JAL loses $1 billion in second quarter

You thought Delta's second quarter loss of $257 million was bad? Or even American's $390 million loss during the same time? Even perennial money-loser Alitalia's financial performance pales in comparison to Japan Airlines' whopping $1 billion loss between the months of April to June, which is larger than the amount it lost for all of 2008 (only $35 million). As a result, the airline has announced that it will reduce flying or switch to smaller planes on 25 international routes, although I'd think that more cuts will have to follow in short order.

Can JAL sustain these heavy losses? The airline got a $1 billion bailout from the Japanese government in June, although it asked for twice that amount. The government will probably end up ponying up more cash to keep JAL afloat. It's true that JAL was hit pretty hard by swine flu fears earlier this year, not to mention the ongoing worldwide recession. Even Singapore Airlines, usually a rock of financial stability, has warned that it could post its first full-year loss since 1972, the year it was founded. But JAL is in much worse shape than its arch-rival ANA, which lost almost $300 million during the second quarter. While everyone's hurting right now, JAL clearly has some problems of its own that it needs to clear up quickly. Traffic (especially business traffic) isn't going to rebound anytime soon, and while JAL has made some progress at cutting costs, it's going to have to do much more if it wants to stick around.

photo by St Stev from Flickr, licensed under the Creative Commons


Airline Complaints said...

nothing about this is surprising. what is surprising is that not many airlines are reporting billion dollar losses. someone once said that the fastest way to become a millionaire is to find a billion dollars and start yourself an airline company. what a shame...