Battered by a plunge in jet travel following the terrorist attacks, Japan Airlines reported a 61 percent fall in profit for the first fiscal half and forecast billions of yen in losses for the whole year.
Japan's biggest airline said yesterday that profits for the six months ended in September totaled ?16.4 billion (US$134 million), down from 42.4 billion yen for a year ago. Sales totaled ?871 billion (US$7.1 billion), down 0.3 percent from ?874 billion.
Earlier this week, JAL announced it was merging with domestic rival Japan Air System to cut costs and compete better against global competitors by setting up a holding company next year and bringing together their businesses by 2004.
But hard times are certain to continue given the deterioration in international travel. Japanese have canceled tours by the droves since the Sept. 11 terrorist attacks. And analysts say the promise of the merger remains too murky to count on solid results soon.
"It's really unclear what's going to happen," said Satoshi Abe, analyst with Daiwa Institute of Research in Tokyo. "To begin to tackle cost-cutting, they have to first show they can carry out the merger."
Among the major stumbling blocks are the different corporate cultures at JAL and JAS.
JAL controls 25 percent of the domestic market -- only half of the nation's No. 2 airline, All Nippon Airways. Together, JAL and JAS would control 48 percent of the domestic market.
The merger still needs approval from government regulators and shareholders.
For the fiscal year ending in March 2002, JAL expects to chalk up ?40 billion (US$327 million) in losses on ?1.6 trillion (US$13 billion) in revenue. In fiscal 2000, JAL had posted a 41 billion yen profit on revenue of ?1.7 trillion. The airline lost ?10 billion (US$82 million) in cargo revenue and an additional ?10 billion (US$82 million) in international passenger revenue. Cost-cutting helped regain ?13 billion (US$106 million), it said.
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