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Japan's airlines diverge as ANA soars and JAL dips

[TOKYO] Japanese carrier ANA said Thursday its annual net profit more than doubled on robust international business, but rival Japan Airlines saw its bottom line worsen as the weak yen undercut lower fuel prices.

ANA Holdings, the parent company of All Nippon Airways, said the soaring profit came after logging record revenue as an expansion at a downtown Tokyo airport allowed it to run more overseas routes.

It recorded a net profit of 39.2 billion yen (S$436.9 million), up 107.8 per cent from the previous year.

But Japan Airlines (JAL) said its fiscal-year net profit sank 10.3 per cent to 149.0 billion yen.

For the fiscal year to March 2016, ANA expects net profit to grow 32 per cent to 52 billion yen while JAL is bracing for a 3.4 per cent drop to 144 billion yen.

"JAL's profit decline for the fiscal year to March was partially due to a weak yen, which boosted fuel costs," said Katsuhiko Suzuki, analyst at Mizuho Securities.

A sharp drop in oil prices is good news for airlines, which often count fuel as their single-biggest expense.

But the Japanese yen weakened sharply from September and aviation fuel prices dropped dramatically only from October, JAL said.

For ANA, Suzuki said its expansion at Haneda Airport offset the negative impact of the weak yen.

For the current fiscal year, the two firms are expected to benefit from the sharp decline in oil prices, he said.

In the past year, ANA's revenue rose 9.1 per cent to a record 1.71 trillion yen, boosting operating profit by 38.7 per cent to 91.5 billion yen.

The robust earnings were "driven by further expansion of the group's international route network, tight cost control and the continued gradual recovery of the Japanese economy," the company said in a statement.

Domestic passenger revenue edged up 1.2 per cent to 683.3 billion yen while international passenger income rose a faster 18.5 per cent to 468.3 billion yen, ANA said.

JAL's overall revenue in the year increased 2.7 per cent to 1.34 trillion yen and operating profit climbed 7.7 per cent to 179.7 billion yen.

ANA has been in a spat with JAL over the allocation of landing slots at Haneda, after the one-time flag carrier emerged from one of Japan's biggest-ever bankruptcies following a government rescue.

ANA expects to grow bigger after throwing a lifeline to bankrupt domestic rival Skymark Airlines by taking a nearly 20 per cent stake.

Skymark, Japan's third-biggest airline which flies on domestic routes, filed for bankruptcy protection in late January in the face of potentially massive penalties linked to a cancelled US$2.2 billion jet order with Airbus.

The Skymark deal would expand ANA's landing slots and give it the upper hand in setting airfares, a factor likely to stabilise the firm's income, Suzuki at Mizuho Securities said.