Japan Airlines forecasts record annual loss as pandemic takes toll

Japan Airlines (JAL) passenger jets sit parked at Haneda International Airport in Tokyo on January 31, 2018. (AFP)
Short Url
Updated 31 October 2020

Japan Airlines forecasts record annual loss as pandemic takes toll

  • Domestic bookings at JAL in October have been about half of what they were a year ago, while overseas flights are still mostly empty

TOKO: Japan Airlines (JAL) on Friday forecast a record operating loss for the year through March, and said it would retire planes early as the pandemic hits travel demand.
   Japan’s second-biggest airline has, like other carriers, been hammered by a collapse in air travel demand. It said on Friday it planned to retire 24 of its Boeing 777 widebodies by March 2023, though its response is less aggressive than larger rival ANA Holdings Inc.
Unlike ANA, JAL also said it will not ask staff to take pay cuts and is dispatching workers to hotels, stores and other outside companies. On any one day about 500 employees are working elsewhere, some for only a day while others will be gone for as long as two years, the company said.
JAL forecast a full-year loss between 330 billion yen ($3.2 billion) and 380 billion, compared with an average loss forecast of 273.1 billion from 10 analysts compiled by Refinitiv. The airline posted a second-quarter operating loss of 92.9 billion yen versus an 82.9 billion profit a year earlier.

HIGHLIGHTS

● Reports operating loss of 92.9 blllion yen.

● Will retire 24 Boeing 777 widebodies early.

● Cash burn to fall, expects to expand credit line.

It expects cash burn of between 15 billion yen and 20 billion a month for the rest of the financial year, compared with 45 billion yen to 50 billion yen so far. It also plans to expand a credit line by 100 billion yen next month.
ANA, which plans to send more than 400 workers to other companies and cut the pay of others, this week forecast a record full-year operating loss of 505 billion yen. It plans to retire 35 planes, including 777s jets, this year.
Domestic bookings at JAL in October have been about half of what they were a year ago, while overseas flights are still mostly empty. By the end of March, international demand is likely to be below 50 percent of normal.


US sanctions Chinese and Russian firms over Iran trade

Updated 52 min 27 sec ago

US sanctions Chinese and Russian firms over Iran trade

  • Four companies accused of ‘transferring sensitive technology and items’ to missile program

LONDON: The US has slapped economic sanctions on four Chinese and Russian companies that Washington claims helped to support Iran’s missile program.

The four were accused of “transferring sensitive technology and items to Iran’s missile program” and will be subject to restrictions on US government aid and their exports for two years, Secretary of State Mike Pompeo said in a statement.

The sanctions, imposed on Wednesday, were against two Chinese-based companies, Chengdu Best New Materials and Zibo Elim Trade, as well as Russia’s Nilco Group and joint stock company Elecon.

“These measures are part of our response to Iran’s malign activities,” said Pompeo. “These determinations underscore the continuing need for all countries to remain vigilant to efforts by Iran to advance its missile program. We will continue to work to impede Iran’s missile development efforts and use our sanctions authorities to spotlight the foreign suppliers, such as these entities in the PRC and Russia, that provide missile-related materials and technology to Iran.”

The Trump administration has ramped up sanctions on Tehran after withdrawing from the Iran nuclear deal in 2018.

Earlier this week, Pompeo met Kuwaiti Foreign Minister Sheikh Ahmad Nasser Al-Mohammad Al-Sabah, when the campaign of pressure on the Iranian regime was also discussed.

“I want to thank Kuwait for its support of the maximum pressure campaign. Together, we are denying Tehran money, resources, wealth, weapons with which they would be able to commit terror acts all across the region,” he said.

It is not yet clear how the incoming administration of Joe Biden will deal with Tehran and whether it wants to revive the nuclear deal which would be key reviving the country’s battered economy. The Iranian rial has lost about half of its value this year against the dollar, fueling inflation and deepening the damage to the economy.

Iran’s economy would grow as much as 4.4 percent next year if sanctions were lifted, the Institute of International Finance (IIF) said last week. 

The economy is expected to contract by about 6.1 percent in 2020 according to IIF estimates.