Japan Airlines profit hit by weak yen and higher costs

  • 30 April 2014
  • From the section Business
JAL planes on tarmac
Image caption Japan Airlines says the weaker yen and rising competition will weigh on future profits

Japan Airlines (JAL) has reported a dip in full-year profits, which it says is mainly due to the weaker yen pushing up costs.

The carrier earned 166.25bn yen ($1.6bn; £950m) for the year to March, a 3.2% drop from the previous year.

A fall in the value of the Japanese yen, while a boost for exporters, is bad for Japan's aviation industry.

That is because it pushes up the cost of fuel, which is usually the biggest expense for an airline.

In a statement, JAL said its annual fuel bill had reached 283bn yen, which is about 25% of the carrier's operating costs.

The Japanese yen has lost about 25% of its value against the US dollar since late 2012, when Japanese prime minister Shinzo Abe embarked on a string of policies to spur economic growth.

'Intensifying competition'

For the current financial year to March 2015, JAL is forecasting a lower net profit of 115bn yen.

The airline said it was facing "intensifying competition at Tokyo metropolitan airports as a result of the dramatic increase of international flight slots at Haneda airport".

Nearly 80 flights currently arrive and depart from Haneda airport each day, which is a 50% jump from a year earlier.

Haneda, Tokyo's second airport, is situated about 30 minutes from the city. Authorities have earmarked the facility as a gateway for visitors to Tokyo in anticipation of high passenger numbers when the city hosts the Olympic games in 2020.

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