Japanese airlines report profits amid Dreamliner woes

AFP, TOKYO

Wed, May 01, 2013 - Page 15

Executives at Japan’s two biggest airlines yesterday said they were relieved the troubled Boeing Dreamliner was taking to the skies again, as the US planemaker ran full-page ads in major Japanese newspapers to apologize for the crisis.

Japan Airlines (JAL) said it was “trying to minimize” the financial impact from the three-month grounding of Boeing’s Dreamliner owing to problems with its lithium-ion batteries, but said its results were also stung by rising competition and soaring oil prices.

“The three-month period was long, but I am relieved that there were no major troubles during that time so we could save customers’ trust in us,” JAL president Yoshiharu Ueki said.

Rival All Nippon Airways (ANA), which operates 17 of the Dreamliner’s 50-strong global fleet, said its fiscal year net profit soared 53.1 percent, as cost-cutting and a boost in demand for international travel helped it shrug off its Dreamliner woes.

Together, the carriers said their sales would take a hit of more than US$200 million in the past and current fiscal year owing to the Dreamliner grounding, though ANA said the pain would be lessened if it could restart flights by next month as the next-generation aircraft undergoes a battery fix.

The carrier, which flew the Dreamliner’s maiden flight, and rival JAL together account for half of the Dreamliners in service globally and had to cancel thousands of flights in the wake of the crisis.

The fleet was grounded in January after a number of incidents including a fire on a JAL plane in Boston, and an emergency landing on an ANA flight in Japan.

After months of investigations into the plane’s powerpacks, US authorities on Thursday last week issued formal approval of Boeing’s battery fix, followed by a similar move by Japanese regulators. Ethiopian Airlines on Saturday became the first carrier to start using the aircraft again, while ANA ran its test flight the following day.

However, it could still be at least a month before the whole Dreamliner fleet is back in the air.

“We deeply apologize to Japanese customers and companies affected for the trouble and concern caused by our new Boeing 787,” the US firm said in an advertisement that appeared in major Japanese newspapers yesterday.

JAL said its net profit in the fiscal year to March fell 8 percent to ¥171.7 billion (US$1.8 billion), while it slashed its full-year earnings outlook by almost a third to ¥118 billion.

Sales rose 2.8 percent to ¥1.24 trillion in the 12 months ending March, it added.

ANA said it earned ¥43.1 billion in the year to March, up from ¥28.2 billion a year earlier, as sales climbed 5.1 percent to ¥1.48 trillion.

It said it expected to earn a ¥45 billion net profit in the current fiscal year.

A weaker yen, which has helped Japan’s exporters, had a less positive impact on airlines whose fuel costs are priced in US dollars.

“Fuel costs have risen nearly 20 percent,” Ueki said.