Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — Q2 FY3/2013 Earnings Presentation
48 slides from Japan Airlines's earnings presentation, November 2012
Slide 1: Japan Airlines Financial Results Second Quarter FY3/2013
Japan Airlines Financial Results Second Quarter FY3/2013 (FY2012)
Slide 2: Table of Contents
Table of Contents Overview of 2Q FY3/13 (2Q FY12) Financial FY3/13 (FY12) Earnings & Operating Forecast Results • Consolidated Financial Results P.18 • Highlights of 2Q FY3/13 Financial Results P.3 • Revised Forecast of Consolidated Operating Profit P.19 • Revision of Consolidated Financial Forecast
Slide 3: Overview of 2Q FY3/13 (2Q FY12) Financial Results
Overview of 2Q FY3/13 (2Q FY12) Financial Results
Slide 4: Mid-Term Management Plan announcement and goals
On February 15, 2012, JAL announced its five year Mid-Term Management Plan ending FY3/2017. The Plan laid down our financial goals as “10%+ operating margin consistently over the next five years” and “equity ratio of 50%+ by FY3/2017.” Operating income is expected to decline from last fiscal year
Slide 5: Highlights of 2Q FY3/13 Financial Results
Highlights of 2Q FY3/13 Financial Results Revenue for 1H FY3/13 is JPY 112.1Bn (Y/Y +5.7%), operating margin continues to be high Our equity ratio reached 41.7% and our financial basis has become stronger. Total Revenue Operating Profit (JPY Bn) (JPY Bn) Margin 800 150 17.7% 17.7% 20% 599.8 634.
Slide 6: Commentary on second quarter financial results
Now, I would like to explain our financial results for the second quarter of FY2012. Operating profit for 1H FY3/2013 is JPY 112.1Bn. (Y/Y +5.7%) Operating profit increased from the year before, when we registered the highest record, due to an increase in revenue attributed to an increase in pass
Slide 7: Revision of Consolidated Financial Forecast for FY3/13
Revision of Consolidated Financial Forecast for FY3/13 Upward Revision of Operating Profit (JPY Bn) Margin +JPY15.0Bn 13.6％ Margin (＋10.0%) 12.3％ +JPY12.0Bn Margin (＋8.7%) 11.3％ 165 150 138 Target in Mid-Term Old Forecast New Forecast Plan 4
Slide 8: Commentary on upward forecast revision
Given an increase in operating profit and progress in cost reductions, we revised up our full- year forecasts. Operating profit is JPY 165.0Bn and operating profit margin is 13.6%, an increase of JPY 15.0Bn and 1.3 percentage points respectively from the previous forecast. This is the second upwa
Slide 9: Progress in Mid-Term Management Plan
Progress in Mid-Term Management Plan Route Network New Products and Services Narita-Boston route by Boeing 787 marked a good takeoff “Welcome! JAL New Sky” L/F of Narita-Boston route: 83.6% Introduction of new seat designs in every (L/F of International Passenger Transportation: 76.2%) cabin c
Slide 10: Commentary on new routes and services
On April 22, 2012, we launched a nonstop service between Narita and Boston using the Boeing 787 Dreamliner, our first new transpacific destination in 13 years. It has been performing at a remarkably strong load factor of 83.6% in 1H FY3/13, given its convenience as the only nonstop service to Bosto
Slide 11: Cost Improvement
Cost Improvement Improving cost efficiency to achieve the unit cost (1) of JPY 11.0 in FY3/17 as targeted in the Mid-term Management Plan Unit cost of 2Q is JPY 11.5, and expected to achieve unit cost target for FY3/13, JPY 11.5 Achieved cost reduction of JPY 5 Bn at 2Q FY3/13 (expected to min
Slide 12: Commentary on cost reduction progress
During the five-year period of the Mid-Term Management Plan, we will strive to restrain the increase in operating expenses against the projected growth in ASK. We have made steady progress in achieving the Mid-Term Management Plan, by reducing costs by JPY5.0Bn this 1H. Of our target of JPY50Bn in
Slide 13: Details of 2Q FY3/13 (2Q FY12) Financial Results
Details of 2Q FY3/13 (2Q FY12) Financial Results
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Slide 15: Overview of Consolidated Financial Results
Overview of Consolidated Financial Results Revenue JPY 634.2Bn and operating profit JPY 112.1Bn Operating profit margin 17.7%, the same level as last year (JPY Bn) 1H FY3/12 1H FY3/13 % Y/Y 2Q FY3/13 (1) % Y/Y Revenue 599.8 634.2 +5.7% 347.4 +0.7% Air Transportation Segment 539.4 567.7 +5.2% 310
Slide 16: Commentary on consolidated results
Revenue for 1H FY3/2013 is JPY 634.2Bn, an Y/Y increase by 5.7% mainly due to an increase in passenger numbers on both international and domestic routes. Although operating expenses increased by 5.7% on an Y/Y basis to JPY 522.0Bn due to an increase in oil prices, capacity, bonuses, etc., the incr
Slide 17: Fluctuations in Operating Profit
Fluctuations in Operating Profit 1H FY3/2013 (JPY Bn) Other • Cost for new products and services ASK Y/Y：+5.9% Revenues Fuel • Depreciation （Shorter years of aircraft depreciation） RPK Y/Y：+13.1% +6.9% ▲9.0% • Personnel (Bonus Payment) etc. Domestic International Operation Passenger Cargo Coupled Co
Slide 18: Commentary on operating profit fluctuations
Fluctuations in operating profit in 2Q FY3/2013 are attributed to the following. Revenue increased by JPY 34.3Bn on an Y/Y basis due to an increase in both international and domestic passengers, and an increase in revenue at affiliated companies. Costs for new products and services increased due
Slide 19: International Passenger Operations (Operating Results)
International Passenger Operations (Operating Results) International Passenger 1H FY3/12 1H FY3/13 % Y/Y 2Q FY3/13 % Y/Y Passenger Revenue (JPY Bn) 190.8 210.3 +10.2% 114.3 +2.2% Passengers (’000) 3,210 3,778 +17.7% 1,975 +6.9% RPK (MM passengers-km) 14,391 16,852 +17.1% 8,890 +8.8% ASK (MM seats-km
Slide 20: Commentary on international passenger demand
Demand for both international and domestic flights picked up significantly on an Y/Y basis, partly due to a rebound from the steep decline in demand in FY3/2012 after the Great East Japan Earthquake. A recovery trend has been marked especially in international flights: Passengers and RPK grew by 1
Slide 21: International Passenger Operations (Fluctuations in Passenger Revenue)
International Passenger Operations (Fluctuations in Passenger Revenue) As passenger numbers increased, passenger revenue rose by JPY 19.4Bn Y/Y in 1H FY3/13 1H FY3/2013 (JPY Bn) +JPY 19.4Bn (+10.2%) 210.3 190.8 +30.5 ▲11.0 Revenue per Passenger Number of Passengers ・Demand recovery from • Demand C
Slide 22: Commentary on international unit revenue
Unit revenue of international passengers dropped due to a recovery in leisure demand, both inbound and outbound, from the post-quake downturn last year, and resulted in a higher rate of low yield passengers. However, passenger numbers increased substantially, owing to post-quake recovery in demand
Slide 23: Domestic Passenger Operations (Operating Results)
Domestic Passenger Operations (Operating Results) Domestic Passenger 1H FY3/12 1H FY3/13 % Y/Y 2Q FY3/13 % Y/Y Passenger Revenue (JPY Bn) 243.3 250.4 +2.9% 142.1 ▲0.5% Passengers (’000) 14,175 15,226 +7.4% 8,114 +1.3% RPK (MM passengers-km) 10,853 11,689 +7.7% 6,264 +0.1% ASK (MM seats-km) 17,352 18
Slide 24: Commentary on domestic passenger recovery
Domestic passenger operations saw a recovery in demand from the negative impacts of the Great East Japan Earthquake. We also strived to maximize revenue by increasing flights throughout the first half-year and assigning larger aircrafts to some routes. Both passenger numbers and RPK grew by 7.4% a
Slide 25: Domestic Passenger Operations (Fluctuations in Passenger Revenue)
Domestic Passenger Operations (Fluctuations in Passenger Revenue) Revenue increases by JPY 7.0Bn due to an increase in passenger numbers. 1H FY3/2013 (JPY Bn) +JPY 7.0Bn (+2.9%) 250.4 243.3 +16.5 ▲9.5 Revenue per Passenger Number of Passengers • Demand recovery from Earthquake 1H FY3/12 • Change i
Slide 26: Commentary on domestic passenger revenue
Despite the rebound in individual and group passenger numbers from impacts of the earthquake last year, the ratio of low cost tickets increased, impacting revenue per passenger negatively. Revenue increased in 1H FY3/2013 by JPY 17Bn Y/Y through flexible pricing to meet the customers’ diverse need
Slide 27: Major Operating Expense Items
Major Operating Expense Items Breakdown of Operating Expense (JPY Bn) 1H FY3/12 1H FY3/13 % Y/Y 2Q FY3/13 (1) % Y/Y Fuel 113.8 124.1 +9.0% 62.4 +3.2% Landing fees and other rent 35.1 37.9 +8.0% 19.3 +5.4% Maintenance 11.2 14.8 +31.6% 7.9 +49.4% Sales Commissions 10.9 10.2 ▲7.2% 5.1 ▲9.7% Aircraft De
Slide 28: Commentary on operating expenses
As fuel prices and capacity increased, fuel costs rose by 9%. Landing fees and other rent went up by 8.0%. Maintenance costs rose by 31.6%, as we had more periodic inspections this year. Aircraft depreciation increased by 8.2%, as the years of aircraft depreciation were shortened. Bonus payment
Slide 29: Major Balance Sheet Items
Major Balance Sheet Items The balance of interest-bearing debt is JPY 182.4Bn after repayment. Shareholders' equity ratio increases by 6.0pt to 41.7%. End of FY3/12 End of 2Q FY3/13 (JPY Bn) Difference 2012/3/31 2012/9/30 Total Assets 1,087.6 1,147.3 +59.7 Cash and Deposits 272.4 349.0 +76.5 Bal
Slide 30: Commentary on debt and equity ratio
The balance of interest-bearing debt is JPY184.2Bn, as repayment of long-term debts and lease debts progressed. Equity ratio reached 41.7% at the end of 2Q FY3/2013, and we are close to reaching the equity ratio target of 50% set out in the Mid-Term Management Plan.
Slide 31: Major Cash Flow Items
Major Cash Flow Items (JPY Bn) 1H FY3/12 1H FY3/13 Difference Net income before income taxes and 109.0 110.6 +1.6 minority interests Depreciation 41.5 40.7 ▲0.7 Interest Payment ▲6.8 ▲1.6 +5.1 Tax ▲4.4 ▲12.1 ▲ 7.6 Other ▲17.1 15.4 +32.5 Cash Flow from Operating Activities 122.1 152.9 +30.8 Capital E
Slide 32: Commentary on cash flow
Cash flow increased by JPY 30Bn on a Y/Y basis to JPY 152.9Bn, attributed to higher profitability. Cash flow from investment activities was an outflow of JPY 44Bn (excluding deposits and withdrawals from deposit accounts.). Free cash flow in 2Q FY3/2013 declined by JPY 18.0Bn, to JPY 108.9Bn.
Slide 33: FY3/13 (2Q FY12) Earnings & Operating Forecast
Click to edit Master title style FY3/13 (2Q FY12) Earnings & Operating Forecast
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Slide 35: FY3/13 Earnings Forecast (Consolidated Results)
FY3/13 Earnings Forecast (Consolidated Results) (JPY Bn) FY3/12 Actual FY3/13 New Forecast FY3/13 Old Forecast Difference Revenue 1,204.8 1,215.0 1,220.0 ▲5.0 Operating Expense 999.8 1,050.0 1,070.0 ▲20.0 Operating Profit 204.9 165.0 150.0 +15.0 Ordinary Income 197.6 155.0 140.0 +15.0 Net Income 186
Slide 36: Commentary on full-year forecast
Revenue for the full FY3/2013 is expected to be JPY 1,215Bn, down JPY 5Bn from the previous forecast. Operating profit and ordinary income forecasts were revised up by JPY15Bn respectively to JPY 165Bn and JPY 155Bn. Net income forecast was revised up by JPY10BN from JPY 130Bn to JPY 140Bn.
Slide 37: Change of Consolidated Operating Profit Forecast
Change of Consolidated Operating Profit Forecast Operating Profit improved by JPY 15Bn from the previous announcement → Upward adjustment from JPY 150Bn to JPY 165Bn Revenue decreased by JPY 5Bn and fuel cost increased by JPY 5Bn but other expenses are expected to decrease by JPY 25Bn • Producti
Slide 38: Commentary on operating profit forecast changes
The key changes in our operating profit forecast are explained below. Operating profit increased, as revenue decreased by JPY 5Bn and fuel expenses increased by JPY 5Bn, but other costs are expected to further decrease by JPY 25Bn. A decline in operating revenue derives from incorporating negativ
Slide 39: FY3/13 Earnings Forecast (Consolidated Balance Sheets / Cash Flow)
FY3/13 Earnings Forecast (Consolidated Balance Sheets / Cash Flow) Consolidated Balance Sheet (JPY Bn) End of FY3/12 Actual FY3/13 New Forecast Difference Total Assets 1,087.6 1,174.0 +86.3 Interest-bearing Debt 208.4 175.0 ▲33.4 Shareholders' Equity 388.5 521.0 +132.4 Shareholders' Equity Ratio (%)
Slide 40: Commentary on balance sheet and cash flow forecast
The last page shows forecasts of the balance sheet and cash flow for FY3/2013. We expect interest-bearing debt to decrease by JPY 33.4Bn to JPY 175Bn, mainly due to repayment of lease debts. We expect equity ratio to reach 44.4% by the end of FY3/2013 due to an increase in shareholders’ equity by
Slide 41: Supplemental Reference
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Slide 43: Revenue of International Routes by Geographic Segment
《Supplemental Reference》 Revenue of International Routes by Geographic Segment Passenger Revenue (% of the whole int’l routes) Passengers (%) 1H FY3/12 1H FY3/13 Y/Y 2Q FY3/13 Y/Y (’000) 1H FY3/12 1H FY3/13 Y/Y 2Q FY3/13 Y/Y Pacific Routes 33.0% 34.0% +1.0pt 35.5% +2.5pt Pacific Routes 7,552 8,436 +
Slide 44: FY3/13 Operating Forecast (Air Transportation Business)
《Supplemental Reference》 FY3/13 Operating Forecast (Air Transportation Business) International Passenger Domestic Passenger 1H FY3/13 2H FY3/13 FY3/13 1H FY3/13 2H FY3/13 FY3/13 (Y/Y basis) Actual Forecast Forecast Actual Forecast Forecast ASK +4.5% +6.9% +5.7% +7.6% ▲0.9% +3.3% RPK +17.1% +1.9% +9.
Slide 45: Number of Aircraft in Service
《Supplemental Reference》 Number of Aircraft in Service Number of Aircraft Used by the JAL Group End of FY3/12 End of 2Q FY3/13 2012/3/31 2012/9/30 Increase/ Decrease 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
Slide 46: New Routes and Planned Services
《Supplemental Reference》 New Routes and Planned Services International Routes Domestic Routes 【New routes】 【Increase of Service】 Route Craft Flight Change (RT) Timing Route Flight Change (RT) Timing 0 ⇒4 (per week) December 2, 2012－ Narita = San Diego 787-8 Haneda = Izumo 5⇒6 per day October 28, 201
Slide 47: Contact
Contact Thank you for your attention! For any inquiries regarding this presentation, please contact the following Japan Airlines Financing and Accounting Office Finance Department Phone： 81-3-5460-3068
Slide 48: Important Information Regarding the Presentation
Important Information Regarding the Presentation 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