Japan Airlines Co, Asia's biggest carrier, said October bookings for overseas flights fell 40 percent from a year earlier as demand slumped after the terrorist attacks, possibly leading to more capacity cuts.
Bookings for transpacific flights are running at less than half the level of October last year, while those to Europe and Asia are down 30 percent, said Katsuo Haneda, a senior vice president at Japan Airlines, in a Bloomberg Television interview.
"Looking at the recent trends of declines, we may have to cut capacity by five to 10 percent if demand remains down," Haneda said. The cuts would be in addition to the 5 percent reduction in flights planned for November, he said.
Global carriers are struggling with weaker demand for air travel after the Sept. 11 terrorist attacks and the subsequent US-led retaliation in Afghanistan. Japan Airlines, which generates about 70 percent of its sales on international routes, is more exposed to the drop in travel than rival All Nippon Airways Co, which gets about 70 percent of its sales at home.
"All Nippon is the better of the two," said Ichiro Takamatsu, who helps manages about US$480 million in stocks for Cigna International Investment Advisors Co. "A lot of the bad news has already been discounted in the share price, so the stock is unlikely to fall much further," he said.
"There have been no falls in domestic bookings" for October, Haneda said. The drop in European bookings came in part after the US began attacks in Afghanistan, he said.
"The 40 percent fall [in overseas bookings] is huge," said Osuke Itazaki, an analyst at Credit Suisse First Boston.
Japan Airlines' President, Isao Kaneko, representing the country's major carriers, including All Nippon and Japan Air System Co, yesterday asked the ruling Liberal Democratic Party to establish a system to give the country's airlines emergency loans and cover the cost of additional security.
Japan Airlines shares fell 4.1 percent yesterday to close at ?306.
The airline has no plan to defer any aircraft orders from Boeing Co, Haneda said.
Japan Airlines, which has never bought aircraft from Boeing's rival Airbus SAS, ordered 10 planes last November, worth as much as US$1.6 billion. This purchase included eight 777-200ER jets and two 767-300ER planes, while other Boeing planes are also on order.
Even though flights are being reduced, Japan Airlines expects to get more than 20 percent of new landing rights at Tokyo's international airport at Narita, adding to their quarter share of the existing capacity. The government will allocate the extra slots as soon as next month ahead of the runway's opening next April, Haneda said.
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