Japan Airlines' third-quarter loss tripled as the world's third-largest carrier by sales faced record jet fuel prices and lost customers to rival All Nippon Airways following safety mishaps.
The net loss grew to ¥11.1 billion ($136.8 million) for the three months ended December 31, from a loss of ¥3.7 billion
in the same quarter a year ago. Sales grew 3.9 per cent to ¥557 billion, the company said yesterday.
The airline has been battered by a surge in jet fuel costs and safety lapses that have made customers wary of flying on its aircraft.
President Toshiyuki Shinmachi is also trying to win employee acceptance for a 10 per cent pay cut, part of the airline's revival plan outlined in November.
The company kept its full-year forecast for a loss of ¥47 billion unchanged.
"The repeated safety mishaps highlight a lack of control within the company, [poor] management procedures and a decline in morale among employees," said Makoto Kikuchi, chief executive at Myojo Asset Management Japan, before the earnings announcement.
"I can't look at the company as a possible investment until it can demonstrate clear signs of recovery," he said.
Japan Airlines is raising fares, cutting labour costs and eliminating money-losing flights to ease the impact of higher fuel costs.
The price of jet fuel in Singapore averaged US$70.59 ($103.59) per barrel in the October-December period.
To help regain profitability in the next business year, the airline plans to cut employees' base salaries by 10 per cent starting in April.
This is three months later than planned, as the airline failed to reach agreement with all nine of its labour unions. The pay cut will reduce labour costs by ¥6 billion annually.
All Nippon, Japan's second-largest airline, has shielded itself from the impact of higher fuel prices by hedging fuel costs and winning over customers from Japan Airlines.
The smaller airline, which surpassed Japan Airlines in market value in August, reported a third straight quarterly profit and raised its full-year profit outlook 70 per cent to ¥17 billion on January 31. Third-quarter net income almost doubled to ¥10.2 billion on stronger travel demand and fewer one-time charges.
Japan Airlines shares fell 0.3 per cent to ¥325.
- BLOOMBERG
