• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

S&P Cuts Japan Airlines Credit Rating

Posted on: Thursday, 17 November 2005, 06:00 CST

TOKYO - International ratings service Standard & Poor's on Thursday cut Japan Airlines Corp.'s credit rating after the airline company posted its first half-year loss in two years.

S&P downgraded Japan's largest airline company to from BB- to B+, four rungs below "junk" status, for its corporate credit rating and long-term senior unsecured debt, citing deteriorating earnings as the reasons.

Last week, JAL posted group net loss of 12.04 billion yen ($102 million) for the first half of fiscal 2005 through September, thanks to higher fuel prices and safety concerns. The Tokyo-based company had recorded an 82.96 billion yen profit the same period a year ago.

JAL also revised its earnings forecast for the full year through March 2006 to a 47 billion yen ($397 million) loss. It had previously expected a 17 billion yen ($144 million) profit.

S&P attributed the poor earnings to rising jet fuel prices, a decline in passengers to China due to anti-Japan riots there, and JAL's safety problems this year. In one, tires on the wheels came off during a landing. In another, a pilot attempted to take off without receiving approval from air traffic controllers.

"Although JAL's stable profits from domestic flights helped cover volatile profit from international flights, its fiscal first half results showed a drop in profitability from its domestic operations," said Standard & Poor's credit analyst Eiro Taniguchi.

Source: Associated Press/AP Online

More News in this Category