All Nippon Airways' first-half net profit jumps 78% to US$328m

Japan's All Nippon Airways (ANA) said on Thursday (Oct 30) its half-year net profit soared 78 per cent as an expansion of one of Tokyo's airports boosted the carrier's international business. The airline earned ¥35.77 billion (US$328 million) against a ¥20.07 billion net profit a year earlier, while April-September sales rose 9.1 per cent to ¥854.82 billion, it said.

ANA increased its international services after a major development of Tokyo's downtown Haneda Airport, which it said helped offset a jump in operating expenses that mainly came from higher fuel costs. A sharp decline in the yen has sent the price of fuel - often an airline's single-biggest expense - surging for ANA and rival Japan Airlines (JAL), which reports its earnings on Friday.

Operating profit for the first half year rose 33 per cent to ¥57.94 billion, ANA said, while it also booked a one-off profit of ¥9.9 billion after changing the structure of its corporate pension scheme. For the full-year to March, the airline kept its estimate of a ¥35 billion net profit on sales of ¥1.7 trillion.

ANA has enjoyed improved fortunes after Haneda, which is much closer to the capital than rival Narita airport, increased capacity to handle more international flights. The airline has added services to major cities including London, Paris, Munich and Jakarta. ANA said its international business saw strong demand, while on the domestic side more flexible price-setting and a fare rise this summer boosted sales.

ANA and rival Japan Airlines (JAL) are increasing their use of the lighter weight Boeing Dreamliner to contain costs, but the fuel-efficient aircraft has been hit by a series of technical problems that forced a months-long grounding last year.

"Competition inside and outside Japan is expected to intensify, in addition to various risks such as fluctuations in foreign currency exchange rates, slowing of foreign economies and other international event risks," it said "We will proceed with multiplying our businesses, and reform our cost structure to maximise our group's profitability."

In contrast, smaller domestic rival Skymark Airlines booked a net loss of ¥5.74 billion in the April-September period, against a profit of ¥1.70 billion a year earlier. It also warned of a full-year net loss of ¥13.68 billion, against a previous forecast of a ¥354 million profit.

The carrier was born out of deregulation measures in the 1990s that were aimed at challenging ANA and JAL's control of the market. However Skymark has been seen ballooning losses owing to new entrants into the budget sector. The struggling airline was sideswiped when Airbus in July said it had cancelled its US$2.2-billion jet order, apparently over concerns about payment.

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Japan to unveil first passenger jet in four decades

The first made-in-Japan passenger aircraft in nearly four decades is being unveiled on Saturday (Oct 18) as its maker pushes into the booming regional jet sector with an eye to taking on industry giants Embraer and Bombardier.

Mitsubishi Heavy Industries, a military contractor best known for its "Zero" World War II fighter, is set to pull back the curtain on its new Mitsubishi Regional Jet (MRJ), a fuel-efficient, next-generation aircraft that claims to offer more passenger comfort with lower operating costs.

The jet, which will be delivered to customers from 2017 and was built with assistance from aviation giant Boeing, is being unveiled at a ceremony in the central city of Nagoya on Saturday.

"The MRJ programme has been making steady progress, and its state-of-the-art aerodynamic design, and a game-changing engine will significantly cut fuel consumption, noise and emissions, helping airlines enhance competitiveness and profitability in the future," Teruaki Kawai, president and chief operating officer of Mitsubishi Aircraft, said in a recent statement.

The plane marks a new chapter for Japan's aviation sector, which last built a commercial airliner in 1962 - the YS-11 turboprop. It was discontinued about a decade later.

Japanese firms were banned from developing aircraft by US occupiers following its defeat in World War II. The country slowly started rebuilding its aviation industry in the 1950s, starting with supplying repair work for the US military, before expanding its scope to start licensed production of US-developed aircraft for Japan's Self-Defence Forces. Japanese firms have also long supplied parts to Boeing.

Mitsubishi's short-to-medium haul regional jet, which comes in a 70 and 90-seat version, was backed by the Japanese government and a consortium of major firms including Toyota with research and development costs of around 180 billion yen ($1.7 billion).

EYE ON 2020 TOKYO OLYMPICS

The company has secured 375 orders and options from carriers including All Nippon Airways (ANA), US-based Trans States Holdings, and SkyWest. Japan Airlines (JAL) has also signed a Letter of Intent for 32 MRJs, which have a list price of $40 million, to be used on domestic flights.

The MRJ project got off the ground in 2008 after ANA agreed to buy two dozen of the planes. But it quickly flew into turbulence as the global economic downturn battered the aviation industry, forcing many carriers to slash jobs and routes.

The project took flight again as Tokyo tries to lure more overseas visitors to Japan ahead of the 2020 summer Olympic Games in Tokyo. The Japanese government is also aiming to expand firms' foothold in the global aviation and military sectors as the domestic market shrinks due to a rapidly ageing population.

The jet will compete with small aircraft produced by Brazil's Embraer and Canada's Bombardier, as well as jets designed by Russian and Chinese firms.

Its maker pointed to expected global demand of 5,000 regional jets over the next two decades.

"Five thousand is not a small number," Kawai told the Wall Street Journal in an interview published this week. "I'm claiming we can get 50 percent of that. That's what we are aiming at right now. But in 20 years, I'm saying, not in three to five years, if our research is correct. We have to be ambitious."

Automaker Honda is also developing a business jet, with its first delivery expected next year in North America and Europe.

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Japan probe comes up empty on Dreamliner battery problems

The Japanese probe into a battery problem that forced the emergency landing of a Boeing Dreamliner last year wrapped up on Thursday (Sep 25) with investigators saying they still have not found the root cause. The domestic All Nippon Airways (ANA) flight on January 16, 2013 was forced to make an emergency landing after pilots noticed a burning smell inside the cockpit that was traced to the plane's lithium-ion battery pack.

But neither Boeing nor battery manufacturer GS Yuasa were able to pinpoint what caused the battery to overheat and on Thursday, the Japan Transport Safety Board (JTSB) issued its final report that suggested a short circuit might be responsible. "The heating phenomenon that began in the number-six cell (of the main battery on board the plane) is believed to have been caused by an internal short-circuit. However, in the end, its developmental mechanism could not be identified," said the 115-page report.

The flight from Ube in Japan's far west to Tokyo marked the most serious case of battery overheating in the Dreamliner which features a composite fibre fuselage that reduces weight and boosts fuel efficiency. ANA, the single biggest operator of 787s, and its domestic rival Japan Airlines (JAL) were among the carriers hit by the worldwide grounding of Boeing's plane following a series of battery problems that also led to a fire onboard an empty JAL plane parked at Boston's Logan Airport.

The Japanese report noted that specks of metal were found inside the battery pack and might be linked to the overheating, but GS Yuasa has rejected suggestions that the impurity was dropped into the packs during manufacturing.

Among the 137 passengers and crew members on board, four passengers suffered minor injuries when they came off an emergency slide, the probe said. That incident prompted a still-ongoing investigation by US National Transportation Safety Board (NTSB).

Boeing admitted in April last year that, despite months of testing, it did not know the root cause of the battery problems, but it rolled out modifications to prevent a recurrence. The Dreamliner has also been hit by a series of unrelated glitches, including a fault with an air pressure sensor and the brake system.

Despite the troubles, the aircraft remains popular. This week Ethiopian Airlines agreed to buy 20 Boeing 737 aircraft in a deal worth US$2.1 billion.

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ANA, Lufthansa announce cargo business tie-up

Japan's All Nippon Airways (ANA) and Lufthansa of Germany on Wednesday (Sep 3) announced an air cargo tie up as they look to fight off intense competition from budget airlines on passenger routes. The airlines said they had won regulatory approval for the agreement, which will see them integrate network planning, pricing, sales and handling on all routes between Japan and Europe.

"The two carriers aim to introduce the joint approach on shipments originating from Japan to Europe in winter 2014/2015 and for shipments from Europe to Japan in mid-2015," they said in a statement. "The joint venture will benefit customers by generating a greater selection of routings and a wider range of service options. Customers will especially profit from a larger and faster network with more direct flights, more destinations and more frequencies."

ANA and Lufthansa, both members of the Star Alliance global airline network, launched a joint venture for Japan-Europe passenger flights two years ago. The Japanese carrier holds a 17 per cent market share for air freight between Japan and Europe, while Lufthansa has 16 per cent, the leading Nikkei business daily said on Wednesday. Mainline carriers' cargo businesses have become increasingly crucial to their bottom line as they battle budget airlines in the passenger market.

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Japan's Skymark Airlines surges on AirAsia takeover report

Skymark Airlines shares soared Tuesday (Aug 19) after a report said Malaysia's AirAsia was eyeing the struggling Japanese carrier, but both firms dismissed the story, with AirAsia's chief executive saying he had "never seen such rubbish". The Tokyo-listed stock jumped 27.77 per cent to finish at 230 yen, its maximum allowable single-day gain, on the report in Japan's leading Nikkei business daily.

The report, which cited unnamed sources, said AirAsia was in talks with its lenders over a possible takeover bid for money-losing Skymark. In a statement, AirAsia dismissed the story as "speculation" and "just another industry rumour". "Never seen such rubbish. AirAsia has no interest in Skymark in Japan," AirAsia chief executive Tony Fernandes wrote on Twitter. "There have been no discussions with Skymark."

The putative takeover target also questioned the report. "We're not aware that there is any truth in what has been reported," Skymark said in a statement.

In the wake of its bitter split last year with All Nippon Airways (ANA) over a budget carrier joint venture, AirAsia has announced it would jump back into the Japanese market in a tie-up with e-commerce giant Rakuten. The Nikkei had said the low-cost carrier might create a new local subsidiary, backed by Rakuten, to launch the bid for Skymark to get around restrictions on foreign ownership in Japanese airlines.

Skymark was born out of deregulation measures in the 1990s which were aimed at challenging ANA and rival Japan Airlines' control of the market. But the carrier has been reporting ballooning losses as new entrants into the budget sector hurt its business.

The airline was sideswiped when Airbus last month said it had cancelled a US$2.2 billion jet order with the carrier, apparently over concerns about getting paid. Skymark shares had lost more than 40 per cent at one stage following the collapsed deal.

The company said the European aviation giant had threatened it with "overpriced" penalties and called on it to merge with a bigger airline, a proposal which Skymark's top executive flatly rejected. The Nikkei report also said AirAsia, a major Airbus customer, had approached the plane maker about reducing the cancellation penalties. Skymark has said it was mulling the cutting of unprofitable routes and borrowing more money from its banks to stay afloat.

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Japan's ANA drops plan to buy stake in Myanmar airline

Japan's All Nippon Airways (ANA) has dropped its plan to buy a 49 per cent stake in a Myanmar airline, blaming "intensified" competition in the country as it quickly emerges from years of economic isolation.

ANA Holdings -- the airline's parent company -- announced last year that it planned to invest about US$25 million (S$31 million) in Asian Wings Airways (AWA).

But "competition between new and old airlines in Myanmar has intensified... calling into question the assumptions made at the time of the original decision", the Japanese firm said in a statement Wednesday (July 30). "Ultimately, negotiations for the capital participation with AWA were unable to reach an agreement, and the investment plan was cancelled as a result." The move will not impact earnings for the current fiscal year, ANA added.

The announcement came as the Japanese carrier said it had swung back to profitability in the three months to June.

With little room for growth in the domestic market, ANA and other Japanese firms have been eyeing Southeast Asia as a lucrative market. Foreign companies have piled into Myanmar since the installation of a nominally civilian government in 2011, eager to make the most of opportunities in the country as it opens up following decades of junta-led government.

Asian Wings said it was disappointed by the ANA pullout. "This is a big loss, not only for us but also for other Myanmar local airlines," said the Myanmar airline's executive director Lwin Moe, adding that it would not have "any difficulties" as a result of the decision.

Shares in ANA closed 2.31 per cent higher at 256.5 yen on the Tokyo Stock Exchange Thursday.

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Japan's All Nippon Airways swings back to profitability

Japan's All Nippon Airways (ANA) said on Wednesday (July 30) it had swung back to profitability in the three months to June, thanks to an expansion at a Tokyo airport and a change to its pension plan.

The carrier said net profit was 3.5 billion yen ($34 million) against a loss of 6.6 billion yen a year earlier, while quarterly sales rose 10.0 percent to 386.8 billion yen. It also logged an operating profit of 347 million yen, from an operating loss of 5.6 billion a year ago.

The sharp improvement came as ANA expanded its international services, benefiting from a major expansion of Tokyo's downtown Haneda Airport, which helped offset a jump in operating expenses mainly due to higher fuel costs.

The firm also booked a 9.9 billion yen extraordinary gain as it changed the structure of its corporate pension scheme, ANA said.

The firm's sales growth was supported by solid demand for domestic and international air travel. Like Japan Airlines, ANA said its overseas business saw strong demand, while flights to Japan rose steadily as the country logs record tourist arrivals. The firm benefited from Haneda's increased capacity to handle international flights, with ANA adding services to major cities such as London, Paris and Hanoi.

"ANA continues to strengthen its network, taking advantage of the expansion of international slots at Haneda Airport from this March," it said

The airline left unchanged its forecast for the fiscal year through March, expecting a 35 billion yen net profit, an operating profit of 85 billion yen, and 1.7 trillion yen in annual sales.

On Tuesday, Japan Airlines said its April-June net profit fell 19.4 per cent to $145 million, after repeatedly warning about the steadily rising cost of fuel, often a carrier's single-biggest expense. A weaker yen inflates the cost of dollar-priced commodities such as jet fuel.

"It looks like ANA and JAL's earnings will be okay in the next quarter. But for the rest of the year, we have to wait and see what the impact of domestic fare prices increases will be after the summer," said Ryota Himeno, analyst at Barclays Securities Japan. "They're facing intense competition from other modes of transportation, such as the bullet train."

ANA and JAL are increasing their use of the lighter weight Boeing Dreamliner to contain costs, but the fuel-efficient aircraft has been hit by a series of technical problems that forced a months-long grounding last year.

However, the two airlines have stood by Dreamliner, with ANA slated to become the world's first airline to operate the new stretched version of the plane in August.

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Japan airlines post falling profits on high fuel costs

Japan's two biggest airlines said Wednesday that their full-year net profit had tumbled despite higher demand for air travel, blaming high fuel costs for shrinking their bottom line.

All Nippon Airways (ANA) took the biggest hit with its operator saying that net profit nosedived by 56 per cent to 18.89 billion yen ($185 million) in the fiscal year to March.

Revenue, however, came in at a record 1.60 trillion yen, up from 1.48 trillion yen in the previous 12 months, "helped by a gradual recovery in the Japanese economy", ANA Holdings said.

ANA's biggest domestic rival Japan Airlines said its fiscal year net profit slipped 3.2 per cent, and warned that earnings this year would also stumble.

The carrier said it booked a 166.25 billion yen net profit in the year to March, down from 171.67 billion yen a year earlier, while revenue ticked up to 1.31 trillion yen from 1.24 trillion yen.

For the current year to March 2015, JAL forecast that net profit would come in lower at 115.0 billion yen.

"The escalation of fuel costs due to the weak yen may prevail and competition may intensify in both international and domestic markets," it said.

A sharp drop in the yen, while giving a boost to Japanese exporters, has hurt the country's airlines by pushing up the cost of fuel, often a carrier's single biggest expense.

The yen has lost about a quarter of its value against the dollar since late 2012 following a policy blitz launched by Japanese premier Shinzo Abe and his hand-picked team at the Bank of Japan, aimed at kickstarting economic growth and beating deflation.

ANA said its fuel costs jumped 22 per cent from a year earlier, as it forecasted a net profit of 35 billion yen on revenue of 1.7 trillion yen in the current year to March.

A recovery in demand for flights on Chinese routes has been one bright spot after a longstanding Tokyo-Beijing territorial dispute erupted anew in late 2012, sparking a consumer boycott of Japanese brands that hurt firms for months.

Relations remain tense, but Japanese companies have reported that sales are returning to pre-dispute levels.

"The business on Chinese routes remains fragile," Mitsuru Miyazaki, analyst at SMBC Friend Securities in Tokyo, told AFP.

"The diplomatic factor may also weigh on Japanese travellers' interest in China. Looking ahead, the domestic economic recovery as well as an expansion of slots for international flights should be positives for the current year."

Both ANA and JAL have been working to recover from the global grounding of Boeing's 787 Dreamliner last year.

The pair are the US-based firm's biggest customers for the state-of-the-art plane, which only resumed flying after a months-long grounding -- caused by a series of battery problems -- forced the cancellation of hundreds of flights.

The firms are also fighting off increasing competition from a handful of low-cost carriers that have sprung up in recent years in a market they have long dominated.

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Japan's ANA orders 40 Boeing, 30 Airbus planes worth US$16.4b

All Nippon Airways (ANA) said Thursday it would buy 70 new planes worth $16.4 billion, with almost half from Airbus in a move that marked a victory for the European aircraft maker as it tries to prise open the lucrative Japanese market.

The airline will buy 40 planes from Boeing, its major supplier that has had a virtual stranglehold in Japan for decades, and 30 from Airbus to increase its fleet ahead of the 2020 Tokyo Olympics, a statement said.

The order includes 14 of Boeing's troubled Dreamliner as well as 20 units of the 777-9X, and six 777-300ERs.

It will also buy seven Airbus A320neo and 23 Airbus A321neo.

The aircraft will be delivered between 2016 and 2027 and will increase the size of the ANA fleet to 250 aircraft.

The new Boeing aircraft will serve mainly international routes while the Airbus aircraft will operate both overseas and domestic trips, ANA said.

"ANA Group's introduction of these new aircraft will help it respond to the needs of the increasing number of passengers expected to arrive in Japan in the run-up to the 2020 Tokyo Olympics and will support the Japanese government's plans to boost the annual total of foreign visitors to Japan to 20 million," the firm said.

The orders, collectively the biggest in ANA's history, came as the airline aims to expand its international presence.

"The aircraft we have selected will enable us to modernise and expand our fleet further as we seek to become one of the world's leading airline groups," said Shinichiro Ito, president and chief executive of ANA Holdings.

"These new aircraft will give us maximum flexibility and improved fuel efficiency and will allow us to meet the growth in demand, both internationally and in our domestic Japanese market," he said in a statement.

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Joint ventures between airlines result in consumer benefits: CCS

A recent market study on the aviation industry in Singapore has found consumer benefits resulting from joint ventures between airlines.

The Competition Commission of Singapore (CCS) had commissioned the study, which focused on two joint ventures in particular -- the agreement between Japan Airlines and American Airlines and the one among United Airlines, Continental Airlines and All Nippon Airways.

In a statement on Tuesday, CCS noted that airline joint venture agreements are inherently anti-competitive, as they typically involve price fixing, market sharing or output limitation.

But it said there is a need to carefully assess such agreements, as they can sometimes generate substantial benefits to consumers, such as lower airfares, more choices in connectivity and better service.

When an agreement generates such benefits, CCS may grant it anti-trust immunity.

The study, which was carried out by external consultants ICF SH&E, found that the two joint ventures have resulted in higher passenger numbers and lower fares.

But the improvements were smaller than those reported in Western literature on airline joint ventures in the US and Europe.

In particular, the significant drop in passenger fares found in literature based on US flight data were not replicated in the joint ventures formed in, or operate in, Singapore and the Asia Pacific region.

Still, the agreements resulted in other benefits such as improved flight schedules and increased capacity.

CCS said to date, it has reviewed eight airline joint ventures agreements, with the consideration that any substantial lessening of competition should be carefully weighed against the extent of consumer benefits that the agreement may generate.

It said it will continue to monitor developments in the aviation market in Singapore.

More information on the study may be found at the CCS website.

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Japan airlines locked in fresh landing slot battle

Japan's two biggest airlines were locked in a fresh battle on Friday over landing slots at a Tokyo airport, with the civil aviation regulator playing referee between the warring carriers.

The spat erupted again as All Nippon Airways (ANA) lodged a complaint over rival Japan Airlines' (JAL) application to launch a new route to Ho Chi Minh City from downtown Haneda airport, the world's fourth-busiest hub.

The request came several months after Japan's transport ministry awarded twice as many Haneda landing slots to ANA, prompting threats of legal action from its key domestic rival which had earlier received a massive bankruptcy rescue from Tokyo.

On Friday, ANA president Shinichiro Ito said JAL's request was giving the airline a "great sense of crisis", and warned it was falling behind its bailed-out rival.

"We are concerned that the business environment would get further distorted," he told reporters in Tokyo Friday, adding that "we hope the Civil Aviation Bureau will make an appropriate decision".

ANA has tried to cut costs and boost productivity to keep up with its rival, Ito said.

"But there is no way we can catch up if this distorted business environment continues," he added.

A bureau official told AFP that a decision on JAL's bid would made be after considering "all aspects of ensuring that there is an environment of fair competition".

A JAL spokesman said the new route was aimed at rising demand from business passengers, but declined to comment on its rival's objections.

The two carriers are looking to boost their international routes -- and lucrative business clientele -- as they fight off competition from a fledging budget sector focused mainly on domestic flights.

ANA has routinely criticised once-bankrupt JAL's bailout, which saw it re-list its shares in Tokyo after a share offering that raised a whopping $8.5 billion, one of the biggest globally in 2012.

The carrier has posted strong earnings since its return to the market, placing it among the most profitable airlines in the world.

In October, the government said ANA would get 11 of 16 new international take-off and landing slots at the airport in Tokyo bay.

JAL, which had expected to share the slots evenly, got just five. The new route to the Vietnamese city was not part of the earlier allocation.

Haneda has better access to the Japanese capital's downtown than suburban Narita airport, which is a major international gateway.

Japan's transport ministry is aiming to boost international flights at both airports in anticipation of big influx of visitors for the 2020 Olympic Games in Tokyo.

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Japan carriers' profits hit as weak yen hikes fuel costs

Japan's two biggest airlines said on Friday that the weak yen sent fuel costs soaring and profits into a nosedive as they struggled to recover from the global grounding of the Boeing Dreamliner plane last year.

However, while the surge in fuel costs, often a carrier's single-biggest expense, hit the bottom lines of Japan Airlines (JAL) and All Nippon Airways (ANA), they said a recovery in international travel helped lift sales.

Both companies are US-based Boeing's biggest customer for the state-of-the-art plane, which only resumed flying after a months' long grounding -- caused by a series of battery problems -- forced the cancellation of hundreds of flights.

The carriers are also fighting off increasing competition from a handful of low-cost carriers that have sprung up in recent years in a market they have long dominated.

On Friday, ANA said its net profit dived 36 per cent to 33.3 billion yen ($325 million) between April and December, citing the jump in fuel prices. Sales were up 7.1 per cent at 1.2 trillion yen.

JAL fared a little better, saying its nine-month net profit turned down 12.2 per cent to $1.2 billion, despite sales climbing 5.1 per cent on rising demand for international travel and its cargo service.

"The weak yen is a major factor holding back their profit," said Masaharu Shirokane, aviation analyst with Nomura Securities.

"It's a real headache for the Japanese aviation industry and as long as the yen remains weak, their bottom line will remain under pressure."

The yen has lost about a quarter of its value against the dollar since late 2012 following a policy blitz launched by Japanese premier Shinzo Abe and his hand-picked team at the Bank of Japan aimed at kickstarting economic growth and beating deflation.

JAL noted that a pickup in Japan's economy also helped lift demand for air travel ahead of an April sales tax hike.

"An economic recovery at home and overseas is stimulating demand, in particular business travel, which is profitable," Shirokane said.

"Demand for Chinese routes is also recovering from a slump... but it remains a potential risk in the future."

However, Japan's thorny ties with South Korea and China have depressed demand for flights to those countries.

Tokyo is embroiled in separate territorial spats with both countries, and a Chinese consumer boycott of Japanese brands in 2012 took a bite out of demand for flights through the first half of 2013.

ANA said it expects "passenger demand for business travel and leisure to remain robust" as it expanded its domestic and international routes, and offered discounted fares.

A 12.2 per cent rise in international passenger revenue as well as a jump in ANA's overseas cargo business helped offset a tiny rise in domestic passenger revenue and a downturn in its Japanese cargo business.

JAL also saw its international businesses offset laggard growth at home.

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Japan Airlines H1 net profit slips 17.8% to US$833m

Japan Airlines said on Thursday net profit for the six months to September dropped 17.8 per cent to $833 million, as the strong yen and rising fuel costs bit into its bottom line.

But it boosted its outlook for the full year, striking an optimistic note on prospects for customer numbers on both domestic and international routes.

In a half that saw the grounding of its fleet of Boeing 787 Dreamliners after a series of safety glitches, the company said it had made 81.94 billion yen ($833 million), with an operating profit that was down 14.6 per cent at 95.84 billion.

Sales however edged up 4.0 per cent to 659.30 billion.

The numbers were healthier than main rival All Nippon Airways, which issued a grim earnings report, citing high fuel costs and the worldwide grounding of Boeing's next generation aircraft as contributing factors.

JAL, which returned to the market last year after a spectacular bankruptcy, did not give a specific reason for its weaker earnings.

But depreciation of the yen, which has slid to around 100 to the dollar compared with 80 a year ago, was seen amplifying the cost of fuel as well as user fees for international airports.

Japan's thorny ties with neighbours also depressed demand for flights to South Korea and China.

Tokyo is embroiled in separate territorial spats with both countries.

But JAL said revenues from its international services increased "despite the suspension of Boeing 787 flights and stagnant demand on Korea and China routes".

"On June 1, 2013, JAL resumed operation of the Boeing 787 on completing of all necessary safety measures, after battery problems grounded the fleet in January 2013 and caused substantial concerns and inconvenience," the company said.

JAL and ANA were sideswiped by the grounding of Boeing's new aircraft that began in January. After a long-running probe, the planes were allowed to fly again in June.

JAL said it increased the use of the fuel-efficient Dreamliner on international services to increase overall efficiency, while reducing Narita-Beijing flights because of shrinking demand.

Domestic services also fared well, with expanded routes and improved services such as better airport lounges.

Unlike ANA, which cut its full year profit forecasts by two-thirds, one-time flag carrier JAL upgraded its annual forecasts, citing strong demand for flights to Southeast Asia and cost cutting efforts.

The figures were also expected to benefit from an adjustment in foreign exchange movement and falling fuel prices.

The new net profit projection came to 128 billion yen, up from the previous estimate of 118 billion yen.

Operating profit is now expected to come in at 155 billion yen, compared with 140 billion yen, on sales of 1.286 trillion yen, up from 1.272 trillion yen.

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Japan's ANA says H1 profit dives 45.7%, slashes FY outlook

Japan's ANA Holdings, parent of All Nippon Airways, on Wednesday slashed its full-year net-profit forecast by two-thirds as first-half profit nosedived due to higher fuel costs and the delayed delivery of a modified Dreamliner.

The company now expects a net profit of 15 billion yen ($153 million) for the year to March 2014, down from the 45 billion yen it projected in April.

ANA Holdings said April-September's net profit fell to 20.07 billion yen, down 45.7 percent from the same period last year.

"Passenger unit cost and numbers fell short of initial targets and there were delays in receiving new aircraft that caused delays in establishing new international routes and adding flights," the company said in a statement.

While the statement did not name Boeing's glitch-plagued Dreamliner, for which it is the world's biggest customer, ANA was hit hard by the grounding of the high-tech aircraft this year.

The company also said its budget unit AirAsia Japan "did not perform as well as expected".

AirAsia Japan is a joint venture with Malaysia-based AirAsia, which is due to end services under the name by Thursday owing to a spat over business practices.

ANA has rebranded the carrier Vanilla Air, which is to begin flights in December.

Regarding revenue for the second half, it said it expected prices on domestic routes to continue to fall.

In addition, "the yen continued to weaken in the first six months, which increased costs for fuel and other dollar-denominated outlays, causing expenditures to exceed initial estimates", it said.

"ANA has no choice but to assume that (the) yen will continue to weaken further in the second half, and must also assume that fuel costs will increase".

It also cut its operating-profit forecast to 60 billion yen from 110 billion yen and revenue estimate to 1.58 trillion yen from 1.61 trillion yen.

In April-September, ANA Holdings' operating profit fell 42.5 percent from a year earlier to 43.31 billion yen despite a 5.9 percent rise in revenue to 797.63 billion yen.

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Japan's ANA and AirAsia to dissolve budget carrier

Japan's All Nippon Airways and AirAsia said on Tuesday they have agreed to terminate their budget carrier joint venture as business slumped amid management clashes, dealing a blow to the country's fledgling low-cost sector.

Malaysia-based AirAsia said AirAsia Japan would cut service by the end of October, just over a year after it started flying out of Tokyo's Narita airport in August.

"The joint venture... faced many challenges since its launch," AirAsia said in a statement.

It cited a "fundamental difference of opinion between its shareholders on how the business should be managed from cost management to where the domestic business operations should be based".

AirAsia chief executive and founder Tony Fernandes added that "it is time for us to part ways and focus our attention on what we do best, which is running a true LCC (low-cost carrier)".

Fernandes hinted AirAsia may return to Japan, saying its brand had "resonated with Japanese customers".

"I remain positive on the Japanese market and believe there is tremendous opportunity for an LCC to succeed," he added.

However, Shinzo Shimizu, senior vice president of ANA Holdings, told a press briefing in Tokyo on Tuesday that the venture dissolved because "its name didn't spread in Japan and it couldn't make profits".

The airline booked an operating loss of about 3.5 billion yen ($36 million), he said.

Another problem was that the carrier focused on online sales -- a key strategy for AirAsia -- but many Japanese travellers still book flights through travel agents, Shimizu said.

"We think that there is a limit to the strategy of simply bringing AirAsia's operation into the Japanese market," he added ANA would launch a new budget brand in November, he said, although the airplanes leased by AirAsia Japan would be returned to the Malaysian firm.

"We will announce details of which brand and aircraft to use, as well as routes, in July," Shimizu said.

News reports said a new airline could fly under ANA's other budget carrier joint venture, Peach Aviation, which flies out of Osaka.

AirAsia Japan was one of three budget airlines to come online in Japan over the past couple of years, promising to shake up a sector long controlled by ANA and rival Japan Airlines.

A key constraint for budget carriers is that they were shut out of Haneda airport, just a short train ride from downtown Tokyo and the staging point for the most profitable domestic routes.

Flying out of Narita requires a one-hour train ride from the city centre, a long-standing headache for travellers including passengers with AirAsia Japan and Jetstar Japan, a joint venture between JAL and Australia's Qantas.

The Japanese aviation industry has long been notorious for sky-high landing fees and fuel taxes.

Another no-frills carrier, Skymark Airlines, has struggled to offer the kind of heavily discounted fares seen in Europe and North America due to high operating costs.

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It seems that the collaboration came too quick and a market research wasn't done properly before Tony jumped at the opportunity of operating a low cost carrier in Japan. The aspect about Japanese consumer's "offline" practice shows that it is a market that you have to adapt to rather than the other way round.

It is sad that it didn't work out as well as another collaboration in Jetstar Japan. It still remains to be seen if the Japanese can accept this business model as such airlines are still struggling pretty significantly to make noticeable good progression.

ANA Dreamliner domestic flight cancelled

Engine trouble grounded a Dreamliner in Japan on Wednesday, its operator said, marking the third straight day of problems for Boeing's next generation plane after months of difficulties.

While none of the recent issues was thought to be serious, they spell more misery for Boeing, whose flagship plane has been beset with delays and failures, most gravely a battery problem that kept the global fleet out of the sky.

In the latest incident, one engine on a 787 would not start after 141 passengers had boarded the All Nippon Airways (ANA) plane in Yamaguchi prefecture in western Japan, bound for Tokyo.

A company spokeswoman said the pilot had called off the flight after being warned of the problem by cockpit instruments, adding the cause of the malfunction was being investigated.

The glitch came a day after a Singapore-bound Dreamliner, operated by ANA's rival Japan Airlines (JAL), had to turn back mid-flight because of a problem with the anti-icing system.

On Monday, ANA had to cancel a Tokyo-bound flight while the plane was at an airport in Fukuoka, western Japan, after instruments showed the left engine was not functioning properly.

The incidents come only weeks after JAL and ANA, the single biggest operator of 787s, put their full fleets of Dreamliners back into service following a four-month suspension over battery problems.

A global grounding order was issued in January after lithium-ion batteries overheated on two different planes, with one of them catching fire while the aircraft was parked.

Boeing admitted in April that despite months of testing it did not know the root cause of the problems, but rolled out modifications it said would ensure the issue did not recur.

Since then, Dreamliners have experienced a series of minor glitches, including a fault with an air pressure sensor.

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The problems are coming in at high frequency. First the anti-icing problem, now engine failure. It's becoming a persistent headache for the airlines and Boeing.

Japan orders JAL, ANA to inspect modified 787s

Japan's transport minister said Tuesday he had ordered the country's two biggest airlines to inspect their entire modified Dreamliner fleets after a fault was found with one aircraft during the weekend.

Minister Akihiro Ota said he issued the instruction to Japan Airlines (JAL) and All Nippon Airways (ANA) after JAL found a fault with an air pressure sensor in the Dreamliner's battery container on Sunday.

The setback, although not serious, is yet another embarrassment for Boeing, which admitted in April that despite months of testing it did not know the root cause of problems that had led to the worldwide grounding of the next-generation airliner.

The grounding order was issued in January after lithium-ion batteries overheated on two different planes, with one of them catching fire while the aircraft was parked.

Both airlines began regular flights with their 787 fleets on Saturday, but following the discovery of the fault on Sunday, JAL was forced to use a substitute aircraft.

The firm said the sensor in the battery container showed a difference in air pressure between inside and outside during a pre-departure safety check.

The difference came after small holes on the container -- necessary for ventilation to prevent overheating -- were mistakenly sealed when earlier modifications were carried out.

"It was regrettable that the modification operation was not fully done," Ota said, according to a ministry official. "(The trouble) did not affect flight safety but it is true that it worried passengers."

A spokesman for JAL said inspections had been carried out without delay.

"We finished checking the part on all the planes (787s) on Sunday. There is no impact on our operation of the aircraft," he said.

No one from ANA was immediately available for comment.

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It was a scare indeed when they found the glitch in the modification. It is good that they're not leaving anything to chance by ensuring all modifications are done properly. You can never be too safe in commercial aviation.

Japan's ANA to resume Dreamliner service on June 1

Japan's All Nippon Airways (ANA), the biggest customer of Boeing's glitch-hit Dreamliner, confirmed on Thursday that it would restart flights with the modified high-tech plane at the start of next month.

ANA will resume services from June 1 "following the successful completion of a series of battery system modifications, safety checks and test flights", it said in a statement.

"Our engineers have worked closely with Boeing to undertake the required improvements and we are fully satisfied with the safety of our 787 fleet."

Last month a modified Dreamliner safely took to the skies over Tokyo with top Boeing and ANA executives aboard, as the planemaker and its leading client sought to reassure passengers over the jetliner.

It was the first flight by an ANA 787 since the worldwide fleet of next-generation planes was grounded over safety concerns due to faulty batteries on board two planes.

ANA will reopen routes linking Tokyo's Narita airport to San Jose, California, with the Dreamliner fleet on June 1. Suspended flights between Narita and Seattle will also restart on June 1 but with the Boeing 777.

Reservations for these flights will start on Friday.

The 787 will also return to services from Tokyo's Haneda airport to Frankfurt and the Haneda-Beijing route on June 1.

ANA will also introduce the Dreamliner onto a further three international routes from this summer -- Narita to Beijing and Haneda to Taipei from June 1 as well as Narita to Shanghai from August 1.

Dreamliners will remain suspended on services between Chubu in central Japan and South Korea's main international airport of Incheon, as well as for flights from Kansai in western Japan to Incheon.

The 787 will also return to domestic flights starting from June 1.

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Going for full fledged service after having its wings clipped for almost half a year

Japan carriers eye claims over Dreamliner grounding

Japan's two major airlines said they were planning to make a compensation claim against US plane making giant Boeing over the prolonged grounding of the troubled Dreamliner, the carriers said Friday.

Japan Airlines and rival All Nippon Airways have been hit by the worldwide parking of the 787 after a number of incidents including a fire on a JAL plane in Boston and the emergency landing of an ANA flight in Japan. Both were caused by battery malfunctions.

The global no-fly order imposed by US regulators in mid-January has seen Japan's two biggest carriers - major customers of the aircraft, with more than 100 combined orders - slash thousands of flights.

"The company is considering seeking compensation," an ANA spokesman told AFP, "We have the intention to do so."

But he also said actual negotiations with Boeing will come after all the facts of the incidents are known.

A JAL spokesman also said the airline is preparing to talk to its supplier about compensation.

"But for now the company will cooperate with Boeing so that the 787s can get back in the air as soon as possible," he said.

The Asahi Shimbun daily reported Friday that ANA "has already informed Boeing of its intention to seek compensation", citing an unnamed senior ANA official.

Neither airline intends to cancel any orders for the next-generation aircraft, the paper said.

Boeing said last month that the 50 planes grounded around the world since the two lithium-ion battery malfunctions sparked the grounding would undergo fixes to their systems and be operational again soon.

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It will be a very big compensation to pay for Boeing. But I believe in this very small field of industry, it isn't advisable to burn bridges, so I guess both airlines will probably not make things too difficult for Boeing. Maybe they will want 5 free Dreamliners each?? Haha

Japan probe finds Dreamliner battery improperly wired

Japanese officials probing the emergency landing of a Boeing Dreamliner said on Wednesday that the plane's battery pack was improperly wired, but added this was unlikely to have caused it to overheat.

A series of problems with Boeing's next-generation aircraft sparked multiple probes around the world and the grounding of the entire Dreamliner fleet last month after the domestic All Nippon Airways (ANA) flight was forced to land.

Japanese investigators have focused on the ANA Dreamliner's main lithium-ion battery, which was severely damaged by what they believe to have been a build up of heat that resulted in uncontrollably high temperatures.

Japan's Transport Safety Board said on Wednesday it had discovered that the circuit wiring of the burned battery and another one were connected, even though this is not typical in airplanes.

However, investigators added that the battery system has a system to block a reverse current and it had remained intact so the "unusual" wiring was an unlikely culprit for the overheating.

Investigators said they would now expand the scope of their search to include the aircraft's circuit wiring.

"We have been investigating what happened, but as we haven't got to a point where we can say why it happened yet, we can't say we've made progress," Norihiro Goto, chairman of the Japan Transport Safety Board, told a press briefing.

The unusual circuit wiring may have affected the digital flight data recorder's measuring of voltage in the burned battery, investigators added.

ANA and Japan Airlines (JAL), major customers of the aircraft with more than 100 combined orders, have been hit hard by the grounding, slashing hundreds of flights, affecting tens of thousands of passengers.

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Haha, that is some comical findings. The people responsible for the replacement of batteries are going to be re-trained on how to connect the wires properly. Sadly, this isn't the cause of the battery fire with the Dreamliner, thus the investigation continues.