Japan Airlines Reports $90M Loss in 3Q

By YURI KAGEYAMA

TOKYO – Japan Airlines reported a net loss of 10.8 billion yen, or $89.9 million, in the latest quarter Tuesday, about the same amount of red ink as a year ago, partly due to soaring oil prices a dip in ski travel.

Japan’s No. 1 carrier is struggling to regain customer confidence after a spate of safety lapses in recent years have prompted passengers to opt instead for rival All Nippon Airways. JAL, as the airline is known, reported an 11 billion yen loss for the same October-December period in 2005.

Sales in the fiscal third quarter rose 4.9 percent to 584.1 billion yen ($4.9 billion), from 556.9 billion yen a year ago.

Cargo traffic from Japan to China was strong but was weak to the U.S. in the latest quarter. Tourism to Guam and Hawaii was stagnant, and poor snowfall caused a drop in domestic ski travel, JAL said.

Japan Airlines is set to outline a business plan later in the day at a time when the troubled airline has already been tackling job cuts, scrapping of flights and other cost cuts to turn around its business.

Soaring fuel costs continue to be a problem, JAL said, although oil prices have eased since October. The average price for Singapore kerosene over the nine-month period from April 2006 still remain at $81.90 per barrel, a price that’s unprecedented, it said.

The airline is taking up fuel hedging and fuel consumption reductions, but the fuel bill during the nine months was up 12.8 percent at 320.4 billion yen ($2.7 billion) from the same period a year earlier, it said.

JAL suffered a huge net loss of 47.2 billion yen ($393 million) in the fiscal year through March 2006 on soaring jet fuel prices and weak passenger demand.

The airline has been trying to regain travelers’ confidence after a series of embarrassing safety lapses since 2005, including an engine fire.

No one has been injured in the Japan Airlines incidents, but wheels have fallen off during a landing, a flight took off with a faulty latch and a flight was forced to return shortly after takeoff when a cockpit window cracked.

JAL left its profit outlook for the fiscal year ending March 31 unchanged at a 3 billion yen ($25 million) group net profit but lowered its sales projection to 2.27 trillion yen ($18.9 billion) from an earlier 2.28 trillion yen.

The fuel price crunch has hit rivals, but ANA has been reporting strong revenue on the back of JAL’s image problems. ANA profits for the third quarter slipped 8.5 percent due to high jet fuel prices and extra costs for the disposal of aircraft and equipment.

For the first nine months of fiscal 2006, JAL posted a 9.3 billion yen ($77.4 million) loss, an improvement over the 23 billion yen loss racked up over the same period in fiscal 2005.