Founder & Managing Director, AIR Control Tower, AIR Control Tower

Neil Glynn

Founder & Managing Director, AIR Control Tower

AIR Control Tower

AIR Control Tower is an independent research and analysis platform. Its mission is to provide impactful insight and analysis across the global airline industry at a company and market level via detailed financial models to aid decision making for key stake holders at a time when risks have seldom, if ever, been higher and the global sector grapples with the imperative of funding de-carbonisation. Unique analysis forecasting global carrier-level earnings/cash flows, and restructuring/de-leveraging prospects, is designed to dynamically assess the health of the industry, predict surprises and identify potential requirements for third party support.

Insights on the global airline industry

Equity Bottom-Up

<ul>
<li>Our updated analysis suggests that JAL's FY24 to March 2024 EBIT guidance of  ¥ 130bn remains conservative. We see  ¥ 177bn as achievable unless forward bookings weaken.</li>
<li>Our analysis of JAL's management of inflation highlights it is outperforming many APAC and global peers, keeping unit cost increases to a minimum. </li>
<li>Reduced overheads have proved the key driver of inflation avoidance, while stable unit personnel costs contrast starkly with US carriers in particular; JAL's largest international market.</li>
</ul>


Our updated analysis suggests that JAL's FY24 to March 2024 EBIT guidance of  ¥ 130bn remains conservative. We see  ¥ 177bn as achievable unless forward bookings weaken.
Our analysis of JAL's management of inflation highlights it is outperforming many APAC and global peers, keeping unit cost increases to a minimum. 
Reduced overheads have proved the key driver of inflation avoidance, while stable unit personnel costs contrast starkly with US carriers in particular; JAL's largest international market.


Japan Airlines: Upside to Expectations Despite A350 Loss

Global Mobility/Transport, Equity Long-Short

Mohshin Aziz

<ul>
<li>Japan Airline's Flight JL516 operated by a two-year-old Airbus A350-900 burst into flames upon landing at Haneda Airport, apparently hitting a small Japanese Coast Guard aircraft  </li>
<li>379 passengers and crew were safely evacuated, but five of six crew on a Japanese coast guard aircraft were unaccounted for</li>
<li>Haneda Airport runaways are all closed, aircraft heading to Haneda are diverted to other airports or flights aborted altogether   </li>
</ul>


Japan Airline's Flight JL516 operated by a two-year-old Airbus A350-900 burst into flames upon landing at Haneda Airport, apparently hitting a small Japanese Coast Guard aircraft  
379 passengers and crew were safely evacuated, but five of six crew on a Japanese coast guard aircraft were unaccounted for
Haneda Airport runaways are all closed, aircraft heading to Haneda are diverted to other airports or flights aborted altogether   


Plane Crash at Haneda Airport; Negative for Japan Airport Terminal and Japan Airlines

<ul>
<li>
<a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a> (JAL) is making a positive recovery on strong domestic and international demand</li>
<li>Weak JPY is a big headwind and so is its 40% fuel hedge cover locked in at higher than-market price. These factors should reverse and unwind next year </li>
<li>Target price JPY3,150 based on 1.65x FY24 P/BV - one standard deviation above its mean. Borderline attractive with 12% UPSIDE, and 2.3% dividend yield  </li>
</ul>



Japan Airlines (9201 JP) (JAL) is making a positive recovery on strong domestic and international demand
Weak JPY is a big headwind and so is its 40% fuel hedge cover locked in at higher than-market price. These factors should reverse and unwind next year 
Target price JPY3,150 based on 1.65x FY24 P/BV - one standard deviation above its mean. Borderline attractive with 12% UPSIDE, and 2.3% dividend yield  


Japan Airlines (9201 JP, BUY, TP: JPY3150): Slow, Steady, Stable Recovery

Expert on Japan Retail and Consumer Markets, JapanConsuming

Michael Causton

Expert on Japan Retail and Consumer Markets

Real Insight on Japanese Consumer Markets

JapanConsuming

JapanConsuming is a specialist research firm producing intelligence on Japanese retail and consumer markets. Founded in 2000, JapanConsuming has become the leading provider of insights on Japanese retailers and consumer trends to retailers, brands, government agencies and investors. As well as a highly regarded monthly report on the market, JapanConsuming produces in-depth reports on retail sectors, seminars on key trends and telephone consulting to investors on trends and retailers.

JapanConsuming was founded by Michael Causton and Roy Larke. 

<ul>
<li>Shopping may be a tiny fraction of <a href="https://www.smartkarma.com/entities/japan-airlines-co-ltd" target="_blank" data-smartkarma-citation="entities:1184:1" rel="noopener">Japan Airlines (9201 JP)</a> business but every little helps.</li>
<li>JAL has long offered a popular mail order catalogue selling premium products but has now converted its catalogues into an online mall. </li>
<li>This means it can offer many more and new types of merchant and product, and create more connection with its customers.</li>
</ul>


Shopping may be a tiny fraction of Japan Airlines (9201 JP) business but every little helps.
JAL has long offered a popular mail order catalogue selling premium products but has now converted its catalogues into an online mall. 
This means it can offer many more and new types of merchant and product, and create more connection with its customers.


JAL Aims for ¥12 Billion from New Online Mall

Thematic (Sector/Industry)

<ul>
<li>In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. </li>
<li>Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. </li>
<li>Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. </li>
</ul>


In aggregate, traffic among the Big-3 Chinese airlines was up 67% YoY in February and +18% vs 2019. Incontestable proof that China has regained its air travel mojo. 
Published March schedules show total implied capacity is 31% higher YoY and 9% higher than 2019 levels. This is driven by domestic travel, international remains depressed. 
Driven by domestic travel, international remains depressed. POSITIVE for China Eastern and other North Asian carriers that provide the missing North America link. 


China BIG-3 Mainland Airlines Traffic 18% Higher than 2019!

Japan

Japan Airlines Co. Ltd. provides air transportation services. The Company offers a variety of scheduled  flights and unscheduled flights throughout the world as well as offers air courier services. Japan Airlines also provides tickets, resort hotels, and travel agencies services.

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Japan Airlines (9201 JP)

Japan Airlines: Upside to Expectations Despite A350 Loss

Significant short-term upside to earnings expectations and long-term improvements to competitive positioning suggested by strong unit cost management.

Neil Glynn

Plane Crash at Haneda Airport; Negative for Japan Airport Terminal and Japan Airlines

A Japan Airlines flight catches fire upon landing at Haneda Airport, causing runway closures and diversions. Negative for both Japan Airport...

Mohshin Aziz