Slide 1: Financial Results MAR/2019 (FY2018)
JAPAN AIRLINES Co., Ltd. Financial Results MAR/2019（FY2018） April 26th, 2019
Slide 2: Today's Topics
Today’s Topics P.1 P.2 P.4 P.15 P.23 ※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 3: Overview of Financial Results for Mar/19
Overview of Financial Results for Mar/19 Resulted in an increase both in revenue and net profit compared to the previous year. Aim to achieve year-over-year growth in both revenue and profit in FY2019. Operating profit・Net profit (1) Operating Revenue Operating profit margin・ROIC (2) Operating O
Slide 4: Operating revenue up 7.5% year-on-year; operating profit and net profit summary
Operating revenue increased by 104 billion yen, up 7.5% year-on-year, to 1 trillion and 487.2 billion yen. Operating profit increased by 1.5 billion yen, or up 0.9% year-on-year, to 176.1 billion yen, and Operating profit margin was 11.8% and Net profit increased 11.4% year-on-year to 150.8 billi
Slide 5: Shareholder returns①
Shareholder returns① Shareholder Return Policy Focuses on continuity, stability and predictability (1) Total Return Ratio＝ From FY2019, approximately 35% will be a benchmark Dividends for payout ratio Total dividends + Total share repurchases Dividends per share will remain unchanged in spite Ne
Slide 6: Total return policy and dividends
We will focus on “Total Return”, which combines dividends and share buyback. For dividends, we will consider continuity, stability and predictability. Our benchmark payout ratio will be approximately 35%, up from 30%. This is because we would like to maintain the current dividends per share level,
Slide 7: Shareholder returns②
Shareholder returns② Shareholder Return Result and Forecast Total Return History (FY2012～FY2019) FY2017 FY2018 FY2019 (Result) (Result) (Forecast) （JPY Bn） 250.0 60% Dividends per share 110 110 110 47.7% 49.2% (JPY) 44.5% 200.0 50% 171.6 174.4 Interim Dividend 52.5 55 55 166.2 164.1 150.8 149.0 150.
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2 JAPAN AIRLINES INTENTIONALLY LEFT BLANK
Slide 9: Details of Financial Results for Mar/19
OVERVIEW OF FINANCIAL RESULTS FOR MAR/19 SHAREHOLDER RETURN EARNINGS FORECAST FOR MAR/20 REFERENCES 4
Slide 10: Consolidated Financial Results Mar/19
Consolidated Financial Results Mar/19 4th Quarter （JPY Bn） FY2017 FY2018 Diff. y/y Diff. y/y (Jan-Mar)(6) Operating Revenue 1,383.2 1,487.2 +104.0 +7.5% 356.1 +18.9 +5.6% International Passenger (1) 462.9 530.6 ＋67.7 +14.6% 127.1 +10.7 +9.2% Domestic Passenger (1) 518.2 528.0 +9.8 +1.9% 123.3 +3.6 +
Slide 11: Changes in Operating Profit (Revenues / Expenses)
Changes in Operating Profit（ Revenues ／ Expenses ） Mar/19 (FY2018) （JPY Bn） ＋ stands for profit increase (revenue increase, cost decrease) ASK y/y ： ＋4.0% ＋1.5Bn ▲ stands for profit decrease (revenue decrease, cost increase) RPK y/y ： ＋4.7% (＋0.9%) The effect of the change of the settlement Adjustme
Slide 12: International passenger revenue increased significantly
International passenger revenue increased significantly by 67.7 billion yen, or up 14.6% year-on-year. This is because of strong demand and an increase in capacity by new routes and increased flight frequency, together with an increase in fuel surcharge revenue and exchange rate. Domestic passen
Slide 13: Changes in Operating Profit (Market / Others)
Changes in Operating Profit（ Market ／ Others ） Mar/19 (FY2018) （JPY Bn） ＋ stands for profit increase (revenue increase, cost reduction) ▲ stands for profit decrease (revenue decrease, cost increase) Impact from +1.5Bn Currency Market +1.2Bn (+0.9%) Revenue ▲1.4Bn (Excl. Market Impact) Cost +2.6Bn Re
Slide 14: Operating profit changes from market impact and others
This page explains changes in Operating profit from the viewpoints of market impact and others. Regarding the market impact, higher fuel prices caused higher fuel costs, however, as a result of fuel surcharge revenue and appropriate hedging, there was a positive effect of 2.9 billion yen year-on
Slide 15: International Passenger Operations
International Passenger Operations International Passenger Change in Revenue FY2017 FY2018 y/y ratio 4th Quarter y/y ratio （ JPY Bn ） +67.7Bn (Jan-Mar)(5) （+14.6％） Passenger 530.6 +14.6% 127.1 +9.2% ・Flight cancellation due Revenue(1) 462.9 to typhoons and (JPY Bn) (524.4) (+13.3%) (125.4) (+7.7%) ・
Slide 16: International passenger revenue up 14.6%
International passenger revenue stood at 530.6 billion yen, up by 14.6% year- on-year. The change in the settlement adjustment method shifted 6.2 billion yen revenue year-on-year from Domestic passenger business to International passenger business. The figures excluding this impact are shown in
Slide 17: Domestic Passenger Operations
Domestic Passenger Operations Domestic Passenger Change in Revenue 4th Quarter （ JPY Bn ） +9.8Bn FY2017 FY2018 y/y ratio (Jan-Mar)(5) y/y ratio (+1.9%) Passenger 528.0 +1.9% 123.3 +3.1% Revenue(1) 518.2 (JPY Bn) (534.3) (+3.1%) (125.1) (+4.6%) ・Flight cancellation due Passengers to typhoons and (’00
Slide 18: Domestic passenger revenue up 1.9%
Domestic passenger revenue stood at 528 billion yen, up by 1.9% year-on-year. The impact of the settlement adjustment method change was negative 6.2 billion yen year-on-year. The figures excluding this negative impact is shown in the bracket. Passenger traffic increased 2.4% year-on-year due t
Slide 19: The New Passenger Service System
The New Passenger Service System The Effect during FY18 The New Passenger Service System 20 billion yen (estimated as maximum) Main functional International flights：10.0 Bn yen Major Improvements enhancements Domestic flights：10.0 Bn yen Improved Revenue Increase from Inbound Business Class and Func
Slide 20: Passenger service system revenue effect
The full-year revenue increase in fiscal year 2018 is expected to reach to approximately 20 billion yen as maximum. We believe that we have achieved our targets earlier than the initial plan. We will continue to have further effects of the passenger service system through more precise revenue ma
Slide 21: Major Operating Expense Items
Major Operating Expense Items Operating Expenses 4th Quarter (JPY Bn) FY2017 FY2018 Diff. y/y (Jan-Mar)(3) Diff. y/y Fuel 215.2 251.2 +35.9 +16.7% 59.4 +2.1 +3.8% Landing and navigation fees 83.5 86.3 +2.8 +3.4% 21.4 +0.4 +2.0% Maintenance 62.0 72.9 +10.8 +17.5% 17.8 +7.1 +67.1% Sales commissions (A
Slide 22: Fuel costs and cost control commentary
Although Fuel costs were 251.2 billion yen, up by 35.9 billion yen, through appropriate hedging, we were able to cut the increase of the Fuel costs. It would have been up by 42.8 billion yen without hedging. For the costs excluding fuel, we were able to keep their increase within the scope of in
Slide 23: Major Balance Sheet Items and Cash Flow Items
Major Balance Sheet Items and Cash Flow Items Balance Sheet End of End of Diff. (JPY Bn) FY2017 FY2018 (1) Total Assets amount as of the end of March, 2018 Total Assets(1) 1,853.9 2,030.3 +176.3 has been changed due to the revision of the Cash and Deposits(2) 448.8 522.0 +73.2 accounting standards a
Slide 24: Balance sheet and cash flow commentary
This page is about balance sheet and cash flows. For Balance sheet, the balance of interest-bearing debt including off-balance sheet outstanding liabilities increased by approximately 30 billion yen, in accordance with our policy of disciplined debt utilization. At the same time, we were able
Slide 25: Revenue of International Routes by Geographic Segment
《 Reference 》 Revenue of International Routes by Geographic Segment Passenger Revenue 4Q Component Ratio 4Q FY2018 (%) 3Months Component y/y y/y FY2017 FY2018 Ratio America +13.4％ +21.4% 26% 26% 25% Europe +12.8% ▲2.0% 16% 16% 13% Asia/Oceania +11.5% +3.2% 33% 33% 35% China +24.4% +7.7% 11% 11% 12%
Slide 26: Commentary on Hawaii and Guam load factor
This page shows Revenue of International Routes by Geographic Segment. As you noticed, the load factor on Hawaii and Guam routes in the 4 th quarter dropped sharply by 6.7 percentage points from the previous year. This is due to a weak demand in spite of capacity expansion. Another reason is a
Slide 27: Number of Aircraft
《 Reference 》 Number of Aircraft End of Mar/18 End of Mar/19 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 40 0 40 40 0 40 - Boeing 787-8 25 0 25 25 0 2
Slide 28: Earnings Forecast for Mar/20
OVERVIEW OF FINANCIAL RESULTS FOR MAR/19 SHAREHOLDER RETURN DETAILS OF FINANCIAL RESULTS FOR MAR/19 REFERENCES 15
Slide 29: FY2019 Earnings Forecast
FY2019 Earnings Forecast Revenue and Operational FY2019 FY2019 Preconditions ※y/y FY2018 Expenditure Plan FY2018 (Plan) Diff. y/y (Plan) (JPY Bn) ASK Int’l +6.0％ +2.5% Operating Revenue 1,487.2 1,563.0 +75.7 +5.1% Doms +1.1% +2.6% International 530.6 575.0 +44.3 +8.4% Total +4.0% +2.5% Passenger Dom
Slide 30: FY2019 forecast commentary
Page 16 explains the forecast of FY2019. No change is made from the one we disclosed on February 25, 2019, however, we updated ROIC as the balance sheet as of the end of March 2019 was fixed. 16-S
Slide 31: FY2019 Changes in Operating Profit (Revenues / Expenses)
FY2019 Changes in Operating Profit（ Revenues ／ Expenses ） Mar/20 (FY2019) （ JPY Bn ） ＋ stands for profit increase (revenue increase, cost reduction) ▲6.1Bn ▲ stands for profit decrease (revenue decrease, cost increase) ASK y/y： +2.5% (▲3.5%) RPK y/y： +3.1% ＋3.8Bn (＋2.2%) Other Revenues Fuel Cargo ＋1
Slide 32: FY2019 market assumptions and expense outlook
Our market assumptions is 90 US dollars for Singapore kerosene and 115 Japanese yen to US dollar. Capacity increase is 2.5% for international routes and 2.6% for domestic routes. Total increase is 2.5%. We expect revenue to increase by 75.7 billion yen year-on-year because of capacity increase
Slide 33: FY2019 Changes in Operating Profit (Market / Others)
FY2019 Changes in Operating Profit（ Market ／ Others ） Mar/20 (FY2019) ＋ stands for profit increase (revenue increase, cost decrease) （ JPY Bn ） ▲6.1Bn ▲ stands for profit decrease (revenue decrease, cost increase) (▲3.5%) Fuel/FX Markets FY18 FY19 ＋3.8Bn Singapore Kerosene 83.9 90.0 (＋2.2%) Revenue
Slide 34: FY2019 market effect commentary
This Page explains the market effect. The overall market effect is negative 7.8 billion yen to profit year-on-year. For the non-market effect, we are going to make more revenues than the preparation expenses for airport capacity expansion in 2020. Without the depreciation method change, the no
Slide 35: FY2019 Recent Market Situations
FY2019 Recent Market Situations Reservations in the long holidays “Golden Week” * Large Increase in Reservation Rate year on year in both International and Domestic Passenger *From April 27 to May 6 International Passenger Domestic Passenger 100.0% FY2018 FY2019 100.0% FY2018 FY2019 94.3% 86.6% 90
Slide 36: Current market situation commentary
This page shows the current market situation for International passenger and Domestic passenger. First of all, reservations during the 10-day holiday period starting from tomorrow have largely exceeded a year before. For Domestic passenger, it looks very good. For International passenger, all
Slide 37: FY2019 Earnings Forecast: Balance Sheet
FY2019 Earnings Forecast Balance Sheet End of (1) NOPAT/Average Fixed Asset (incl. Future Rental Expenses under End of Operating Leases) at beginning and end of a fiscal year （JPY Bn） FY2019 Diff. FY2018 (2) Figures in ( ) in End of FY2019 Plan and Diff do not include (Plan) the depreciation method
Slide 38: FY2019 balance sheet and cash flow guidance
Page 20 shows FY2019 Balance sheet and Cash flow guidance. Cash flow from operating activities in FY2019 includes a cash injection of 80 billion yen to Corporate Pension Fund. Free cash flow is expected to be negative 40 billion yen, but it should be plus 40 billion yen when the pension fund inj
Slide 39: FY2019 Impact of Fuel and FX Markets
FY2019 Impact of Fuel and FX Markets Fuel Cost Breakdown by Factors Hedge Ratio (JPY Bn) (As of End of Mar/2019) 300 Volume increase/ 60% Hedging Fuel Approx. Approx. FX +8.6 FX Market +9.0 40% 40% 40% +15.1 250 284.0 ＋32.7Bn 20% Approx. Approx. (＋13.0%) Approx. Approx. 251.2 10% 10% 5% 5% 0% 200 FY
Slide 40: Fuel and FX impact commentary
This page explains the impact of Fuel and FX Markets for FY2019. We expect the fuel cost to increase to 284 billion yen, up by 32.7 billion yen mainly due to fuel price increase. The right bottom matrix chart shows the profit impact. If FX is 110 yen and Singapore Kerosene is 80 dollars throug
Slide 41: FY2019 Earnings Forecast (Air Transportation Segment)
FY2019 (Mar/20) Earnings Forecast（Air transportation Segment） y/y(%) International Passenger FY2018 FY2019 Full-year 1H 2H (Forecast) (Forecast) (Forecast) Passenger Revenue (JPY Bn) 530.6 575.0 +8.5％ +8.5％ +8.5％ Passengers (’000) 9,128 9,490 +4.0％ +3.1％ +4.8％ ASK (MN seat km) 54,925 56,284 +2.5％ +3
Slide 42: Passenger business forecast commentary
Page 22 page shows our forecast in International passenger business and Domestic passenger business. From page 23, we have provided some references about our ESG initiatives, Financial Strategy and Capital Policy that were explained in our Medium-term Management Plan. 22-S
Slide 43: References
OVERVIEW OF FINANCIAL RESULTS FOR MAR/19 SHAREHOLDER RETURN DETAILS OF FINANCIAL RESULTS FOR MAR/19 EARNINGS FORECAST FOR MAR/20 REFERENCES 23
Slide 44: Reference: ESG
《Reference》ESG Environmental Social Governance ・Low-Carbon Initiatives: ・Diversity promotion initiatives Introduce fuel-efficient aircraft and ・High transparency and strict ・Build a sustainable supply chain management oversight： aim for eco-friendly operation ・Contribute to regional revitalization -
Slide 45: Financial Strategy and Capital policy①
《Reference》Financial Strategy and Capital policy① ※Originally disclosed on February 25,2019 25
Slide 46: Financial Strategy and Capital policy②
《Reference》Financial Strategy and Capital policy② ※Originally disclosed on February 25,2019 26
Slide 47: Financial Strategy and Capital policy③
《Reference》Financial Strategy and Capital policy③ ※Originally disclosed on February 25,2019 27
Slide 48: Fly into tomorrow.
Fly into tomorrow. Finance & Investor Relations, Japan Airlines
Slide 49: 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