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Japan Airlines profit soars but China spat weighs
by Staff Writers
Tokyo (AFP) Nov 2, 2012

Japan Airlines on Friday raised its full-year profit forecast to $1.74 billion as the carrier, which only exited bankruptcy last year, released its first results since re-listing on Tokyo's stock market.

The airline -- whose collapse was one of Japan's worst-ever corporate failures -- said net profit would rise to 140 billion yen ($1.74 billion) in the year to March as it cut costs and enjoyed heavy demand for new international routes.

But it warned that a simmering trade spat between Tokyo and Beijing has weighed on revenue as it trimmed its full-year sales target to 1.21 trillion yen, from 1.22 trillion yen.

JAL and rival All Nippon Airways both cancelled thousands of flights in the wake of huge anti-Japan protests in China after Tokyo in mid-September nationalised a group of disputed islands in the East China Sea.

Chinese consumers boycotted many Japan-branded products, but JAL said Friday that its other international business was healthy in the first half of the year as a strong yen boosted travel demand.

Domestic sales also climbed as the carrier and rival All Nippon Airways recovered from a slump after last year's quake-tsunami disaster and subsequent nuclear crisis, which pounded Japan's tourism industry.

Cargo sales were off about 3.3 percent owing to turmoil in debt-hit Europe, it said.

"Despite flight cancellations and a decline in passenger traffic on JAL's China routes from late-September, traffic demand to Europe and Southeast Asia on the other hand was high," it said in a statement.

For the first six months of its fiscal year, JAL said it booked a net profit of 99.7 billion yen, up 2.3 percent on-year, with sales of 634.2 billion yen from 599.8 billion yen a year earlier.

On Wednesday, ANA said its half-year net profit soared 61.6 percent on firm travel demand to 36.93 billion yen, although it admitted Tokyo's territorial dispute with Beijing also took a bite out of its China business.

JAL re-listed its shares in September, marking a spectacular turnaround three years after it went bankrupt with massive debts and saw its stock delisted from Japan's premier bourse.

The new listing followed a share offering that raised around $8.5 billion, the second biggest in the world this year after Facebook's $16 billion initial public offering in May.

JAL had continued flying while it went through its huge overhaul under court protection, cutting staff and money-losing routes as well as selling or merging non-core businesses.

The airline received a huge government bailout and other concessions, drawing howls of protest from rivals although some of the share sale proceeds have been earmarked to pay back the government.

It has also embarked on an ambitious expansion, saying earlier this year it ordered 10 new fuel-efficient Boeing 787 Dreamliner aircraft as it looks to build on its recovery and fend off an emerging low-cost sector.

The 10 new aircraft, part of a five-year plan, are in addition to an existing order for 35 of the mid-sized planes capable of flying long-range routes.

Japan was slow to the budget carrier sector although several new low-cost airlines have come online this year.


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