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Investing.com -- Japan Airlines (9201) announced a positive set of earnings for the fourth quarter of fiscal year ending March 2025.
The company surpassed its EBIT target for the year by 1.4%, reporting ¥172.5 billion, and reiterated its confidence in achieving a ¥200.0 billion EBIT target for the following year, representing a 16% increase YoY.
The airline attributed its fourth-quarter earnings beat to a robust increase in inbound demand and a surge in cargo business, which included pre-tariff stockpiling. Specifically, Japan Airlines reported an EBIT of ¥28.1 billion for the March quarter, which is an 88% increase YoY.
The performance was driven by a rise in international passenger revenue, cargo and mail, and other income streams such as mileage programs. The cargo unit price saw a significant boost by capturing cargo headed to Europe and North America from China and Asia, including high-value goods like pharmaceuticals and batteries.
Despite the positive results, Japan Airlines acknowledged potential future risks, such as a decrease in inbound travel due to shifts in U.S. consumer sentiment, which have not yet been factored into the FY3/26 guidance.
Nevertheless, the company expects to continue seeing robust international passenger growth and load factor improvements, supported by strategic initiatives such as a joint venture with Garuda Indonesia, the operation of new routes, and partnerships like the one with Major League Baseball (MLB).
Jefferies analysts commented positively on Japan Airlines’ financial strategy, stating, "We see the DPS increase to ¥92 in FY3/26 from ¥86 as positive, keeping the 35% payout. It reiterated potential buybacks in the FY. We also like the company’s confidence in achieving the EBIT target of ¥200.0bn. However, we see limited contribution from Japan Airlines’ LCC ZIPAIR, given that Japan Airlines Group has a total of 232 aircraft (+5 YoY)."
In the broader context of the aviation market in Japan, the company is working to recover its market share in international routes. While Japan Airlines, including its low-cost carriers (LCC), has seen a slight decline in market share over the last twelve months, there are signs of a turnaround with the recent strategic moves.
Looking ahead, Japan Airlines remains focused on sustaining its current growth trajectory, leveraging its partnerships, and expanding its fleet to meet the anticipated demand in international and domestic travel.
The company’s financial assumptions for the coming fiscal year include an exchange rate of ¥145/$ and Dubai crude oil prices at $75/bbl, with operational sensitivity to currency hedging factored into their projections.
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