A jetliner of Asia's largest air career Japan Airlines parks
© AFP/File Yoshikazu Tsuno

TOKYO (AFP) - Asia's largest carrier posted a net profit of 1.5 billion yen (12.8 billion dollars) for the first half of the fiscal year compared with a 12-billion-yen loss a year ago and after a first quarter loss of 26.7 billion yen.

Revenues rose 3.4 percent in the interim period to 1.15 trillion yen, helped by route network restructuring and aircraft downsizing.

Operating profit, however, almost halved to 8.1 billion yen from 15.7 billion due to rising fuel costs and lackluster ticket demand.

Revenues rose on routes to the mainland United States, Europe, Southeast Asia, South Korea and China while domestic revenue was largely stagnant and operating costs increased 4.1 percent due to the higher fuel bill.

"While higher fuel cost continued to weigh on overall profitability our international operations saw a major improvement thanks to the hike in the fuel surcharge and a downsizing of the fleet," JAL director Tetsuya Takenaka said.

JAL is moving towards more medium-sized planes so it can prioritize shorter-distance flights, particularly to China.

JAL said traffic to China had recovered after the effects of demonstrations there in early 2005 accusing Japan of failing to atone for its militarist past and protesting its bid for a permanent UN Security Council seat.

People check their boarding passes at an automatic check-in counter of Japan Airlines
© AFP/File Yoshikazu Tsuno

The airline has also been hit hard by a series of safety scares. In one incident last year, three travellers were injured when the front tires of a JAL plane came off on landing in Tokyo.

"A series of operational problems had previously weakened our position against competitors, but we think the downturn in domestic demand has bottomed out and we have experienced some recovery since April," Takenaka said.

Overall revenue from international flights rose by 2.9 percent to 370.7 billion yen and from domestic services by 1.6 percent to 345.8 billion yen.

JAL has been cutting routes and laying off some 6,000 workers to try to return to the black.

Its president, Toshiyuki Shinmachi, agreed to quit in March faced with a rebellion by shareholders and executives over the mounting losses.

For the year to March, the airline maintained its forecast for three billion yen in net profit but cut its projections for operating profit to 13 billion yen from 17 billion and for revenue to 2.28 trillion from 2.30 trillion.

"To achieve our commitment to earn profits at all levels in the full year, we will sell what marketable securities that we can unload," said Takenaka.

He said the company would also look at selling properties, adding, "The asset sales in the second half will be sizeable."

Due to the high price of oil, the fuel bill for the first-half period was 209.2 billion yen, up 15.4 percent from the same period last year despite fuel hedging and reduced fuel consumption, it said.

JAL shares closed down three yen or 1.36 percent at 218 following the release of the results, while the Nikkei-225 index lost 1.08 percent.

©AFP