[Company analysis] Japan Airlines Co., Ltd. (日本航空)

「Japan Airlines Co., Ltd. (日本航空)」is one of the two major airlines representing Japan together with「All Nippon Airways Co., Ltd.」. This company is a global airline, which acheived the title of "The World's 5-Star Airlines", the highest rank in airline company. Before the end of "Japan Airline Law(日本航空株式会社法)", it was government-run coporation. The number of consolidated employees is approximately 31,986.

 

1. Company Profile

2. Summary and Features

3. Major Business

4. Financial Information

 

 

 

1. Company Profile

 

※Unit is JPY million, as of 2019

Company name	Japan Airlines Co., Ltd.
Company name (Japanese)	日本航空
Date of establishment	Thursday, October 1, 1953
Headquarters location	〒140-8635 東京都品川区東品川二丁目4番11号
Capital	181,352
Consolidated sales	1,487,261
Consolidated operating profit	176,160
Consolidated total assets	2,030,328
Consolidated capital	1,200,135
Capital adequacy ratio	59.1%
Consolidated number of employees	31,986

 

 

 

2. Summary and Features

 
Immediately after World War II,  the operation of all Japanese national and private aircraft was suspended by GHQ. In 1953,「Japan Airlines Co., Ltd.」was established as a government-run coporation, by the "Japan Airline Law". At the time of its establishment, this company was the only operator of domestic and international scheduled airlines. The following year, in 1954, the first international flight of a Japanese company between Tokyo and San Francisco began. After that, in 1970, it was listed on the first section of the Tokyo Stock Exchange and it was privatized in 1987.

 

For five years from 1983 to 1987, with the rapid growth of the Japanese economy,「Japan Airlines」became the  largest passenger and freight carrier in the world. However, due to the "Japan Airlines Flight 123 crash", domestic flight demands reduced significantly, and it also caused fatal damage to the image of「Japan Airlines」. After that, it went bankrupt due to unreasonable expansion of international flights and reckless management. But it was rebuilt in January 2010, according to the adaptation of the "Corporate Reorganization Law(会社更生法)".

In the past,「Japan Airlines」was a semi-public and semi-private company. This company has conservative coporate culture with Top-down management style. But after the restructuring, the atmosphere was changed with the smooth internal communication. Currently,「Japan Airlines」is based in Tokyo International Airlines, Narita International Airport and Kansai International Airport, and has an international route network to Asia, Europe and Oceania. In addition, they are also a member of「One World」, a global aviation union.

Because it is Japan's flagship carrier,「Japan Airlines」has a high name recognition not only in Japan but also in the world. And the number of group companies exceeds 130, which is quite large considering the company size. In addition, there is an image that it is strong for domestic flights and local airports. Based on the historical background,「Japan Airlines」has distinct advantages in domestic flight network compared to「ANA」, which focuses on international flights.

As for the flight route network, domestic and international sales, number of passenger,「Japan Airlines」is inferior than「ANA」. However, this company is concentrated in the quality of customer service. For example, in the economy class,「Japan Airlines」recently changed the seat layout, and gave economy class passengers larger seat space than「ANA」. Thanks to the various effort, their operating margin become 11.8%,  on the basis of 2018. Compared with the 8% of operating margin of「ANA」 during the same period, this company made profits more efficiently.

However, regarding to the LCC business, the attitude between both companies are extremely different. In the case of 「ANA」, they are actively engaged in LCC business by owing「Vanilla Air」and「Peach Airlines」. On the other hand, in the case of「Japan Airlines」, they jointly invested in「Jetstar Japan」with「Qantas Airways」and「Mitsubishi Corporation」, but unlike「ANA」, this company is not actively participating LCC business. Instead, they are concentrated in the conventional highly profitable passenger transportation business.

 

 

 

3. Major Business

 

■ Air transportation business
They carry out domestic and international air transportation business (passenger / freight), and develop air transportation business with five subsidiaries and one affiliated company.

■ Other business
They carry out planning, sales and operation of packaged travel.

 

 

 

4. Financial information

 

※Unit is JPY million

		2016	2017	2018
Consolidated sales		1,288,967	1,383,257	1,487,261
Consolidated operating profit		170,332	174,565	176,160
Consolidated total assets		1,728,777	1,854,227	2,030,328
Consolidated net assets		1,003,393	1,094,127	1,200,135
Breakdown of sales	Air transportation business	1,159,392	1,257,265	1,357,603
	Others	273,491	275,310	288,190
	Adjustments	-143,917	-149,318	-158,531