TOKYO (Reuters) - Japan Airlines Corp <9205.T> said on Friday it had roughly doubled its 2007/08 profit estimates to above market expectations, thanks to strong business travel demand on its international routes.
The carrier, Asia's biggest by revenue, reported net losses in the previous two years due to soaring fuel prices, high labor costs and a string of safety mishaps, while domestic rival All Nippon Airways <9202.T> flew ahead with swift cost-cutting measures.
JAL had forecast a return to profitability for the year that ended in March, but it said its bottom line showed a stronger improvement than it had expected thanks to robust demand and lower costs.
"It had been said that JAL would be saved with a recovery in demand on international routes because that is where the company's strength lies," Fitch Ratings analyst Satoru Aoyama said.
"And indeed international demand has been showing a strong recovery with an improvement in Japanese companies' earnings and an export-backed upswing in the country's economy increasing the appetite for business travel," he said.
JAL said it now expected to post a group operating profit of 90 billion yen ($862 million) for the year that ended on March 31, well ahead of a consensus projection for a 50 billion yen profit in a poll of nine analysts by Reuters Estimates.
The company had previously forecast a 2007/08 operating profit of 48 billion yen, up from a 22.9 billion yen profit a year earlier.
JAL more than doubled its 2007/08 net profit forecast to 16 billion yen from 7 billion yen, helped also by reduced costs after it axed unprofitable routes, renewed its fleet to improve fuel efficiency and sold non-core assets.
As part of its restructuring, JAL said on Friday that it would sell nearly half of its credit card unit to
Still, Fitch's Aoyama warned that JAL could face headwinds this year as it will find it tough to hike prices to buffer soaring fuel prices. He said that could reduce business travel demand amid weak sentiment on the economy.
Rival ANA this week forecast that high fuel prices would push its operating profit down 5.2 percent to 80 billion yen in the year to March 2009, missing a market forecast of 83.9 billion yen.
JAL plans to announce its earnings results for 2007/08 and its forecast for 2008/09 on May 9.
Its shares closed up 3.6 percent at 257 yen after the Nikkei business daily reported on the revision. The Nikkei average <.N225> rose 2.1 percent.
($1=104.38 Yen)
(Reporting by Sachi Izumi; Editing by Hugh Lawson)
