JAL doubles estimates on business travel boom

TOKYO (Reuters) - Japan Airlines Corp (9205.T: Quote, Profile, Research) said on Friday it had roughly doubled its 2007/08 profit estimates to above market expectations, thanks to strong business travel demand on its international routes.

The carrier, Asia's biggest by revenue, reported net losses in the previous two years due to soaring fuel prices, high labour costs and a string of safety mishaps, while domestic rival All Nippon Airways (9202.T: Quote, Profile, Research) flew ahead with swift cost-cutting measures.

JAL had forecast a return to profitability for the year that ended in March, but it said its bottom line showed a stronger improvement than it had expected thanks to robust demand and lower costs.

"It had been said that JAL would be saved with a recovery in demand on international routes because that is where the company's strength lies," Fitch Ratings analyst Satoru Aoyama said.

"And indeed international demand has been showing a strong recovery with an improvement in Japanese companies' earnings and an export-backed upswing in the country's economy increasing the appetite for business travel," he said.

JAL said it now expected to post a group operating profit of 90 billion yen ($862 million) for the year that ended on March 31, well ahead of a consensus projection for a 50 billion yen profit in a poll of nine analysts by Reuters Estimates.

The company had previously forecast a 2007/08 operating profit of 48 billion yen, up from a 22.9 billion yen profit a year earlier.

JAL more than doubled its 2007/08 net profit forecast to 16 billion yen from 7 billion yen, helped also by reduced costs after it axed unprofitable routes, renewed its fleet to improve fuel efficiency and sold non-core assets.

As part of its restructuring, JAL said on Friday that it would sell nearly half of its credit card unit to Mitsubishi UFJ Financial Group (8306.T: Quote, Profile, Research) in a deal that will bring the airline a windfall gain of about $400 million. [nT7393]