Airline upbeat despite full-year operating loss

TOKYO - Japan Airlines Corp (JAL), Asia's fourth-largest airline by market value, reported a full-year operating loss yesterday as high oil prices continued to hurt, but kept its forecast of a profit for this year.

The company also faced a management dispute and widely publicised safety problems that led many travellers to opt for competitors.

In a restructuring effort, JAL has been cutting unprofitable flights and focusing on business routes, which have higher yields than those that predominantly handle leisure travel. But those savings could not make up for soaring fuel costs.

JAL said it had a group operating loss of 26.83 billion ($389 million) in the year ended in March, compared with a 56.15 billion profit a year earlier.

For the current year to March 2007, the company reiterated a profit forecast of 17 billion that it had given in a mid-term business plan in March. Analysts estimate 18 billion in profit.

The company maintained its net profit forecast of 3 billion in 2006/07 on projected sales of 2.3 trillion.

JAL became embroiled in a management dispute in early 2006, and chief executive Toshiyuki Shinmachi resigned to take responsibility for the turmoil and losses.

Senior managing director Haruka Nishimatsu, who has overseen JAL's finances, is to take over in June.

The Nihon Keizai business daily reported yesterday that JAL planned to raise about 150 billion by issuing shares to Japanese financial institutions, aiming to use the money to cover bond redemptions next year and to prop up business.

Shares in JAL fell 1.6 per cent in 2005/06, while the Tokyo Stock Exchange's air transport subindex IAIRL rose 8.3 per cent in the same period.

- REUTERS