JAL Group Announces Consolidated Financial Results for Full Fiscal Year 2011 TOKYO May 14, 2012: The JAL Group (JAL) announced today the consolidated financial results for the full fiscal year of 2011 the period from April 1, 2011 to March 31, 2012. As JAL entered the fiscal year that began shrouded in economic uncertainty due to the then-recent Great East Japan Earthquake and the debt crisis in Europe, the company continued with its endeavors from the previous year to review aircraft and route plans, and enforced measures to maximize revenues. At the same time, with an unwavering commitment to safety, JAL examined every cost category, such as rent and service expenses, to strive for greater cost savings. Meanwhile, the divisional profitability management system was strongly put in place from April to raise the profit consciousness of each department so as to increase efficiency. The Group s other consolidated non-core businesses have also improved in earnings for the reporting period through cost savings in various areas and active measures to maximize revenue. Consequently, the JAL Group achieved a consolidated net income of 186.6 billion yen based on consolidated operating revenue of 1,204.8 billion yen, operating expense of 999.8 billion yen and operating income of 204.9 billion yen. (1) JAL Group Consolidated Results for the Period April 1, 2011 March 31, 2012 Fiscal Year 2011 (April 1, 2011 March 31, 2012) Total Operating Revenue 1,204.8 International Passenger Domestic Passenger International and Domestic Cargo Others 385.2 481.1 78.8 259.5 Total Operating Expense 999.8 Operating Income (loss) 204.9 Ordinary Income (loss) 197.6 Net Income (loss) 186.6 Unit: Billions of yen. Figures are rounded down to the nearest tenth of a billion yen.
(2) Air Transportation Segment International Passengers After terminating underperforming routes and reducing the number of aircraft types in the fleet the previous year, JAL continued to review aircraft used for operations, to improve profitability by striking a better balance between demand and capacity, and to also improve the capability of responding swiftly to changes in the operating environment. Despite the event risks such as the Great East Japan Earthquake in March 2011 and the severe flooding in Thailand in October, JAL minimized the decline in profitability by temporarily suspending and reducing affected flights and downsizing aircraft. On the other hand, frequency on the Delhi route was increased from 4 to 5 flights a week from October 30 to meet the robust corporate demand on this sector. To improve profitability, JAL reacted swiftly to capture more traffic and deployed larger aircraft and operated extra flights to Honolulu when demand recovered from summer due to the strong yen. In the joint business agreement with oneworld alliance partner American Airlines launched in April 2011, JAL cooperated in various areas such as establishing joint fares for applicable flights boarded on either carrier across the Pacific, adjusting flight schedules, and co-locating in the departure terminal at Chicago O Hare International Airport. From December, the joint business was further expanded with the introduction of joint fares between North America and Asia (via Japan). Meanwhile, JAL and British Airways have plans for a joint business between Japan and Europe, and applied to the Japanese Ministry of Land, Infrastructure, Transport and Tourism for antitrust immunity (ATI) in February. JAL launched code-sharing agreements with other oneworld alliance members such as LAN Airlines and airberlin to gain connecting passengers by expanding the alliance s global network and improving customers convenience. To boost demand during the shoulder season and maximize revenue, attractive fares for Business Class and Economy Class were offered during specific periods. Additionally, to increase product competitiveness and thus the customers preference for JAL, more collaboration was done with well-known restaurants to present passengers a series of enjoyable in-flight meal choices on select routes. Consequently, international capacity for the reporting period on a consolidated basis declined year-on-year by 16.8%
when measured in available-seat-kilometer (ASK) and demand declined year-on-year by 20.3% in terms of revenue-passenger-kilometer (RPK). Load factor was 3.1 points less at 70.4% from the same period last year. Revenue from international passenger operations in FY2011 on a consolidated basis was JPY385.2 billion. Domestic Passengers Profitability in domestic passenger operations improved owing to appropriate responses to changes in the operating environment and by better matching demand with capacity. While reducing frequency of scheduled flights due to the dramatic post-quake decline in passengers from April to June, many extra flights were operated to the Tohoku region as surface transportation was disrupted. Following the recovery in domestic demand from July, larger aircraft were used and extra flights were operated between Haneda and Sapporo, Okinawa, etc. where demand was remarkably stronger, so as to maximize revenue. In the winter schedule from the end of October, flight frequency was increased on six routes such as between Haneda and Akita. The closing date for purchase of Tokubin discount fares between Haneda and Sapporo, Fukuoka, Kita-Kyushu, and Okinawa was extended, from three days before departure to one day, for departures from May. Applicable routes were also expanded to Haneda = Oita, Nagasaki, Kumamoto, Miyazaki and Kagoshima for departures from October. Availability of Sakitoku discount fares was expanded to the year-end period, as well as throughout the summer holidays and on all routes with the aim to boost demand and increase revenue. To create new demand for travel, unique attractions of select local regions in Japan are introduced monthly through JAL s inflight magazines and meals under the JAPAN PROJECT in collaboration with local governments and businesses. Furthermore, the JAL Tabi Plus Navi travel information website was launched in October and made accessible on smartphones from February. In addition, special fast lanes and security checkpoints exclusively for JAL Global Club members and JMB Sapphire members, similar to the one offered at Haneda airport s domestic passenger terminal, were opened at Itami and Fukuoka airports from March to enhance customer service. The resulting domestic capacity for the reporting period on a consolidated basis declined year-on-year by 13.5% in terms of ASK and demand declined year-on-year by 12.3% in terms of RPK. Load factor was 0.8 points up at 62.7% from the same period last year. Revenue from domestic passenger operations in FY2011 on a consolidated basis was JPY481.1 billion.
International and Domestic Cargo Amid the decline in overall cargo demand from overseas, JAL moved quickly to meet the sudden increase in demand for air transportation of automobile parts, cigarettes, etc. after the Great East Japan Earthquake. Larger aircraft were also utilized in response to the urgent need for transport of goods after the severe flooding in Thailand in October. In cargo sales, JAL provided transportation for temperature-controlled, high added-value goods such as pharmaceuticals, and endeavored to capture new inbound cargo from overseas as well as cargo from regional Japan through domestic-international connection services at Haneda airport. As a result of the suspension of freighters and large capacity cuts due to downsizing of passenger aircraft by November 2010, the comparative volume of international cargo transported in this reporting period on a consolidated basis in revenue-cargo-ton-kilometer (RCTK) declined by 36.9% from the same period a year ago, and revenue was JPY53.7 billion. Following the Great East Japan Earthquake, demand for transport of cargo shifted from surface and marine modes to air, which JAL made efforts to meet. From July, JAL transported perishables from Hokkaido, Kyushu and Okinawa, for which there was robust demand, and fresh flowers using the belly space of unoccupied chartered passenger aircraft operated at night, in order to meet domestic cargo demand as much as possible. The volume of domestic cargo transported during the reporting period in RCTK terms declined year-on-year by 11.4% due to the downsizing of network and aircraft, as with the international network, and revenue generated from domestic cargo operations was JPY25.0 billion. (3) JAL Group Consolidated Financial Position FY2011 Apr 1, 2011 Mar 31, 2012 FY2010 Apr 1, 2010 Mar 31, 2011 Difference FY2011 FY2010 Total assets (billion yen) 1,087.6 1,206.5-118 Net assets (billion yen) 413.8 218.2 195 Capital ratio *1 (%) 35.7 16.5 19.3 points Interest-bearing debt (billion yen) 208.4 484.0-275 Debt/Equity Ratio *2 0.5 2.4-1.9 Figures are rounded down to the nearest tenth of a billion yen while percentage points are rounded up to the nearest tenth. Notes: 1. Shareholders equity is total net assets excluding minority interests 2. Debt-to-equity ratio is interest-bearing debt divided by shareholders equity (4) Forecast of JAL Group Consolidated Financial Results The outlook for fiscal year 2012 is uncertain due to the prevailing economic situation faced by the company, such as
concerns of a downward swing in the global economy due to the European financial crisis and rising fuel prices caused by geopolitical risks in the Middle East. The operating environment is also entering a new phase with the launch of JAL s Boeing 787 Dreamliners and the entry of Low Cost Carriers (LCC) into the Japanese market. Nevertheless, the company is strongly committed to maintaining flight safety - the foundation of its existence, and will steadily implement the measures set out in the Mid-Term Management Plan, announced in February in order to achieve stable profits, and provide customers with unparalleled quality of service. Management indicators for fiscal year 2012 were provided in the Mid-Term Management Plan. To raise as much as possible, the probability of achieving them, measures set out in the Plan were more deeply scrutinized and consolidated results for the full fiscal year ending March 31, 2013 are forecast to be as below. (Billions of yen) Forecast for the full fiscal year ending March 31, 2013 Operating Revenue Operating Income Ordinary Income Net Income 1,220 150 140 130 The forecast in this document represents estimates of future results based on the information available at the time of release and the company s reasonable judgment on this information. They are inherently subject to risks which may result in a divergence in the actual result from the forecasts and estimates contained herein. END