Japan Airlines : JAL Group Announces Medium Term Management Plan Rolling Plan 2015

~ FY2015-FY2016: A period to achieve management targets and start new growth ~

TOKYO February 18, 2015: JAL Group today announced its Medium Term Management Plan Rolling Plan 2015. (FY2015: fiscal year 2015 is from April 1, 2015 to March 31, 2016)

After announcing "JAL Group Medium-Term Management Plan for Fiscal Years 2012-2016" in February 2012, we review the previous fiscal year at the end of each fiscal year, and reconsider our policy for implementing the plan in order to achieve our targets in the remaining years. As we consider it essential to explain this to all our customers, shareholders, and business partners, as well as our staff, we drew up a rolling plan as we did last year with the aim to achieve the management targets of the Medium Term Management Plan based on the current business environment;

- to enable JAL Group staff to reaffirm the direction we are heading for, and to understand our current positioning; and

- to present to our customers, shareholders and all stakeholders the progress we have made with the Medium　Term Management Plan.

By achieving our management targets, we aim to realize the JAL Group Corporate Policy.

In addition to providing customers with safe and punctual operations, we are enhancing our services, such as rolling out "JAL SKY NEXT" on domestic routes, expanding "JAL SKY SUITE" on international routes, and launching new services each month under our banner, "Embrace new challenges, JAL" in an effort to improve customer satisfaction.

As a result, we came in first in Repeat Intention Rate of international flights again as in FY2013, and placed first for Recommendation Intention Rate. On the other hand, we ranked 3rd in Repeat Intention rate and Recommendation Intention rate of domestic flights.

Based on an analysis of results in FY2014, we will launch and enhance our products and services with speed, and strive to achieve No.1 in Customer Satisfaction by FY2016.

*1. Repeat Intention and Recommendation Intention rate: JCSI values (Japanese Customer Satisfaction Index) announced by Japan Productivity Center, Service Productivity and Innovation for Growth.

3. JAL aims to establish sufficient profitability and financial stability levels capable of absorbing the impact of economic fluctuations and risk events by achieving "10% or above operating profit margin for 5 consecutive years and 50% or above equity ratio in FY2016"

【FY2014 Forecast】

While an increase in consolidated revenues is expected due to an increase in international passenger revenue, etc., consolidated operating expenses are seen to decline due to falling jet fuel prices and through persistent cost reduction initiatives. As a result, we expect:

- Operating Profit  167.0 billion yen (+27.0 billion yen vs. Rolling Plan 2014)

- Operating Profit Margin  12.4%

- Shareholders' Equity  765.0 billion yen (+42.0 billion yen vs. Rolling Plan 2014)

- Equity Ratio   52.4%

【FY2015 Plan】

As an increase in costs based in foreign currency caused by the weak yen is expected in FY2015 as in FY2014, and tough competition is predicted in Japan and overseas, we will strive to improve profitability through consolidated efforts of every staff. As a result, we expect:

- Operating Profit  172.0 billion yen

- Operating Profit Margin  13.0%

- Shareholders' Equity  887.0 billion yen

- Equity Ratio    56.5%

【 Summary of Financial Results / Plan 】

II. Positioning of Each Fiscal Year

On initiating the remaining two years, having passed the midway point of the Medium Term Management Plan which covers FY2012-2016, we have defined the positioning of each fiscal year as below.

■FY2012-2013

A period that our ability to build a high-profitability structure was tested

Drawing on lessons learned in the past that we had created plans without fully executing the measures we had decided to take and without ample analyses, all JAL Group staff strived to demonstrate that "JAL Group has changed" and "has become a company that keeps its promises to its stakeholders."

A severe business environment prevailed through these two years, as we faced the suspension of 787 operations and rapid depreciation of Japanese yen. In such a severe environment, we worked to launch new products, enhance service, and improve productivity. As a result, we achieved an operating profit margin of over 10%, but we reported lower earnings on higher revenues. We considered the responses to the severe business environment would be one of our challenges to address in the future.

■FY2014

A period to develop the business foundation for new growth

As an extremely severe business environment was predicted in the beginning of FY2014, such as intensifying competition caused by additional international slots at Haneda airport, effects of the consumption tax hike on demand, rising fuel costs caused by the weak yen, we started FY2014 positioning it as a period to develop the business foundation on the premise of lower earnings on higher revenues. Actually, the effects of the consumption tax hike on aviation demand was more limited than we had expected, many overseas visitors came to Japan, jet fuel prices dropped from the latter part of the fiscal year, and consequently, the harsh business environment was relaxed to a certain extent. Furthermore, due to group-wide cost reduction initiatives and new products and services, we expect to report increased revenues and operating profit similar to previous year's level. We feel that we have established a business foundation for future growth with higher earnings on higher revenues.


■FY2015-2016

A period to achieve our Management Targets and start new growth

Although the business environment is seen to remain severe, we will not merely seek to expand business scale, but strive to differentiate JAL from our competitors so as to survive competition under the 3 keywords, "autonomy", "challenge" and "speed". By enhancing the JAL Brand and polishing our products and services, we will encourage as many customers to choose JAL, increase our cost competitiveness, and consequently, achieve growth (i.e. higher earnings on higher revenues) and clear our medium term targets. As an increase in capacity at Tokyo metropolitan airports and an increase in overseas visitors to Japan are expected ahead of the Tokyo Olympic and Paralympic Games in 2020, we will develop a corporate foundation resilient to various changes in the future.

Please refer to the attached [JAL Medium Term Management Plan Rolling Plan 2015(Summary)] & [JAL Medium Term Management Plan Rolling Plan 2015] for the details.

JAL will do announcement as soon as the starting date and the details of the new networks, products and services have been confirmed.

Please see the attached file

Attach①_JAL Group Medium Term Management Plan Rolling Plan2015(summary).pdf

Attach②_JAL Group Medium Term Management Plan Rolling Plan2015.pdf

20150218 JAL Group Announces Medium Term Management Plan Rolling Plan 2015.pdf

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