A significantly improved operating result helped Japan Airlines Corp. narrow its net loss for the fiscal year ended March 31 to 16.2 billion yen (US$135.1 million) from 47.2 billion yen in the prior year, although the bottom line was hurt by the removal of a 54.4 billion yen deferred tax asset from the balance sheet and an extraordinary loss of 6 billion yen from a special early retirement program launched in March.

JAL credited network restructuring, cost-cutting and rising yields from international premium traffic for its reversal of operating fortune as it reported a 22.9 billion yen profit compared to a 26.8 billion yen deficit in FY05. Operating revenue climbed 4.6% to 2.3 trillion yen, driven by a 5% lift in international passenger revenue to 724.8 billion yen and recovering domestic demand, with sales up 1.6% year-over-year to 675.6 billion yen. International passenger yield jumped 13.1%. Continued cost-cutting, including a 10% wage reduction, held the increase in operating expense to just 2.3% to 2.28 trillion yen even as the fuel bill climbed 11.6%.

JAL found that passenger demand was particularly strong on short- and medium-haul routes, such as Korea and Southeast Asia services, as well as China where it boosted frequencies and enjoyed its largest traffic and capacity increases. International network restructuring has been a key platform for recovery and featured an emphasis on high-profit routes, suspension of low-profit routes and aircraft downsizing. On the domestic front the carrier launched various promotional campaigns while introducing its Class J domestic business class on some aircraft.

Total traffic fell 7.2% to 62.6 billion RPKs against a 9.5% decline in capacity to 87.99 billion ASKs, lifting load factor 1.7 points to 71.1%.

In the fourth fiscal quarter JAL lost 6.8 billion yen, narrowed from a 24.1 billion yen deficit in the year-ago quarter, on a 7.1% rise in revenue to 567.7 billion yen. Operating result swung to a 28.7 billion yen profit from a 25.9 billion yen loss. It is targeting a full-year profit for the 12 months ending March 31, 2008, forecasting 7 billion yen in net income on 2.2 trillion yen in revenue and an operating profit of 35 billion yen.