Japan Airlines falls into operating loss of $186m

TOKYO — Japan Airlines expects to book an operating loss of some 20 billion yen ($186 million) for the three months to March, compared to 30.6 billion yen profit in the same period a year earlier.

It is the first time since its relisting in 2012 for the company to fall into a quarterly operating loss.

The carrier has suffered a rapid decline in passengers starting in the second half of February and expects a further deterioration in operations in April and beyond.

The company estimates revenue dropped between 20% and 30% in the three-month period to March.

Although the reduction in flights until the first half of February was mainly those to and from China, it rapidly expanded to routes to other parts of Asia, Europe and the United States.

In March, only 10% of JAL’s international flights were operating compared to what is normal for the month. Domestic flights have also dropped about 30% from usual levels in the month.

Seat occupancy ratios for many of JAL’s routes in March fell below 50%, which is said to be the break even point for air carriers.

In addition to a significant fall in revenue, fixed expenditures, including maintenance spending, hit JAL’s profitability as the company was unable to cut payrolls to get ready for the expected business recovery after the coronavirus pandemic runs its course.

The company estimates its operating loss in the January-March period could end up being even bigger at around 30 billion yen.

Although JAL expects to have turned a profit for the full year ended March, it sees the figure at between 90 billion yen to 100 billion yen, down about 40% from a year earlier.

JAL at the end of January lowered its full-year forecast by 30 billion yen, or 21%, to 140 billion yen, but the adjustment did not include the expected impact of the outbreak.

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