Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — H1 FY2020 Earnings Presentation
42 slides from Japan Airlines's earnings presentation, Oct 30, 2020
Slide 1: Financial Results 2nd Quarter Mar/2021 (FY2020)
JAPAN AIRLINES Co., Ltd. Financial Results 2nd Quarter Mar/2021 (FY2020) October 30, 2020 Boeing 767 (JA613J) Specially Painted Aircraft for Domestic Routes In the midst of a gloomy atmosphere in our society, JAL Group employees (mechanics) wished to cheer up people in Japan and painted the bottom o
Slide 2: Today's Topics
Today’s Topics PERFORMANCE OVERVIEW OF 1st HALF P.3 FY2020 EARNINGS FORECAST FOR FY2020 P.4 LATEST INITIATIVES P.5 TOWARD THE NEW NORMAL P.7 DETAILS OF FINANCIAL RESULTS FOR P.10 1st HALF FY2020 REFERENCES P.19 IFRS is adopted from the fiscal year ending Mar 2021, instead of the previously used Japa
Slide 3: Financial Results for the 1st Half of FY2020
Financial Results for the 1st Half of FY2020 Large drop in revenue due to the COVID-19 pandemic Despite the cost reduction efforts, we were unable to cover the decline in revenue and posted a significant loss Revenue(1) EBIT (1)(2)/Profit or Loss (1)(3)/EBIT Margin(1)(4) （JPY Bn） （JPY Bn） Net EB
Slide 4: Financial results briefing speaker notes: first half
Thank you for joining us today for the financial results briefing for the first half of the fiscal year 2020, ending March 2021. Today, I will briefly explain our financial results for the first half, earnings forecast for the current fiscal year, and then, I will touch upon our efforts toward p
Slide 5: FY2020 Earnings Forecast
FY2020 Earnings Forecast Based on IATA's demand forecast, we assume demand recovery within a certain range, taking into account the recent passenger demand trends, the current status of COVID-19 and the gradual lifting of immigration restrictions Full-year EBIT for the fiscal year ending March 3
Slide 6: Earnings forecast speaker notes
Here are our earnings forecasts for FY2020. We have no choice but to expect a significant loss of 330 to 380 billion yen in EBIT for the current fiscal year. As the management, we take very seriously our responsibility to present such a large loss projection. Please see the graph on the left s
Slide 7: Cost and CAPEX Reduction Initiatives
Cost and CAPEX Reduction Initiatives Cost Reduction CAPEX Reduction Fixed Cost We are targeting 90 Bn JPY reduction by adding 10 Bn JPY to the previous forecast of 80 Bn JPY We are targeting 100 Bn JPY reduction by adding reduction compared to the original plan 10 Bn JPY to the previous target (90
Slide 8: Cost and capex reduction speaker notes
On this slide, I will explain the progress of our cost and capex cutting initiatives and the forecast for this fiscal year. We originally targeted at the 90 billion yen fixed cost reduction for the year. But as we have made a good progress, we have raised our target to 100 billion yen, resulting
Slide 9: Bolstering Liquidity
Bolstering Liquidity Secured 346.6 Bn JPY cash at hand as of the end of September by prompt financing and reducing cash outflows Plan to set up additional 100 Bn JPY credit facility to secure further liquidity Cash burn keeps steadily declining in Q2 Cash Balance & Credit Facility Cash Burn(1)
Slide 10: Liquidity speaker notes
On this slide, I will explain our liquidity position. We have cash balance of 346.6 billion yen at the end of September 2020. In addition, we plan to set up addition 100 billion yen credit facility next month, resulting in the total amount of unused credit facility of 300 billion yen. Thus, we
Slide 11: Passenger Demand Assumption toward the New Normal
Passenger Demand Assumption toward the New Normal Based on IATA's demand forecast, we have set the passenger demand assumptions considering the characteristics of our home market and other factors ■Int’l Passenger: Assumed recovery to approx. 80% of the pre-COVID-19 level by the end of FY2022 and
Slide 12: Demand recovery scenarios speaker notes
From here, I will explain our future vision toward the New Normal post-COVID-19 and our current initiatives for it. This slide shows our scenarios of passenger demand recovery until the end of Fiscal Year 2022. As with our demand forecast for this fiscal year, we have come up with these scenar
Slide 13: Strategic Direction Toward New Normal
Strategic Direction Toward New Normal Path to Recovery of Enterprise Value Our Structural Restructuring Outcome Responsibilities Safety and Restructuring the Comfort Business Structure Reconstruction of Endure COVID-19 Improve profitability / a strong financial Pandemic / take initiatives for SDGs p
Slide 14: Strategic direction speaker notes
Firstly, we will continue to improve safety and comfort, and accelerate initiatives for social issues as our first priority. In order to endure the COVID-19 pandemic, we will promptly proceed with restructuring of the business structure and reconstruction of a strong financial position with a vi
Slide 15: Structural Review for the New Normal
Structural Review for the New Normal Restructuring of the Business Structure Take initiatives for Growth and Improve Profitability / Take Initiatives for SDGs Risk Tolerance FSC Business LCC Business Flexible adjustments of fleets and retirement of aged aircrafts Strengthen LCC business to captu
Slide 16: Business restructuring speaker notes
On this slide, I will explain concrete actions regarding the restructuring of the business structure. As shown in the left side, for full service carrier business, we will proceed with early retirement of aged aircrafts for international services to address the temporary downturn in demand due t
Slide 17: Financial Results (Details)
FINANCIAL RESULTS (DETAILS) ©Japan Airlines, ALL rights reserved. 10
Slide 18: Intentionally Left Blank
INTENTIONALLY LEFT BLANK ©Japan Airlines, ALL rights reserved.
Slide 19: Consolidated Financial Results for 1st Half FY2020
Consolidated Financial Results for 1st Half FY2020(1) 1st Half 1st Half 2nd quarter （JPY Bn） Diff. y/y Diff. y/y FY2019 FY2020 FY2020(6) Revenue 748.9 194.7 ▼554.1 ▼74.0% 118.4 ▼281.7 ▼70.4％ International 272.9 9.1 ▼263.7 ▼96.6% 6.4 ▼135.8 ▼95.5％ Passenger Domestic 285.8 69.6 ▼216.1 ▼75.6% 50.6 ▼108
Slide 20: Consolidated results speaker notes
On this slide, I will explain the details of 1st half results in Fiscal Year 2020. Page 11 shows the consolidated financial results. Please see this slide for the details later. ©Japan Airlines, ALL rights reserved. 11-S
Slide 21: Changes in EBIT (Revenues/Expenses)
Changes in EBIT（Revenues／Expenses）(1) （JPY Bn） (2) ＋ stands for profit increase (revenue increase, cost decrease) ASK y/y： ▼73.5% ▼ stands for profit decrease (revenue decrease, cost increase) RPK y/y： ▼89.2％ ▼306.9 82.9 1st Half FY2019 ▼263.7 ▼223.9 Int’l Passenger Other Others(4) Expenses ▼96.6％ ▼
Slide 22: EBIT changes speaker notes
This slide shows the changes in EBIT. For revenue side, despite an increase in revenue of cargo and mail business, we have posted the significant decline in revenue since there was a significant decline in international and domestic passenger revenue due to the impact of COVID-19 pandemic. Ope
Slide 23: International/Domestic Passenger Operations
International/ Domestic Passenger Operations Significantly reduced the capacity for international passengers as demand falls rapidly in COVID-19 Domestic demand have gradually recovered since September after a temporary dip in August due to an increased cases of COVID-19. Unit price was down due
Slide 24: Passenger operations speaker notes
On this slide, I will explain the current situation of international and domestic passenger business. International passenger demand decreased by 97.7% year-on-year due to the continuing stringent immigration restrictions in various countries. Domestic passenger demand was on the recovery tren
Slide 25: Cargo / Mail
Cargo / Mail Despite a significant decrease in volume, revenue exceeded the previous year (+18% yoy) due to price hike Tight supply-demand situation continues as capacity is being reduced worldwide Cargo flights utilizing passenger aircrafts totaled at 7,228 in 1st half of FY2020 ZIPAIR also
Slide 26: Cargo and mail speaker notes
For Cargo and Mail, the supply-demand situation continues to be tight due to large capacity reduction worldwide. We operated approximately 7,200 cargo flights using our passenger aircrafts in 1 st Half of Fiscal Year 2020. Unit price also remained at high level and the revenue from cargo and m
Slide 27: Major Operating Expense Items
Major Operating Expense Items (1) Reduced revenue- and capacity-linked costs, equivalent of approximately 40% of reduced revenue (217.8 Bn JPY) Fixed costs has also decreased more than estimated（Details on P.5） 2nd 1st Half 1st Half （JPY Bn） Diff. y/y quarter Diff. y/y FY2019 FY2020 FY2020(4) Re
Slide 28: Operating expense speaker notes
On this page, major operating expense items are shown with the categorization of revenue- and capacity-linked costs and fixed costs. Revenue- and capacity-linked costs steadily decreased by about 40% of decreased revenue, 217.8 billion yen. Fixed cost also decreased by 34 billion yen year-on-yea
Slide 29: Summary of Consolidated Statement of Financial Position and Cash Flow
Summary of Consolidated Statement of Financial Position and Cash Flow(1) Have secured sufficient long-term funding with the cash balance of 346.6 Bn JPY and the credit BS facility of 300 Bn JPY, while the repayment within one year is only 50.9 Bn JPY D/E Ratio is still at a sound level of 0.6x i
Slide 30: Balance sheet and cash flow speaker notes
This slide explains our consolidated balance sheet and cash flow. Cash balance stands at 346.6 billion yen as of the end of 2 nd quarter. We secured sufficient liquidity including unused credit facility of 300 billion yen. In addition, we control the repayment of debt within one year to 50.9 bil
Slide 31: Current Outlook (COVID-19 Impact)
Current Outlook（COVID-19 Impact) International passenger business is showing signs of recovery backed by ease of travel restrictions mainly for business trips among some countries Domestic passenger business is steadily recovering as a mood of self-restraint in traveling has been eased since lat
Slide 32: Current outlook speaker notes
This page shows the current situation of international and domestic businesses. As for international business, even though immigration restrictions are still in place in many countries, we expect gradual resumption of traffic from now on. We will consider the restart of services considering pass
Slide 33: Approach Toward Demand Recovery
Approach Toward Demand Recovery New Type of Trip Under “New Normal” / the revitalization of local communities Reasonable JAL Online Trip Regional Vitalization Division Self-PCR Test (Workation） (Homeland Ambassador) LCC：ZIPAIR Leverage Talent Launched passenger services to/from Tokyo-Seoul and fro
Slide 34: Demand recovery approach speaker notes
On this page, I will explain our approach toward a recovery in passenger demand. In order to alleviate the anxiety of our customers even in COVID-19 pandemic and to make their travel experience safer, we have launched new services listed on the top left on this page, "Reasonable Self-PCR Test“.
Slide 35: References
REFERENCES ©Japan Airlines, ALL rights reserved. 19
Slide 36: References introduction speaker notes
In the following pages, we show the revenue breakdown by each destination in international business, fleet information, accounting impact by IFRS adoption, and finally, anti-COVID-19 measures for our customers. That's all I have to say today. Thank you very much. ©Japan Airlines, ALL rights rese
Slide 37: Operation Performance by Geographic Segment
《Reference》 Operation Performance by Geographic Segment Passenger Revenue Revenue Passengers Carried (1) (2) 1st Half 2nd quarter 1st Half % 1st Half 2nd quarter (%) % (‘000) y/y y/y FY2019 FY2020 FY2019 FY2020 y/y FY2020 y/y America ▼96.7% ▼95.0% 28% 28% 30% America 819 29 ▼96.4% 21 ▼95.0% Europe ▼
Slide 38: Fleet Information
《 Reference 》 Fleet Information End of FY2019 End of 2nd Quarter FY2020 (March 31, 2020) (June 30, 2020) Diff. Owned Leased Total Owned Leased Total Airbus A350-900 4 1 5 2 4 6 +1 Boeing 777-200 11 0 11 9 0 9 ▼2 Boeing 777-200ER 11 0 11 11 0 11 - Boeing 777-300 4 0 4 4 0 4 - Boeing 777-300ER 13 0 13
Slide 39: Accounting Impact by IFRS Adoption
《Reference》 Accounting Impact by IFRS Adoption Profit/Loss Statement Due to changes in accounting rules for mileage points, revenue allocated to mileage points is deferred as a liability, and recognized when miles are redeemed (The impacts to Profit/loss are limited) Our main index for performan
Slide 40: Anti-COVID-19 Measures
Anti-COVID-19 Measures Appeal of Flysafe Environment In-cabin air is replaced in two to three Cabin in Cabin minutes Air flows from top to bottom In-cabin Air Flow Image Passengers do not get on/off during the flight Passengers face to the same direction HEPA Filter is equipped HEPA Filter
Slide 41: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations, Japan Airlines ©Japan ©Japan Airlines, ALL Airlines, ALL rights rightsreserved. reserved.
Slide 42: 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