Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — Q2 FY3/2014 Earnings Presentation
41 slides from Japan Airlines's earnings presentation, Oct 31, 2013
Slide 1: Japan Airlines Financial Results 2nd Quarter FY3/2014
JAPAN AIRLINES Financial Results 2nd Quarter Mar / 2014 (FY2013) Yoshiharu Ueki, President Norikazu Saito, Managing Executive Officer 31 October, 2013
Slide 2: Contents
Contents 2) mm JAPAN AIRLINES OVERVIEW OF 187 HALF FY3/14 FINANCIAL = RESULTS REVISED CONSOLIDATED FINANCIAL FORECAST FOR FY3/14 PLAN DETAILS OF 187 HALF FY3/14 (1H FY13) FINANCIAL RESULTS PROGRESS OF MEDIUM TERM MANAGEMENT w SUPPLEMENTAL REFERENCES =
Slide 3: Overview of 2nd Quarter FY3/14 Financial Results
Overview of 2nd Quarter FY3/14 Financial Results Operating Revenue Operating Profit Operating Profit (JPY Bn) (JPY Bn) Margin 659.3 115 112.1 20% 660 ＋4.0% 634.2 17.7% 95.8 630 95 15% 14.5% 600 75 10% 1H FY3/13 1H FY3/14 1H FY3/13 1H FY3/14 FX Markets Despite weak Yen, Operating profit for 1H FY3/
Slide 4: Operating revenue increased 4.0% Y/Y to 659.3 billion yen
During the reporting period, operating revenue increased by 4.0% Y/Y to 659.3 billion yen, due to an increase in international and domestic passenger revenues. On the other hand, operating profit declined by 16.3 billion yen from the previous year to 95.8 billion yen, owing to an increase in var
Slide 5: Revised Consolidated Financial Forecast for FY3/14
Revised Consolidated Financial Forecast for FY3/14 Revised Operating Profit Forecast Operating Profit Margin Revised our Forecast based on the Result of 1H and Operating Profit Margin (JPY Bn) 11.0% 12.1% change in Fuel and FX market. +15Bn 155.0 Operating Profit: 155.0 Bn JPY, OPM 12.1% 150 140
Slide 6: Operating profit forecast revised upward by 15 billion yen
As operating profit was 155 billion yen, exceeding our forecast of 140 billion yen announced on April 30, we revised our operating profit upward by 15 billion yen. The profit margin is expected to be 12.1% . As for our dividend policy, we intend to pay the dividend at approximately 20% of our co
Slide 7: Progress of Medium Term Management Plan
Progress of Medium Term Management Plan Product and Service Enhancement International Domestic Improved comfort and functionality by Refurbishment of our cabin interior revamping all class of 767-300ER • Expand the leg room of economy class for 5cm Starting with Narita = Vancouver (maximum) fr
Slide 8: SKY SUITE 767 launch and domestic cabin revamp
First, following our popular SKY SUITE 777 service on international routes, we will progressively launch SKY SUITE 767, which is a fully revamped 767-300ER, starting with Narita=Vancouver route this December. As recently announced, we will also revamp seats and cabin interiors and offer Wi-Fi se
Slide 9: Introduction of Airbus A350
Introduction of Airbus A350 • Replacing long range aircraft • High levels of safety performance, inflight comfort, and operational efficiency • Entering into service from 2019, gradually replacing aging aircraft over approx. 6 years periods Current As of A350- 777- 777- A350-900 787-8 TYPE FIRM OPTI
Slide 10: Airbus A350 chosen as next generation aircraft
We have decided to use the Airbus A350 as the next generation aircraft on our mid and long distance routes. The features of the Airbus A350 are high safety performance, inflight comfort, and fuel efficiency surpassing other models by 10%, amongst others. It is a superbly economic and environment
Slide 11: Details of Financial Results 2nd Quarter FY3/14
Details of Financial Results 2nd Quarter Mar / 2014 (FY2013) Norikazu Saito, Managing Executive Officer Finance and Accounting
Slide 12: Intentionally Left Blank
Intentionally Left Blank 2) JAPAN AIRLINES
Slide 13: Consolidated Financial Results
Consolidated Financial Results Consolidated Financial Results 2nd Quarter FY3/14 2nd Quarter (JPY Bn) 1H FY3/13 1H FY3/14 y/y y/y (Jul-Sep) (1) Revenue: Revenue 634.2 659.3 +4.0% 365.1 +5.1% 659.3 Bn JPY, Air Transportation Segment 571.6 589.0 +3.0% 326.1 +4.3% y/y +4.0% Operating Expense 522.0 56
Slide 14: Operating revenue up 4.0%, operating expense up 7.9%
During the reporting period, operating revenue increased by 4.0% Y/Y to 659.3 billion yen, mainly due to an increase in international and domestic passenger revenues. Operating expense increased by 7.9% Y/Y to 563.4 billion yen, largely due to an increase in supply and various cost items, primar
Slide 15: Changes of Operating Profit
Changes of Operating Profit 1st HALF FY3/14 ASK y/y: +3.7% RPK y/y: +3.7% ▲16.3 Bn (Bn JPY) (▲14.6%) Other Revenue Fuel Domestic Int’l Int’l Cargo +10.9 ▲16.9 Passenger Passenger Operation +1.2 +1.0 Coupled Cost Revenue Other +11.8 Coupled Cost ▲3.4 Cost +7.4% ▲2.3 112.1 +0.5% +4.0% ▲13.7% ▲18.6 ▲8.
Slide 16: Operating profit declined 16.3 billion yen
As for revenues, international passengers and domestic passengers reported an increase in revenue of 11.8 billion yen, and 1.2 billion yen respectively. Adding other revenue, revenues increased by 25 billion yen. As for expenses, in addition to increased supply, fuel costs showed a marked increa
Slide 17: Impact from Currency Market
Impact from Currency Market Breakdown of the Impact on Our Operating Profit FX Impact Excl. FX (Bn JPY) ▲23.2 +6.9 Expenses Revenue (Excl. Fuel) 112.1 +11.6 ▲9.9 Fuel Revenue Expenses ▲24.9 95.8 88.9 +13.4 ▲6.5 1H FY3/13 1H FY3/14 Estimated Operating Profit (80.3 JPY/USD) without FX Impact (98.5 JPY
Slide 18: Foreign exchange impact on revenue and expenses
Compared to the operating profit of 112.1 billion yen the previous year, foreign exchange rates impacted revenue by plus 11.6 billion yen. The impact of foreign exchanges rates on expenses was +9.9 billion yen excluding fuel costs, and +24.9 billion yen of fuel costs. Excluding the impact of f
Slide 19: International Passenger Operations (Operating Results)
International Passenger Operations (Operating Results) International Passenger 2nd Quarter 1H FY3/13 1H FY3/14 y/y y/y (Jul-Sep) (1) Passenger Revenue 210.3 222.2 +5.7% 123.2 +7.8% International Passenger (JPY Bn) Revenue: ASK (MN seat km) 22,127 23,089 +4.4% 11,829 +4.9% JPY 222.2 Bn y/y +5.7% RP
Slide 20: International ASK, RPK and load factor commentary
ASK on international routes increased by 4.4% from the previous year, and RPK increased by 4.5%, making the load factor 76.3%, which is a 0.1points rise. Due to an increase in passenger numbers on mid- and long distances routes such as to Southeast Asia, as well as an increase in the revenue per
Slide 21: International Passenger Operations (Changes of Revenue)
International Passenger Operations (Changes of Revenue) 1st HALF FY3/14 Strong Demand on Europe and (Bn JPY) Southeast Asia Routes +11.8 Bn (+5.7%) Load Factor Europe 79.0% (y/y +2.6%) 222.2 Southeast Asia 75.6% (y/y +3.7%) +3.4 Expansion of SKY SUITE 777 +8.4 Expanded to JFK and Paris - Str
Slide 22: International passenger revenue up 5.7%
During the reporting period, demand on China and Korea routes was stagnant, but the load factor and revenue per passenger of Europe and Southeast Asia routes was strong. By expanding routes of SKY SUITE 777 with sweeping changes in comfort and functionality , the load factor and yield increased
Slide 23: Domestic Passenger Operations (Operating Results)
Domestic Passenger Operations (Operating Results) Domestic Passenger 2nd Quarter 1H FY3/13 1H FY3/14 y/y y/y (Jul-Sep) (1) Passenger Revenue 250.4 251.7 +0.5% 142.9 +0.5% Domestic Passenger (JPY Bn) Revenue: 251.7 Bn JPY, y/y +0.5% ASK (MN seat km) 18,668 19,229 +3.0% 9,784 +2.2% RPK (MN passenger
Slide 24: Domestic ASK, RPK and load factor commentary
ASK on domestic routes increased by 3.0% from the previous year, and RPK increased by 2.7%, making the load factor 62.4%. On the other hand, there was strong demand of group passengers, whose revenue per passenger is relatively low, and as a result, yield and revenue per passenger dropped by 2.4
Slide 25: Domestic Passenger Operations (Changes of Revenue)
Domestic Passenger Operations (Changes of Revenue) 1st HALF FY3/14 (Bn JPY) +1.2 Bn (+0.5%) Group Passenger Growth 251.7 Tie-up with Tokyo Disney Resort® 30th Anniversary 250.4 “Sengu” Ceremony at Izumo Taisha Shrine ▲8.5 +9.7 - Passenger Mix - Increase in supply - Other Measures 1H Revenue pe
Slide 26: Group passenger demand on domestic routes
During the reporting period, demand of group passengers on domestic routes remained strong. Demand from regional cities in Japan was robust, owing to the Tokyo Disneyland Resort ® 30th Anniversary Celebration Project, and such. The Sengu Ceremony of Izumo Taisha Shirine attracted strong demand o
Slide 27: Major Operating Expense Items
Major Operating Expense Items Operating Expenses 2nd Quarter Fuel cost increased by (JPY Bn) 1H FY3/13 1H FY3/14 difference % y/y difference (Jul-Sep) 16.9 Bn JPY due to an increase in supply and Fuel 124.1 141.1 +16.9 +13.7% 72.8 +10.3 weak yen Landing fees 37.9 40.7 +2.8 +7.4% 20.7 +1.3 Mainte
Slide 28: Fuel, landing, maintenance and personnel cost changes
Fuel costs increased by 16.9 billion yen, up 13.7% and landing fees increased by 2.8 billion yen up 7.4% from last year, due to the weak yen and an increase in supply. The breakdown of this increase of the fuel cost consists of an increase of 24.9 billion yen due to the weak yen, an increase of
Slide 29: Major Balance Sheet Items
Major Balance Sheet Items Consolidated Balance Sheet Summary as of End of 1st Half FY3/14 End of FY2012 End of 1H FY3/14 The balance of interest- (JPY Bn) difference 2013/3/31 2013/9/30 bearing debt is reduced to 137.3 Bn JPY after Total Assets 1,216.6 1,261.4 +44.8 repayment Cash and Deposits 347
Slide 30: Interest-bearing debt decreased; equity ratio rose
The balance of interest-bearing debts decreased by 22.7 billion yen from the previous year to137.3 billion yen, as we repaid lease obligations and long-term loans. The equity ratio increased by 2.5 points to 49.0%, as we reported a net profit for the reporting period. We are moving steadily forw
Slide 31: FY3/14 Earnings Forecast (Consolidated)
FY3/14 Earnings Forecast (Consolidated) FY3/13 FY3/14 FY3/14 FY3/14 FY3/14 (JPY Bn) difference Results New Forecast Prev. Forecast New Prev. Forecast Forecast Revenue 1,238.8 1,286.0 1,272.0 +14.0 ASK Int’l 103.3 103.9 Operating Expense 1,043.5 1,131.0 1,132.0 ▲1.0 Doms 102.5 104.5 Operating RPK Int
Slide 32: Revised fuel price, FX and demand assumptions
The price of Singapore Kerosene in 2nd half was revised to USD120 per barrel, and the exchange rate was changed to100 yen to a US dollar as well. We also revised our demand and supply forecast, based on results of the first half of the fiscal year, the latest frequency and route plans, and trend
Slide 33: Contents: Supplemental References
OVERVIEW OF 157 HALF FY3/14 FINANCIAL RESULTS REVISED CONSOLIDATED FINANCIAL FORECAST FOR FY3/14 PROGRESS OF MEDIUM TERM MANAGEMENT PLAN DETAILS OF 187 HALF FY3/14 (1H FY13) FINANCIAL RESULTS SUPPLEMENTAL REFERENCES 2) JAPAN AIRLINES
Slide 34: Supplemental: FY3/14 Earnings Forecast (Air Transportation Segment)
《Supplemental Reference》 FY3/14 Earnings Forecast（ Air transportation Segment ） International Domestic y/y (%) 1H 2H FY3/14 1H 2H FY3/14 (Exclude Load Factor) (Result) (Forecast) (Forecast) (Result) (Forecast) (Forecast) ASK +4.4% +2.2% +3.3% +3.0% +1.9% +2.5% RPK +4.5% +4.2% +4.3% +2.7% +3.0% +2.8%
Slide 35: Supplemental: Major Cash Flow Items
《Supplemental Reference》 Major Cash Flow Items (JPY Bn) 1H FY3/13 1H FY3/14 difference Net income before income taxes and minority interests 110.6 90.8 ▲19.7 Depreciation 40.7 40.5 ▲0.1 Other 1.6 6.8 +5.2 Cash Flow from Operating Activities 152.9 138.3 ▲14.6 Capital Expenditure (1) ▲45.8 ▲56.2 ▲10.4
Slide 36: Supplemental: FY3/14 Forecast (Balance Sheet / Cash Flow)
《Supplemental Reference》 FY3/14 Earnings Forecast (Consolidated Balance Sheets / Cash Flow) Consolidated Balance Sheet (JPY Bn) End of FY3/13 Result FY3/14 New Forecast difference Total Assets 1,216.6 1,289.0 +72.3 Interest-bearing Debt 160.1 137.0 ▲23.1 Shareholders' Equity 565.0 646.0 +81.0 Shareh
Slide 37: Supplemental: Impact from Fuel and Currency Markets
《Supplemental Reference》 Impact from Fuel and Currency Markets Sensitivity for Fuel Costs Hedging Ratio for Fuel Costs (As of End of 2Q FY3/14) (Without Hedging) 90% Approx.85% Crude Oil 2.0 Bn JPY 80% Fuel FX (Change in 1 USD/bbl） Per Year 70% Approx. FX 2.5 Bn JPY 60% Approx. 45% (Change in 1 JPY/
Slide 38: Supplemental: Revenue of International Routes by Geographical Segment
《Supplemental Reference》 Revenue of International Routes by Geographical segment Passenger Revenue (% of the whole int’l revenue) Passengers (%) 1H FY3/13 1H FY3/14 Y/Y 2Q FY3/14 Y/Y (‘000) 1H FY3/13 1H FY3/14 Y/Y 2Q FY3/14 Y/Y Trans Pacific 34.0% 34.5% +0.5pt 35.5% +0.0pt Trans Pacific 843 870 +3.2
Slide 39: Supplemental: Number of Aircraft in Service
《Supplemental Reference》 Number of Aircraft in Service End of Mar/2013 End of Sep/2013 2013/3/31 2013/9/30 Changes 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 - Boeing 777-300ER 13 0 13 13 0 13 - Large-sized Tot
Slide 40: Fly into tomorrow.
Fly into tomorrow. Contact: Finance, Japan Airlines +81-3-5460-3068
Slide 41: Disclaimer on forward-looking statements
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 created by the