Japanese airlines sink on higher fuel costs

Author: Agencies

Major Japanese carriers All Nippon Airways (ANA) and Japan Airlines (JAL) on Tuesday reported sluggish April-June profits as fuel costs weighed despite higher revenues.

Both airlines left their full-year guidances unchanged, bracing for annual profit drops.

ANA Holdings said operating profit fell 21.1 percent from a year earlier to 20.1 billion yen ($180 million), while revenue grew 7.3 percent to 484.9 billion yen.

Core revenue from the aviation business increased thanks to robust demand, but profits fell “due to rises in fuel costs on top of investment in measures to increase safety and service quality as well as in human resources,” ANA said in a statement.

Net profit tumbled by 68.5 percent to 16.1 billion yen because the previous year’s figures included one-off gains from including a low-cost carrier as a consolidated subsidiary.

For the current year to March 2019, ANA maintained its forecasts, saying the April-June results were in line with expectations.

It expects net profit to slip 29 percent to 102 billion yen, snapping three years of record profits, while projecting revenue will grow three percent to two trillion yen.

Rival JAL meanwhile said its quarterly operating profit rose a marginal 0.7 percent to 24.9 billion yen with net profit dropping 10.3 percent to 17.5 billion yen. It also saw higher operating expenses eat into profits, with fuel costs jumping 20 percent as oil prices rose.

Revenue rose 8.7 percent to 342.1 billion yen.

JAL forecasts full-year net profit will fall nearly 19 percent to 110 billion yen for the current year, despite a five percent increase in revenue to 1.46 trillion yen.

Published in Daily Times, August 1^st 2018.