Asia's largest carrier, Japan Airlines (JAL), has remained mired in the red in the third quarter of its financial year, hit by the soaring cost of fuel. The company has struggled to cut costs, while a series of safety problems have dented its image. JAL said the fuel bill during the first three quarters of financial year 2005/06 was up 30% from the same period a year earlier, with fuel costs averaging US$71 a barrel. The carrier again said it expected to report a loss of 47bn yen for the full year to the end of March 2006, against a previous profit forecast of 17bn yen. Passenger numbers fell about 2% during the period at 44.04 million people from 44.84 million during the same period in 2004, as passengers declined in both international and domestic travel. Traffic between Japan and China fell sharply after anti-Japanese protests in April, when China was angered by Japanese approval of a school textbook presenting a nationalist view of early 20th Century history.
On the surface, JL's short-term position is beginning to look ever weaker and weaker. I'm even starting to wonder at what point can we consider them to be on the ropes? Can they recover simply by cutting more and more routes, or is something more substantial in the cards at this point? What sort of protections do they have available to them and under which circumstances will these come into affect?