Japan Airlines Co., Ltd. · TSE:9201
Japan Airlines — Q3 FY2018 Earnings Presentation
39 slides from Japan Airlines's earnings presentation, Jan 31, 2019
Slide 1: Financial Results 3rd Quarter Mar/2019 (FY2018)
JAPAN AIRLINES Co., Ltd. Financial Results 3 rd Quarter Mar/2019（FY2018） January 31, 2019
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Slide 3: Today's Topics
Today’s Topics P.1 P.3 P.5 P.17 ※The Award for Passenger Service System Project (Note) Regarding figures in tables of this material, amounts are rounded down to the nearest hundred million yen, and the second decimal point in ratios is rounded off to one decimal point.
Slide 4: Overview of third-quarter results (speaker notes)
Now, I will present the overview of the third-quarter financial results for the fiscal year ending March 31, 2019. 0-S
Slide 5: Overview of Financial Results for 3rd Quarter Mar/19
Overview of Financial Results for 3rd Quarter Mar/19 Achieved profit growth with growing revenue by capturing passenger demand through capacity expansion and the new system Operating Revenue Operating profit・Net profit （ JPY Bn ） （Operating Profit Margin） 200 25% （ JPY Bn ） +85.0Bn Operating Net O
Slide 6: Overview of results (speaker notes)
Now, I will present the overview of the third-quarter financial results for the fiscal year ending March 31, 2019. Operating revenue was 8.1% up year-on-year by 85 billion yen to 1 trillion and 131 billion yen. Operating profit increased by 0.2 billion yen, 0.2% up year-on-year, to 145.5 billion
Slide 7: Recent Topics
Recent Topics Take thorough actions to rebuild our safety management system based on the Business Improvement Order Pursue greater convenience & comfort for customers through enhanced networks and new aircraft Contribute to society through challenges to stay one step ahead in creating values t
Slide 8: Recent topics (speaker notes)
I will explain about recent topics. JAL was issued a “Business Improvement Order” by the Ministry of Land, Infrastructure, Transport and Tourism last December. In addition to implementing prevention measures, we will dig deeper to uncover problems rooted in organizations and the corporate climat
Slide 9: FY2018 Earnings Forecast
FY2018 Earnings Forecast Raised operating profit forecast to 175 billion yen, resulting in profit growth, taking into account Q3 results, recent fuel prices and revenue forecasts FY2017 FY2018 Diff. Forecast （JPY Bn） Previous New (Y/Y) Diff. Results (1 Forecast ) Forecast Fuel /FX Markets Operatin
Slide 10: Earnings forecast (speaker notes)
I will explain about earnings forecast for 2018. We reviewed our earnings forecast for fiscal 2018, taking into account the third- quarter results and recent exchange rate and fuel price estimates, and today we have disclosed our revised earnings forecast. Operating revenue remains the same as th
Slide 11: Revised Consolidated Financial Forecast for Mar/19 (Change in Operating Profit)
Revised Consolidated Financial Forecast for Mar/19（Change in Operating profit） (JPY Bn) ＋ stands for profit increase (revenue increase, cost reduction) ▲ stands for profit decrease (revenue decrease, cost increase) 【Revenues ／ Expenses】 ＋8.0Bn (＋4.8%) Fuel Ex. Fuel Int’l Domestic Other ▲4.0 Passenge
Slide 12: Forecast changes (speaker notes)
The graph at the top shows the financial results broken down in revenues and expenses. Regarding revenues, passenger demand was strong in general. However, as passenger and cargo demand from China in this third quarter gradually slowed down, we conservatively calculated demand forecasts for the
Slide 13: Consolidated Financial Results
Consolidated Financial Results Consolidated Financial Results 3 rd Quarter Mar/19 3Q 3Q 3rd Quarter （JPY Bn） Diff. y/y ratio Diff. y/y ratio FY2017 FY2018 (Oct-Dec)(5) Operating Revenue 1,046.0 1,131.0 +85.0 +8.1% 380.8 +27.1 +7.7% Air Transportation Segment 950.5 1,032.1 +81.5 +8.6% 349.2 +26.0 +8.
Slide 14: Consolidated results (speaker notes)
Now, I will explain our consolidated financial results for the third-quarter financial results for the fiscal year ending March 31, 2019. 5-S
Slide 15: Changes in Operating Profit (Revenues / Expenses)
Changes in Operating Profit（ Revenues ／ Expenses ） 3 rd Quarter Mar/19 (FY2018) ASK y/y ： +4.1% ＋ stands for profit increase (revenue increase, cost reduction) RPK y/y ： +5.2％ ▲ stands for profit decrease (revenue decrease, cost increase) +0.2Bn （JPY Bn） The effect of the change of the settlement (+
Slide 16: Operating profit changes (speaker notes)
I will explain about the changes in operating profit. Revenue was strong in international passenger, domestic passenger and international cargo. Combined with higher fuel surcharge revenue, we recorded a revenue increase of 85 billion yen year on year, or up by 8.1%. Regarding expenses, fuel cost
Slide 17: Changes in Operating Profit (Market / Others)
Changes in Operating Profit（ Market ／ Others ） 3 rd Quarter Mar/19 (FY2018) （ JPY Bn ） ＋ stands for profit increase (revenue increase, cost reduction) ▲ stands for profit decrease (revenue decrease, cost increase) Impact from +0.2Bn Currency Market +2.2 Bn (+0.2%) (Excl. Market Impact) Revenue ▲0.3B
Slide 18: Market impact (speaker notes)
This page explains changes in operating profit from the viewpoints of market impact and others. Fuel costs rose significantly due to higher fuel prices, but through fuel surcharge revenue and hedging, we were able to suppress the negative impacts on profit to 3.5 billion yen year on year. Regardi
Slide 19: International Passenger Operations
International Passenger Operations International Passenger Change in Revenue 3Q 3Q 3rd Quarter （JPY Bn） +57.0Bn y/y ratio y/y ratio FY2017 FY2018 (Oct-Dec)(5) （+16.5％） Passenger Revenue 403.4 +16.5% 134.2 +14.6% (JPY Bn) 346.4 ・Flight cancellation due (399.0) (+15.2%) (132.6) (+13.3%) to typhoons an
Slide 20: International routes (speaker notes)
For international routes, in order to meet both robust outbound and inbound demand, we increased capacity through more flights and cabin configuration change. As a result, ASK increased by 6.2% year on year and passenger traffic increased by 7.8% year on year. Regarding revenue per passenger, as
Slide 21: Domestic Passenger Operations
Domestic Passenger Operations Domestic Passenger Change in Revenue 3Q 3Q 3rd Quarter （ JPY Bn ） y/y ratio y/y ratio FY2017 FY2018 (Oct-Dec)(5) Passenger +6.1Bn 404.7 +1.5% 136.5 +2.3% (+1.5%) Revenue(1) 398.5 (JPY Bn) (409.1) (+2.7%) (138.1) (+3.5%) Passengers ・Flight cancellation due (’000) 25,919
Slide 22: Domestic routes (speaker notes)
Next, for domestic routes. To meet strong domestic air travel demand, we operated larger aircraft on Osaka (Itami) routes. Despite the flight cancellations due to weather and other factors, ASK increased by 1% over the previous year. The number of individual passengers grew significantly through s
Slide 23: The New Passenger Service System
The New Passenger Service System The Effect during FY18 3 rd Quarter The new passenger service system 16 billion yen (estimated as maximum) Main functional Major Improvements International flights：10.0 Bn yen enhancements （Nine months ended December 31, 2017=100) Domestic flights：6.0 Bn yen Revenue
Slide 24: New system effects (speaker notes)
On this page, I will explain the positive effects of our new passenger service system. Regarding the revenue increase effects, although it is hard to pinpoint and quantify each factor since the result is a composition of various complex factors, in cumulative third-quarter financial results, while
Slide 25: Major Operating Expense Items
Major Operating Expense Items Operating Expenses 3Q 3Q 3rd Quarter (JPY Bn) FY2017 FY2018 Diff. y/y ratio (Oct-Dec)(3) Diff. y/y ratio Fuel 157.9 191.7 +33.7 +21.4% 66.3 +10.3 +18.6% Landing and navigation fees 62.5 64.9 +2.4 +3.8% 21.7 +0.4 +2.2% Maintenance 51.3 55.0 +3.6 +7.1% 18.3 +2.8 +18.3% Sa
Slide 26: Operating expenses (speaker notes)
Next, please look at the details of operating expenses. In maintenance costs, engine maintenance costs increased significantly due to repairs of engines and enhanced safety measures to improve quality. Depreciation cost of the new passenger service system from April to December was up by 9 billio
Slide 27: Impact of Fuel and FX Markets
Impact of Fuel and FX Markets Hedging Ratio for Fuel Costs Transition of Fuel Cost by Factors (as of end of December 2018) (JPY Bn) 250 Volume 60% loaded/ Fuel FX Market FX Hedging Approx. Approx. 200 ▲1.4 40% 40% +45.4 ▲10.2 40% Approx. Approx. 150 30% 30% ＋33.7Bn 191.7 100 157.9 (＋21.4%) 20% Appro
Slide 28: Fuel and FX (speaker notes)
I will explain the impact of Fuel and FX Markets. Fuel prices, based on the cumulative total for the third quarter, increased nearly 40% year on year. However, we were able to suppress the increase in fuel costs to 33.7 billion yen year on year, or 21.4%, through hedging. 12-S
Slide 29: Major Balance Sheet Items and Cash Flow Items
Major Balance Sheet Items and Cash Flow Items End of 3rd Balance Sheet End of Quarter Diff. (JPY Bn) Mar/18 Mar/19 Total Assets (1) 1,853.9 1,934.1 +80.1 Cash and Deposits (2) 448.8 460.5 +11.7 Balance of Interest-bearing Debt (3) 125.7 129.4 +3.6 1 Total Assets amount as of the end of March, 2018 h
Slide 30: Balance sheet (speaker notes)
Please be noted that page 13 indicates our balances sheet and our cash flows. The level of cash on hand still remains at a high level as of December, but we will achieve the optimal level in accordance with our capital policy. At the end of this material, we have provided some references on Re
Slide 31: Revenue of International Routes by Geographic Segment
《 References 》 Revenue of International Routes by Geographic Segment Passenger Revenue 3Q 3Q Component Ratio (%) Cumulative 3Months y/y y/y 3Q Mar/18 3Q Mar/19 3Q 3Months America +11.1% +14.6% 27% 26% 26% Europe +17.3% +12.3% 17% 17% 15% Asia/Oceania +14.8% +12.2% 32% 32% 34% China +30.9% +20.9% 10%
Slide 32: Number of Aircraft
《 References 》 Number of Aircraft End of Mar/18 End of 3rd Quarter/19 (March 31, 2018) (December 31, 2018) 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
Slide 33: FY2018 (Mar/19) Revised Forecast
《 References 》 FY2018 (Mar/19) Revised Forecast Balance Sheet End of End of 1 Disclosed on October 31, 2018 FY2017 FY2018 2 Total Assets amount as of the end of FY2017 has been changed （JPY Bn） Diff. due to the revision of the accounting standards and other Previous New regulations regarding indicat
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Slide 35: Financial Strategy and Capital Policy ①
《Reference》 Financial Strategy and Capital Policy① ※Originally disclosed on February 28, 2018 17
Slide 36: Financial Strategy and Capital Policy ②
《Reference》 Financial Strategy and Capital Policy② ※Originally disclosed on February 28, 2018 *1 Free cash flow (3-year aggregate)=Cash flow from operating activities-Cash flow from investing activities *3 Indicates dividend yield of shareholders’ equity *2 3-year aggregate new debts used (new procu
Slide 37: Financial Strategy and Capital Policy ③
《Reference》 Financial Strategy and Capital Policy③ ※Originally disclosed on February 28, 2018 19
Slide 38: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations, Japan Airlines
Slide 39: 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