jal group’s q3 account settlement for fy2003 group’s q3 account settlement for fy2003 - analyst...

0 ©JAL 2004

JAL Group’s Q3 Account Settlement

for FY2003

- Analyst Briefing -

February 9, 2004

Japan Airlines System Corporation

1 ©JAL 2004

Contents

Contents P1

Defects of Engines for MD81/87 Aircraft P2

Outline of Q3 Account Settlement for FY2003 P3 Topics P17

Outline of the Consolidated Financial Statements P4 Flight Plan for FY2004 P18

Quarterly Operating Income P5 New Services for Domestic Flights (class J) P19

Operating Revenue & Income by Segment P6 Towards the Final Stage of the Integration (1) P20

Outline of the results of Air Transportation Segment P7 Towards the Final Stage of the Integration (2) P21

Trend in Demand in International Passenger Segment P8 JAL Group's Cash Management System P22

Results of International Passenger P9 JAL Group's Home Page P23

Demand & Supply of International Passenger by Route P10 Notice P24

Results of Domestic Passenger(1) P11

Results of Domestic Passenger(2) P12

Results of International Cargo(1) P13

Results of International Cargo(2) P14

Outline of the Breakdown of Operating Costs P15

Fuel & FOREX (AirTransportationSegment) P16

2 ©JAL 2004

FollowFollow--upup

Defects of Engines for MD81/87 Aircraft

Details of the DefectDetails of the Defect

Engines for MD81 (17 aircraft) & MD87(8 aircraft）manufactured by Pratt&Whitney

Cracks found in a section of the high-pressure compressor in the engines

Situation & MeasuresSituation & MeasuresImpactImpact

＊Negative impact on revenue is assumed approx. (500) million yen

＊Results of Inspection from Jan.19 to Jan. 21　　→Damage was revealed in engines of 18 aircraft out of 25.＊17 out of 25 MD81/87aircraft would be operated from Feb. 7 by change of engines.

＊From Feb. 8, no flights would be cancelled by the damages in engines.　　

　　

＊Cancelled flights／Affected passengers　　　Jan. 568 flights / 38,000 passengers　　　　　Feb. 28 flights / 2,000 passengers　　　　　In total 596 flights / 40,000 passengers

We deeply apologize to our customers and investors for any trouble and concern caused by this.We deeply apologize to our customers and investors for any trouble and concern caused by this.

3 ©JAL 2004

Outline of Q3 Account Settlement for FY2003

4 ©JAL 2004

Outline of Q3 Account Settlement for FY2003Outline of Q3 Account Settlement for FY2003

Outline of the Consolidated Financial Statements

(Billion yen)

FY02Oct.～Dec. Apr.～Dec. Apr.～Mar.

Operating Revenue 525.6 1,470.1 2,083.4Operating Income 5.4 (43.0) 10.5Ordinary Income 11.0 (38.7) 15.8

Net Income 3.7 (53.8) 11.6

FY03

5 ©JAL 2004

Comparison between FY03 & average past 10 years Quarterly Operating Income


* add-up of JAL & JAS without adjustment (provisional)

** JAL Group’s Consolidated

(18.0)

48.0

(11.0) (7.0)

(76.9)

28.4

5.4

(100.0)

(80.0)

(60.0)

(40.0)

(20.0)

0.0

20.0

40.0

60.0

Q1 Q2 Q3 Q4

Billion yenAve rage Ope rat in g In come fo r FY93-02*

Ope rat in g In come fo r FY03**

6 ©JAL 2004


Operating Revenue & Income by Segment

Oct.～Dec. Apr.～Dec. Oct.～Dec. Apr.～Dec.

Air Transportation 410.6 1,162.1 0.8 (47.5)

Airline-related 60.5 180.1 1.6 0.9

Travel Services 109.9 293.4 0.7 (1.2)

Others 67.5 188.3 3.2 5.1

All figures are before consolidation adjustments

Operating Revenue Operating Income

(Billion yen)

7 ©JAL 2004


Outline of the results of Air Transportation SegmentOutline of Q3 Account Settlement for FY2003

Breakdown of Revenue（Apr.-Dec.)）

<Breakdown of Revenue> （unit：billion yen）

Internatiional Passenger 154.6 (10.9) 405.4 (112.2)

Cargo 43.3 (2.0) 114.7 (5.8)

Domestic Passenger 168.4 16.3 512.3 30.0

Cargo 8.5 0.1 23.6 0.3

Others 35.6 (3.0) 106.0 (17.3)

Total 410.6 0.4 1,162.1 (104.9)

Underlined figures are differences between FY03 and FY02.FY02 figures are add-ups of JAL/JAS without adjustment for consolidation.

Operating Income （unit：billion yen）

Total 0.8 9.5 (47.5) (68.1)

Oct.～Dec. y.o.y. Apr.～Dec. y.o.y.

Oct.～Dec. y.o.y. Apr.～Dec. y.o.y.

38.1%44.1%

40.9% 34.9%

9.5%

9.9%

2.0%

1.8%

9.7%

9.1%

0

200

400

600

800

1,000

1,200

1,400

FY02 Apr.-Dec. FY03 Apr.-Dec.

Dom. Passenger Int'l PassengerInt'l Cargo Dom. CargoOthers

billion yen

ＩＰ

ＩＣ

ＤＰ

Underlined figures are differences between FY03 and FY02.

FY02 figures are add-ups of JAL/JAS without adjustment for consolidation.

8 ©JAL 2004


Trend in Demand in International Passenger Segment

Number of International Passengers in FY03

40%

50%

60%

70%

80%

90%

100%

110%

120%

Apr. May June July Aug. Sept. Oct. Nov. Dec. Jan. Feb. Mar.

y.o.y.

ForecastActual Results

＊Jan. : Flash Report

9 ©JAL 2004


Results of International PassengerOutline of Q3 Account Settlement for FY2003

Oct. – Dec. Apr. – Dec.

-21 .7

-1 .7

-20 .3

-11 .5

-30 .0

-20 .0

-10 .0

0 .0

10 .0

20 .0

Revenue RPK ASK Yield

y.o.y .（％）

Effect of FOREX approx. (0.5%)

Revenue 405.4 billion yen

y.o.y. (112.2) billion yen

-6 .6

-3 .5-3 .2 -3 .8

-30 .0

-20 .0

-10 .0

0 .0

10 .0

20 .0


y.o.y.（％）

Effect on FOREX approx. (1%)

Revenue 154.6 billon yeny.o.y. (10.9) billion yen

10 ©JAL 2004


Demand & Supply of International Passengers by route (y.o.y.)

Oct. －Dec.

L/F FY03 68.5% FY02 68.1%

-3.3

17.1

-23.3

-15.8

0.61.8

12.7

-17.0

15.3

-2.7

-10.1

-0.4

3.2

-10.6

-5.3-5.6

-40.0

-20.0

0.0

20.0

Continental

Haw

aii

Europe

Southeast Asia

Oceania

Guam

/Saipan

Korea

China

RPK ＡＳＫy.o.y.（％）

Apr.－Dec.

L/F FY03 63.8% FY02 70.8%

-10.7

-17.0

-21.6

-30.6

-9.7

-21.7

-29.7

-38.5

0.3

-14.8

-18.0

3.0

-11.0

-17.2

-3.8

-17.6

-40.0

-20.0

0.0

20.0

Contin

enta

l

Haw

aii

Euro

pe

South

east A

sia

Oceania

Guam

/S

aip

an

Kore

a

Chin

a

RPK ＡＳＫy.o.y.（％）

11 ©JAL 2004


Results of Domestic PassengerOutline of Q3 Account Settlement for FY2003

Growth of Passengers（y.o.y.）

April ～December

Individual Passengers：１０４％

Total Passengers：１０２％

96%

98%

100%

102%

104%

106%

108%

110%

112%

114%

Apr. May June July Aug. Sept. Oct. Nov. Dec.

Individual Passengers

Total Passengers

Growth of Domestic Passengers in FY03（y.o.y.） *JAL Group total

Individual Pax. Ratio(Target for FY2003:63%)

April ～December 63.5%

L/F Oct.～Dec. FY03 63.2% FY02 64.2% L/F Apr.～Dec.　FY03 65.0% FY02 65.4%

12 ©JAL 2004


Results of Domestic PassengerOutline of Q3 Account Settlement for FY2003

Oct. －Dec. Apr.－Dec.

10.8

0.0

1.6

10.8

-5.0

0.0

5.0

10.0

15.0


y.o.y.(%)Revenue 168.4 billion yen

（y.o.y.＋16.3 billion yen）

6.2

1.62.2

4.6

-5.0

0.0

5.0

10.0

15.0


y.o.y.(%)Revenue 512.3 billion yen

（y.o.y.＋30.0 billion yen）

13 ©JAL 2004


Results of International CargoOutline of Q3 Account Settlement for FY2003

International Cargo Tonnage by route (y.o.y. %)Tonnage Growth in International Cargo

2

5

-3

-10

-5

0

5

10

Pacific

Europe Southeast Asia &Others

-6

-2

-4

-10

-5

0

5

10

y.o.y .(%)

Pacif ic Europe

Southeast Asia& Others

Oct.－Dec.

Apr.－Dec.

85.0%

90.0%

95.0%

100.0%

105.0%

110.0%

Apr. May June July Aug. Sept. Oct. Nov. Dec.

y.o.y.(%)

14 ©JAL 2004


Results of International CargoOutline of Q3 Account Settlement for FY2003

Oct.－Dec. Apr.－Dec.

-4.6

0.0

-4.6

-6.0

-3.0

0.0

3.0

Revenue RCTK

y.o.y.(%)

Effect of FOREX approx.(3%)

Revenue 43.3 billion yeny.o.y. (2.0) billion yen

-4.8

-3.7

-1.1

-6.0

-3.0

0.0

3.0

Revenue RCTK Yield

y.o.y.(%)

Effect of FOREX approx. (1.5%)

Revenue 114.7 billion yeny.o.y. (5.8 )billion yen

15 ©JAL 2004


Outline of the Breakdown of Operating Costs

ＦＹ02 ＦＹ03 Difference ＦＹ02 ＦＹ03 Difference

Fuel 65.1 62.3 (2.8) 185.3 183.9 (1.5)

Airport Facilities 33.5 34.3 0.8 99.9 99.5 (0.4)

Maintenance 31.4 26.8 (4.7) 85.1 82.4 (2.8)

Passenger Services etc. 14.2 12.6 (1.6) 43.1 35.4 (7.7)

Commisions 33.2 33.3 0.1 101.9 90.8 (11.1)

Aircraft Depreciation 18.6 18.9 0.3 54.9 56.8 1.8

Aircraft Leases 25.4 24.9 (0.5) 76.3 73.3 (3.0)

Personnel 82.1 84.7 2.5 244.2 251.9 7.7

Others 115.4 112.0 (3.2) 355.9 335.7 (19.9)

Total 418.9 409.8 (9.1) 1,246.6 1,209.7 (36.9)Figures in ＦＹ02 are add-ups of JAL/JAS without adjustments of reference.

Oct.～Dec. Apr.～Dec.

16 ©JAL 2004


Fuel & FOREX (Air Transportation Segment)

◆Fuel （Average from Apr. to Dec.）

◆FOREX　

SIN Kerosene

FY03　$31.5/bbl

（FY02　$28.9/bbl）

SIN Kerosene

FY03　$31.5/bbl

（FY02　$28.9/bbl）

Hedge Ratio for FY03

Approx. 50%

Hedge Ratio for FY03

Approx. 50%

Operating Revenue (4.7)

Operating Costs (15.7)

Operating Income ＋11.0

　　＊Apr.－Dec.

(Billion yen)

ＦＹ02 ＦＹ03

USD ¥124.1 ¥116.2

EUR ¥118.1 ¥131.7

HKD ¥15.9 ¥14.9

Exchange Rate of Main Currencies

N.B. Based on the average JAL Exchange Rate from Apr. to Dec. of FY03

18 ©JAL 2004

Topics Topics Flight Plan for FY2004

Network Plan

Domestic Passenger Domestic Passenger

ASK VS.PY(4% )

The greatest aviation network in Japan

Improvement of investment efficiency

More efficient operation of aircraft

Network Plan aiming at profit maximization

Approx. 960 flights per day for JAL Group

International Passenger International Passenger

International CargoInternational Cargo

ASK yr/yr +7% (vs.FY02(4%))

The largest network between Japan & China covering 12 cities in Japan, with 26 routes and 216 flights per week

Increase of Shanghai route

e.g. inauguration of Hanzhou from Tokyo & Osaka

ATK y.o.y. +1%

286 aircraft (Mar. 2003) ⇒275 aircraft(Mar. 2004) ⇒275 aircraft (Mar. 2005) Fleet Plan By retirement of all existing MD11, number of aircraft types decreases from 15 to 14.

ＭＤ１１ ⇒3 ＤＣ10 ⇒４ B777-200ER ⇒３ B777-300ER ⇒２ B767-300ER ⇒４

ＹＳ１１ ⇒2 A300 ⇒３ Dash-8 Q400 ⇒１ B747-400F（Freighter）　⇒２

retire 12 aircraft introduce 12 aircraft

19 ©JAL 2004

Topics Topics

New Services in Domestic Flights (class J)

Introduction of “class J” replacing “Super Seat”Introduction of “class J” replacing “Super Seat”

Type of aircraft equipped and No. of seats Type of aircraft equipped and No. of seats

“class J” seats are installed in Middle & Large-size aircraft with more than 250 seats

While the number of "class J" seats will be about 3 times as many as the present Super Seats, the total number of seats remains same.

Services Services

- Special blanket and headphone

- Relaxation Oriented

June 1, 2004June 1, 2004 Fare + 1,000 yen Fare + 1,000 yen Start of services Start of services Charge Charge

New reclining system based on ergonomicsNew seatNew seat

Extension of seat

pitch by 20%

20 ©JAL 2004

Topics Topics

Towards the Final Stage of the Integration -1-

Improvement in Service and User-friendliness and Enhancement of Brand StrengthImprovement in Service and User-friendliness and Enhancement of Brand Strength

Airport Airport Reservation Reservation

Timetable Timetable

Uniform Uniform

Cargo servicesCargo services

Unification of toll-free dial

Improvement of User-friendliness

Introduction of new uniforms

Unification of freight mail windows at domestic airports

Integration of counters

Reorganization of Lounges & ban smoking

Introducing New style check-in machines

New style mileage registration machine

“JAL Pet Club”

Increase of automatic check-in machines

Domestic

International

Domestic Flight: 0120-25 -5971Int’l Flight :0120-25 -5931

21 ©JAL 2004

Topics Topics

Towards the Final Stage of the Integration -2-

All domestic flights are unified under new JAL 4-digit flight numbers All domestic flights are unified under new JAL 4-digit flight numbers

Flight No. Depart from Flight No. ～Sapporo 1000～1099 Itami/Kansai 2000～2599 ～Kansai 1300～1329 Hokkaido 2700～2899 ～Itami 1500～1599 Tohoku/Hokuriku 2900～2999 ～Fukuoka 1700～1759 Narita 3000～3099 ～Okinawa 1900～1939 Nagoya 3100～3399 ～Hokkaido 1100～1199 Chugoku/Shikoku 3400～3499 ～Tohoku/Hokuriku 1200～1299 Kyushu etc. 3500～3899 ～Kinki/Shikoku 1330～1499 ～Chugoku 1600～1699 2600～2699 ～Kyushu 1760～1899 3900～3999 ～Amami/Ishigaki/Miyako/Kume 1940～1999 4000～4999

＊ＪＴＡ・ＲＡＣ flights continue to use 3-digit Flight No. for the time being

LocalRoutes

Extra & SeasonalFlights

　　　　　　　　To and From Haneda

TrunkRoutes

22 ©JAL 2004

Topics Topics

JAL Group’s advanced Cash Management System

Operated by JAL Capital (100% subsidiary of JLC / Japan Airlines system) Operated by JAL Capital (100% subsidiary of JLC / Japan Airlines system)

Progress of JAL Group CMSMar. 2000 Start Operation with Pooling function,

Transfer Payment function & Nettingfunction for 11 companies

Apr. 2002 Salary Deposit Oct. 2002 JAS Group joined the CMS Feb. 2004 In total 97 companies participate in the CMS.

Progress of JAL Group CMSMar. 2000 Start Operation with Pooling function,

Transfer Payment function & Nettingfunction for 11 companies

Apr. 2002 Salary Deposit Oct. 2002 JAS Group joined the CMS Feb. 2004 In total 97 companies participate in the CMS.

620 million yen 620 million yen 53 billion yen53 billion yen

Of which the former JAS Group’s participation

Of which the former JAS Group’s participation

Reduction of Interest-bearing Debt vs. 1997Reduction of Interest-bearing Debt vs. 1997

Improvement of net interest expense

Improvement of net interest expense

9 billion yen 9 billion yen 55 million yen55 million yen

B/S B/S P/L P/L Effect CMS

(estimated JAL Group’s Total Amount of FY02)

23 ©JAL 2004

Topics Topics

JAL Group’s Homepage – most popular website in Japan-

Aim Revenue increase & Cost reduction by promoting e-marketing

Advantage JMB Member:more than 15 million

Copious contents Integration of Homepages of JAL/JAS

Enhance domestic passenger reservation to 50% of the total domestic passengers through internet by the end of FY2005. Target

Result Revenue through e-reservation system

⇒　estimated 190 billion yen for FY2003 Access:150 million views

The 3rd most selling site in Japan No.1 in the Airline ticket site (Surveyed by Gomez in 2003)Appraisal

24 ©JAL 2004

<Notice>

<Contact Address>

Japan Airlines System Corporation, IR Desk TEL: (03)5769-6097 FAX: (03)5769-6492

Office Hour:　Weekday： 9:30-12：00，13：00-17：00

Address: JAL Bldg. 2-4-11, Higashi-Shinagawa Shinagawa-ku, Tokyo 140-8605

(N.B.)

Please refer to the Financial Information (“Gyoseki no Gaikyo” ) for the precise figures on the account settlement. Any statements in this document, other than those of historical facts, are forward-looking statements about future performance, which are based on management’s assumptions and beliefs in light of information currently available, and involve risks and uncertainties. Actual results may differ materially from these forecasts. This document is published as supplemental materials for the Briefing on JAL Group’s Financial Statements for Q3 in FY2003. The copyright of this document belongs Japan Airlines System Corporation.

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