Japanese Full-Service Carriers Benefit from Growing International Passengers

Diverging Strategic Paths Should Create Pair Trading Opportunities Between JAL and ANA

ANA Maintains Momentum Capitalising on International Revenue While Consolidating Domestic Operations

JAL's Tactical Route Plans Boost Revenue Yet Intense Rivalry Compress Margins

Equity Analyst, LightStream Research

Nuzran Sahib

Equity Analyst

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Bottom-Up

<p>Both major full-service airlines in Japan saw their revenue increase during the 1<sup>st</sup> quarter in FY03/19 due to an increase in international passengers. The domestic passenger segments did not increase drastically, and we expect that to continue for the remainder of the fiscal year since both JAL and ANA are effectively targeting the increasing international demand. Despite the revenue increase, both companies saw their OP decline in 1Q FY03/19 compared to 1Q FY03/18 due to increased fuel costs.</p>

Both major full-service airlines in Japan saw their revenue increase during the 1st quarter in FY03/19 due to an increase in international passengers. The domestic passenger segments did not increase drastically, and we expect that to continue for the remainder of the fiscal year since both JAL and ANA are effectively targeting the increasing international demand. Despite the revenue increase, both companies saw their OP decline in 1Q FY03/19 compared to 1Q FY03/18 due to increased fuel costs.

Japanese Airlines: OP Margins Dropped Amidst Increasing Fuel Costs

Ana Holdings

Japanese Airlines: OP Margins Dropped Amidst Increasing Fuel Costs