Japan Airlines forecasts record annual loss as pandemic takes toll

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)
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Updated 31 October 2020

Japan Airlines forecasts record annual loss as pandemic takes toll

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.


American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties

American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties
Updated 3 min 38 sec ago

American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties

American Chamber of Commerce: Why Biden will be business as usual for US-KSA economic ties
  • New US leader may adopt more pragmatic approach, but trade relations will remain strong

JEDDAH: While some analysts are predicting a change in Saudi-US relations following Joe Biden’s inauguration on Wednesday, the new chairman of the American Chamber of Commerce (AmCham) in the Kingdom of Saudi Arabia said he believes the change in the White House will not have any significant impact on relations between the two allies.

“The US has been a partner of Saudi Arabia since the 1940s and I think that goes very deep. We think that the Biden administration and presidential election victory will usher in new foreign policy changes. That’s a given when there’s any change in administration and especially in party,” Tarik Solomon, chairman of AmChamKSA, told Arab News.

AmCham recently launched its first chamber in Saudi Arabia. It is part of the United States Chamber of Commerce umbrella that has hundreds of branches around the world. In the region, there are already branches in Dubai and Abu Dhabi, as well as in Egypt and Lebanon.

The US and Saudi Arabia enjoy a robust economic relationship. According to the US Department of State, the US is Saudi Arabia’s second-largest trading partner, while Saudi Arabia is one of the US’ largest trading partners in the Middle East and its third-leading source of imported oil.

Solomon said he expects a different communication style when it comes to the US-Saudi relationship going forward. “We will likely see a return to standard official communication procedures under Biden, rather than the decree by tweet policy of Trump,” he said.

However, the US-Saudi relationship is longstanding and is characterized by its pragmatism, Solomon said.

“Biden may request some concessions and will probably put stronger conditions on support. However, when you look at trade and investment, we’re committed to working tirelessly to elevate this relationship,” he added.

According to Solomon, AmCham’s aim is to strive for increased cooperation between the two countries in terms of trade and investment, to diversify the Saudi economy away from a dependence on hydrocarbons and to help raise the Kingdom’s profile in the US.

In 2019, Saudi Arabia was the US’ 27th-largest goods and service market, with a total value of $39 billion, focusing on military, energy, aluminum, fertilizers and petrochemicals.

“Those are extremely high figures when you look at, for example, military vehicles — that’s $2 billion on its own,” said Solomon. “There’s a lot of trade going on between the KSA and US and there’s a lot of room for growth.”

However, the chairman hopes to push more US companies into new sectors that have high potential and are pillars of the Saudi government’s Visions 2030 goals. Of the promising investment sectors in the Kingdom, Solomon highlighted manufacturing, tourism, entertainment, sports and technology.

“What we are looking at right now is the manufacturing sector. This is where work towards localizing renewable energy and industrial equipment is growing. We’re looking at sports, tourism and leisure,” said Solomon.

In addition to manufacturing, the technology sector is another promising industry with high potential, but Solomon said that there is a slight lag in US investment in technology and the digital economy, which he wants to push forward while it remains a greenfield space in the country, especially as the government increases investment in the sector.

Solomon highlighted the significance of Saudi Crown Prince Mohammed bin Salman’s visit to the US under the Trump Administration. “Crown Prince Mohammed bin Salman signed a significant amount of memorandums of understanding between the Saudi Arabian government and US entities, and some of those included Aramco and SABIC. We see this as an opening to new opportunities for US investment in a market that was traditionally heavily protected.”

Solomon believes that strategic dialogue in the trade and investment field will be the key to success and enhancing investment opportunities between the two countries.

“We need to remember what kind of a friend Saudi Arabia is and that they’ve always been there for us. We’ve always had a strong relationship,” he said. “Saudi Arabia has choices. Our goal is to be its first choice as a trusted partner.”