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Fuel costs, blunders push Japan Airlines' Q3 loss up

Soaring fuel costs sent Japan Airlines (JAL) deeper into the red for the quarter ended Dec. 31, at a ¥11 billion (US$92.5 million) loss, as an embarrassing spate of safety lapses eroded passenger travel at the major Japanese carrier.

But revenue in the latest quarter was propped up by an extra cost that was added to plane tickets starting last year to offset surging fuel costs, the Tokyo-based company said yesterday.

Sales were up by nearly 4 percent at ¥556.9 billion, from ¥535.8 billion. Japan Airlines Corp, the holding company for JAL Group, had reported a ¥3.7 billion loss the same period a year ago.

The image of Japan Airlines has been badly tarnished by a series of safety lapses since early last year.

Despite promises to correct problems, two additional problems have popped up recently, including a JAL affiliate on a Tokyo-Taipei flight that took off with a latch on the emergency exit incorrectly positioned in December. Last month, a JAL aircraft on a domestic flight flew with the reverse thruster on an engine still locked. Both aircraft landed safely.

Passenger numbers for the quarter dropped 3.7 percent to 14.5 million people from 15.08 million people the same period the previous year, with passengers dropping in both international and domestic travel. Despite cost-cutting efforts, expenses jumped from the previous year, mostly because of surging fuel prices. Costs had been trimmed the previous year because of a change in the pension system, but that lift was missing this past year, JAL said in a statement.

The fuel bill during the first three quarters of fiscal 2005 was up 30 percent from the same period a year earlier, with fuel costs averaging US$71 per barrel versus US$49 the previous year, the airline said.

Anti-Japanese demonstrations in China that flared up last year over a new Japanese textbook that critics say glosses over World War II atrocities, continued to depress tourist travel to China, JAL said.

Japanese Prime Minister Junichiro Koizumi's annual visits to a shrine that honors Japanese war criminals have also set off anti-Japanese sentiments in China. Chinese suffered atrocities by Japanese soldiers during World War II. Koizumi has repeatedly said he does not support war and he goes to the shrine to pay respect to the war dead, but the diplomatic row between the two nations has continued.

For the fiscal year ending March 31, Japan Airlines is forecasting a ¥47 billion loss on ¥2.195 trillion sales, unchanged from what it gave in November.
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