Japan Airlines profit hit by weak yen and higher costs

JAL planes on tarmac Japan Airlines says the weaker yen and rising competition will weigh on future profits

Japan Airlines (JAL) has reported a dip in full-year profits, which it says is mainly due to the weaker yen pushing up costs.

The carrier earned 166.25bn yen ($1.6bn; £950m) for the year to March, a 3.2% drop from the previous year.

A fall in the value of the Japanese yen, while a boost for exporters, is bad for Japan's aviation industry.

That is because it pushes up the cost of fuel, which is usually the biggest expense for an airline.

In a statement, JAL said its annual fuel bill had reached 283bn yen, which is about 25% of the carrier's operating costs.

The Japanese yen has lost about 25% of its value against the US dollar since late 2012, when Japanese prime minister Shinzo Abe embarked on a string of policies to spur economic growth.

'Intensifying competition'

For the current financial year to March 2015, JAL is forecasting a lower net profit of 115bn yen.

The airline said it was facing "intensifying competition at Tokyo metropolitan airports as a result of the dramatic increase of international flight slots at Haneda airport".

Nearly 80 flights currently arrive and depart from Haneda airport each day, which is a 50% jump from a year earlier.

Haneda, Tokyo's second airport, is situated about 30 minutes from the city. Authorities have earmarked the facility as a gateway for visitors to Tokyo in anticipation of high passenger numbers when the city hosts the Olympic games in 2020.

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