q2 Cargo Revenue (JPY Bn) 29.7 80.8 109.0 +267.2% +35.0% 52.1 +24.3% Available Ton Km (MN ton km) 2,233 1,616 1,857 ▼16.8% +14.9% 962 +16.1% Revenue Ton Km
Slide 30: Performance of the Cargo business
● This page shows the performance of the Cargo business. ● The total weight of international cargo was slightly lower compared to last year due to the global decline in the demand. However, the decrease for JAL was smaller than other competitors, and high level of unit prices continue. As a result,
Slide 31: LCC
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 LCC ZIPAIR Spring Japan (1) LCC 1st Half 2nd Quarter 1st Half 2nd Quarter FY21Q2 FY22Q2 Vs. FY21Q2 FY22Q2 Vs. FY21Q2 FY22Q2 FY22Q2 Vs. FY21Q2 Passenger Revenue（JPY Bn） 0.1 7.4 - 5.3 - 3.6 2.4 +252.5% Passengers（’000） 5 162 - 109 - 208 165 +617.7% RPK（MN passen
Slide 32: Performance of the LCC business
● This page shows the performance of our LCC business. ● ZIPAIR mainly contributed to Cargo transportation last year, but they started the full-scale LCC passenger business and contributed to a significant increase in passenger revenue with an unexpectedly high level of ancillary revenue this year. Z
Slide 33: Expenses
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 Expenses ✔ Actual fixed cost for FY22Q2 was 244.6 billion yen. Further cost control will be conducted to suppress increase in costs by the market & cut costs below the annual target of 500 bil. Major Operating Expense Items 1st Half 2nd Quarter （JPY Bn） Vs. FY1
Slide 34: Cost breakdown and cost management initiatives
● This page shows the breakdown of the cost and our cost management initiatives. ● Due to the impact of the fuel exchange market and the recovery of demand, costs linked to the scale of operations and the number of passengers increased significantly compared to the previous fiscal year. On the other h
Slide 35: Fuel Costs
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 Fuel Costs Changes in fuel costs Hedge Ratio (As of End of Oct/2022) (JPY Bn) FX Market 29.0 +72.3 154.8 Volume Hedging increase and others 45% 45% +31.5 ▼37.1 58.9 ＋95.8 Bn 20% 20% 9% 9% (＋162.5%) FY21Q2 FY22Q2 FY22 FY23 FY24 Fuel Hedging FX Hedging Foreign c
Slide 36: Explanation of fuel cost
● This page explains our fuel cost. ● Fuel costs for the second quarter was 154.8 billion yen, which increased by 95.8 billion yen year-on-year. While consumption did increase, this is mainly due to market situations. In addition to soaring crude oil prices and a significant depreciation of the yen,
Slide 37: Balance Sheet and Cash Flow
DETAILS OF FINANCIAL RESULTS FOR FY22Q2 Balance Sheet and Cash Flow BS ✔ Equity ratio is 39.0% and Net D/E ratio is x0.2 both in terms of credit evaluation basis, keeping a healthy level ✔ Cash flow from operating activities is 120.2 billion yen, Free cash flow is 67.7 CF billion yen of inflow, improvi
Slide 38: Balance sheet and cash flow explanation
● This page shows our balance sheet and cash flow. ● The balance of interest-bearing debt continued to decline from the first quarter. The net D/E ratio on a rating evaluation basis is 0.2 times, kept at a healthy level. ● Our cash position at the end of September was 542.9 billion yen, a 48.7 billion
Slide 39: Agenda
1. PERFORMANCE OVERVIEW FOR FY22Q2 2. FORECAST FOR FY22 FULL-YEAR 3. INITIATIVES FOR THE SECOND HALF 4. DETAILS OF FINANCIAL RESULTS FOR FY22Q2 5. REFERENCES ©Japan Airlines, ALL rights reserved. 21
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Slide 41: Operation Performance by Geographic Segment (Full Service Carrier)
[Reference] Operation Performance by Geographic Segment (Full Service Carrier) Passenger Revenue Revenue Passengers Carried 1st Half 2nd Quarter 1st Half 2nd Quarter ('000) (%） FY22Q2 FY22Q2 FY22Q2 Vs. FY19Q2 Vs. FY21Q2 FY22Q2 Vs. FY21Q2 Component Ratio Vs. FY19Q2 Vs. FY21Q2 Component Ratio Vs. FY21
Slide 42: Fleet Information
[Reference] Fleet Information End of FY21 (March 31, 2022) End of FY22Q2 (September 30, 2022) Diff. Total2 Total2 Total2 of Retired Retired Sep/22 Owened Leased Total1 AircraftExcluded Owened Leased Total1 AircraftExcluded - Mar/22 Airbus A350-900 11 4 15 15 12 4 16 16 +1 Boeing 777-300ER 13 0 (1) 13
Slide 43: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations Japan Airlines ©Japan Airlines, ALL rights reserved. 24
Slide 44: 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