JAL to record $1.1bn quarterly loss on pandemic

Jul 27, 2020 | News On Japan

Jul 27, 2020 (Nikkei) - Japan Airlines is expected to report an operating loss of about 120 billion yen ($1.1 billion) for the April-June quarter, swinging from a profit of 21 billion yen during the same period a year ago, Nikkei has learned, due to a sharp decline in passenger demand due to the coronavirus.

That will mark the biggest quarterly loss for Japan's flag carrier since its stock market relisting in 2012.

The coronavirus pandemic has weighed on revenue as people stopped traveling not just to overseas locations but also domestically, bringing three-month revenue to around 75 billion yen, down 80% on year.

JAL's utilization rate on its international routes was as low as 4% in June, 6% in May and 23% in April. The corresponding rate for domestic routes stood at around 30% to 40% between April and mid-June.

The airline industry has a structural problem of high fixed costs, especially for personnel and aircraft, meaning that a big revenue decline can easily result in an operating loss.

Still, the expected 120 billion yen loss represents a smaller deficit than the consensus market forecast of 135.5 billion yen and reflects JAL's efforts to cut costs in areas such as outsourcing and advertising.

Japanese airline ANA Holdings, meanwhile, is believed to have suffered an operating loss of 160 billion yen during the April-June quarter, which will bring the combined red ink at the two airlines to nearly 300 billion yen.

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