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Japan airlines reports earnings amid Dreamliner woes

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(Globalpost/GlobalPost)

Executives at Japan's two biggest airlines said Tuesday they were relieved the troubled Boeing Dreamliner was taking to the skies again as they reported full-year financial results.

Japan Airlines (JAL) said it was "trying to minimise" the financial impact from the three-month grounding of Boeing's Dreamliner, but said its results were still hit by rising competition and soaring oil prices.

"The three-month period was long, but I am relieved that there was no major troubles during the period so we could save customers' trust in us," said JAL president Yoshiharu Ueki.

Rival All Nippon Airways (ANA), which operates 17 of the Dreamliner's 50-strong global fleet, said its fiscal year net profit soared 53.1 percent, as cost-cutting and a boost in demand for international travel helped it shrug off its Dreamliner woes.

"We also responded flexibly to minimise the number of cancellations affected by the groundings of the Boeing 787 from January, minimising its impact to profit," said ANA Chief Executive Shinichiro Ito, who flew in a Dreamliner test flight Sunday with a top Boeing executive.

The carrier and rival JAL together account for half of the Dreamliners in service globally and had to cancel thousands of flights in the wake of the crisis.

The fleet was grounded in January after a number of battery incidents including a fire on a JAL plane in Boston, and an emergency landing on an ANA flight in Japan.

After months of investigations into the plane's lithium-ion batteries, US authorities on Thursday issued formal approval of Boeing's battery fix, followed by a similar move by Japanese regulators.

Ethiopian Airlines on Saturday become the first carrier to start using the aircraft again, while ANA ran its test flight the following day.

But it could still be at least a month before the whole Dreamliner fleet is back in the air.

On Tuesday, JAL, which re-listed in Tokyo last year after a high-profile bankruptcy restructuring, said its net profit in the fiscal year to March fell 8.0 percent to $1.8 billion, while it slashed its full-year earnings outlook by almost a third.

JAL reported a net profit of 171.7 billion yen and said its earnings in the current fiscal year would be about 31 percent lower at 118 billion yen.

Sales rose 2.8 percent to 1.24 trillion yen in the 12 months to the end of March, it added.

ANA meanwhile said it earned 43.1 billion yen in the year to March, up from 28.1 billion yen a year earlier, while it said it expected to earn 45.0 billion yen in the current fiscal year.

Sales during the last fiscal year climbed 5.1 percent to 1.48 trillion yen, ANA said.

A weaker yen, which has helped Japan's exporters, had less positive impact for the airlines whose fuel costs are priced in dollars.

The Japanese currency has declined steeply in recent months as Prime Minister Shinzo Abe and his hand-picked team at the Bank of Japan roll out a big spending and aggressive monetary easing agenda, dubbed "Abenomics", aimed at stoking the world's third-largest economy.

"Fuel costs have risen nearly 20 percent," JAL's Ueki said.

"But the original purpose of Abenomics is to boost demand... including tourism, so in the mid-to-longer term, its impact is a plus."

Japanese airlines have also been hit by a row between Tokyo and Beijing over sovereignty of a group of islands in the East China Sea, which triggered anti-Japan rallies across China and a consumer boycott of Japanese brands.

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http://www.globalpost.com/dispatch/news/afp/130430/japan-airlines-reports-earnings-amid-dreamliner-woes