a more competitive jal group this pdf annual report ... international routes, jal took steps to...

ANNUAL REPORT

’98 ’99FISCAL YEAR ENDED

MARCH 31, 1999

A More CompetitiveJAL Group

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This pdf annual report originates from the AR-DDS section of the www.gcis.com web site operated by General Solutions, Inc.

Contents

Consolidated Financial Highlights .................................................................................... 1

Consolidated Operating Highlights .................................................................................. 1

Message From the President ............................................................................................. 2

A More Competitive JAL Group ...................................................................................... 4

Safety and Service—A Relentless Drive to Achieve Higher Goals .................................. 6

Internal Structure—The Productivity and Flexibility for Success .................................. 8

The JAL Group—A Plan to Optimize the Deployment of Resources ........................... 10

Review of Operations ........................................................................................................ 12

Passenger Operations (International) ............................................................................ 12

Passenger Operations (Domestic) ................................................................................. 14

Cargo Operations ......................................................................................................... 16

Other Operations ......................................................................................................... 17

JAL Route Network .......................................................................................................... 18

Corporate Citizenship ....................................................................................................... 20

Consolidated Six-Year Financial Summary ....................................................................... 21

Management’s Review and Analysis of Financial Position ................................................. 22

Consolidated Financial Statements and Notes .................................................................. 26

Non-Consolidated Financial Statements and Notes .......................................................... 40

Consolidated Subsidiaries ................................................................................................. 50

JAL and Its Subsidiaries and Affiliates ............................................................................... 52

Directory .......................................................................................................................... 54

Corporate Organization .................................................................................................... 56

Board of Directors ............................................................................................................ 58

Investor Information ................................................................................ Inside Back Cover

One of the world’s premier carriers, Japan Airlines Company, Ltd. (JAL)

and its affiliates offer a growing network of services to over 99 interna-

tional and domestic locations. These services encompass areas as varied as

hotels and resorts, catering, maintenance, cargo, information and

communications, and trading, as well as air travel.

The company was founded in 1951 as Japan’s flag carrier and fully

privatized in 1987. Its stock is listed and actively traded on Japan’s three

principal exchanges. JAL is the country’s largest airline and one of the

world’s largest. Through a number of alliances and business tie-ups,

JAL’s range of services has been extended to many more cities. The

business environment may change, but two well-known characteristics

of JAL will not: its commitment to superlative service and total safety.

1P A G E

C O N S O L I D A T E D F I N A N C I A L H I G H L I G H T SJapan Airlines Company, Ltd. and Consolidated Subsidiaries

For the Years Ended March 31, 1999, 1998 and 1997

C O N S O L I D A T E D O P E R A T I N G H I G H L I G H T SJapan Airlines Company, Ltd. and Consolidated Subsidiaries

For the Years Ended March 31, 1999 and 1998

1999 1998 Change (%)

Revenue Passengers Carried: Domestic 22,660,778 22,447,242 1.0(number of passengers) International 12,831,052 12,749,376 0.6

Total 35,491,830 35,196,618 0.8

Revenue Passenger-Km: Domestic 18,620,417 18,382,368 1.3(1,000 passenger-km) International 65,472,537 65,290,700 0.3

Total 84,092,954 83,673,068 0.5

Revenue Passenger-Load Factor: Domestic 63.3 64.0 –0.6(%; percentage point change) International 69.9 71.9 –2.0

Total 68.3 70.0 –1.7

Revenue Ton-Km Performed: Domestic 1,705,444 1,697,103 0.5(1,000 ton-km) International 10,184,914 10,212,886 –0.3

Total 11,890,358 11,909,989 –0.2

Revenue Weight-Load Factor: Domestic 52.1 53.0 –0.9(%; percentage point change) International 67.3 69.1 –1.8

Total 64.6 66.2 –1.6Notes: 1. Ratios and percentages have been rounded to the nearest tenth of a percent.

2. Other figures less than one thousand, except for passengers carried, have been discarded.

Thousands ofMillions of yen U.S. dollars

1999 1998 1997 1999

For the Year:Operating Revenues ¥1,566,094 ¥1,581,559 ¥1,567,133 $13,050,785Operating Expenses 1,533,237 1,539,932 1,555,915 12,776,977Operating Income (Loss) 32,856 41,626 11,218 273,808Net Income (Loss) 26,773 (62,918) (14,478) 223,109Net Income (Loss) Per Share

(yen and dollars) ¥ 15.05 ¥ (35.37) ¥ (8.14) $ 0.125

At Year-End:Long-Term Debt ¥1,066,862 ¥1,064,235 ¥1,022,383 $ 8,890,522Stockholders’ Equity 216,957 184,961 246,593 1,807,983Total Assets 1,955,622 2,042,761 2,050,623 16,296,851

Shares Issued (thousands) 1,778,943 1,778,943 1,778,943Note: The U.S. dollar amounts in this annual report are translated from yen amounts, solely for convenience, at ¥120=U.S.$1.00, the exchange rate prevailing

on March 31, 1999 (see Note 2 to the Consolidated Financial Statements).

2P A G E

M E S S A G E F R O M T H E P R E S I D E N T

million (US$12,776 million). Cost-cutting initiatives and

low fuel prices were behind this achievement, which

limited the fall in operating income to 21.0 percent, or

¥32,856 million (US$273 million). An improvement in

non-operating expenses resulted in net income of ¥26,773

million (US$223 million) compared with last year’s net

loss of ¥62,918 million. This performance enabled us to

resume cash dividends. The June 1999 payment of ¥3.0

per share was our first since June 1992.

BUILDING A MORE COMPETITIVE JAL GROUP

The outlook for Japan’s economy remains uncertain, and

no meaningful rebound is foreseen in the air transporta-

tion market. Competition will intensify on domestic and

international routes. In Japan, for example, all restrictions

on flight frequency on domestic routes will soon be lifted.

We are also seeing growing interest in lower fares among

passengers. All this adds up to an even more difficult

operating environment.

JAL will remain committed to improving earnings and

fulfilling its core social mission. To build up the strength

to meet these obligations, we began implementing a three-

year medium-term management plan in April 1999. Our

ultimate goal is an organization capable of consistently

creating value for stockholders.

We are active on many fronts. We have downsized the

board of directors, reduced the length of directors’ terms

to one year and adopted a corporate executive officer

system, in a comprehensive effort to create a management

structure capable of responding to the rapid pace of change

RESULTS FOR THE YEAR ENDED MARCH 1999

In Japan, adverse market conditions persisted as private-

sector capital spending and consumer spending both

remained lackluster. The United States and European

economies were generally healthy, but figures from Asia

continued to be negative. In the Japanese airline industry,

demand for domestic and international travel was weak as

the number of business travelers declined. Air freight

volumes were lower as well.

On international routes, JAL took steps to raise the

efficiency of its route network and make travel more con-

venient for passengers. Service was inaugurated linking

Nagoya with Europe and the United States. Among other

new destinations were Tianjin, Qingdao, Las Vegas and

Dallas. Code sharing programs were expanded to enter

other routes. On domestic routes, we concentrated on

raising efficiency and hence profitability. More flights were

added on heavily traveled routes and smaller aircraft intro-

duced on others. In related operations, progress was made

in unifying the resources of the entire JAL Group while

restructuring selected operations.

Together, these measures enabled JAL to achieve a

combined domestic and international passenger and cargo

volume of 11,890 million ton-kilometers, about the same

as in the previous fiscal year. Operating revenues decreased

1.0 percent to ¥1,566,094 million (US$13,050 million).

This is a reflection of lower revenues per passenger-

kilometer due to intense competition, and lower demand

for business travel on international and domestic flights.

Operating expenses were down 0.5 percent to ¥1,533,237

There was no shortage of challenges during the past fiscal year. JAL had to deal with soft economies at homeand abroad and generally unfavorable conditions in the market for air transportation. We took several stepsto improve services for passengers while boosting productivity. Groupwide efforts to enhance operationsproduced sufficient earnings during the fiscal year that ended March 31, 1999 for us to resume dividendpayments for the first time in seven years. But more difficulties lie ahead. To give the JAL Group thenecessary strength and resilience, we initiated a three-year medium-term management plan in April 1999.We are determined to quickly fulfill its goals to make the JAL Group a globally competitive organization.

3P A G E

Isao KanekoPresident

in our markets. We intend also to clarify lines of account-

ability. Restoring the confidence of the public is another

goal. Following JAL’s violation of Japan’s Commercial

Code, we formed the Business Activities Reappraisal

Committee and took other steps to bolster our oversight

functions. We vow to continue a rigorous internal inspec-

tion system to prevent illegal or unethical behavior.

We are constantly striving to improve safety. This is an

issue requiring the continual vigilance of all group members.

Reports on safety are submitted quickly, necessary actions

are taken quickly and safety-related information is shared

throughout the group. JAL has been working on Year

2000 compliance since 1995, testing computer systems

and making revisions as needed. To reinforce these efforts

as the year 2000 nears, we established a Year 2000 Com-

mittee in February 1999. Our compliance activities cover

the monitoring of companies, organizations and others

with whom we deal. Furthermore, we have formulated a

contingency plan and completed other measures to be

certain that JAL is fully prepared for the year 2000.

As I mentioned earlier, we are concentrating on making

the JAL Group an even more competitive organization.

The primary means is raising the strength of the entire

group by realigning operations at the parent company and

restructuring the group. In terms of routes, we are aiming

for higher earnings through code sharing and by restruc-

turing existing routes and shifting operations on certain

routes to group companies with lower costs. Naturally,

we will at the same time retain uncompromising standards

where safety and passenger service standards are concerned.

We want to remain an airline that passengers choose over

others. This demands that we rapidly become an organiza-

tion that can compete successfully anywhere in the world.

I believe that achieving this goal is the best means for us to

meet the expectations of our stockholders.

August 1999

Isao Kaneko

President

4P A G E

A More CompetitiveStructural reforms have been sweeping through JAL since early in the 1990s. They culminated in the October

1998 formulation of management goals and corresponding basic policies for the entire group and the March

1999 release of a medium-term management plan. Covering the period from April 1999 to March 2002, the

plan provides a clear blueprint for completing JAL’s ongoing restructuring program. JAL is determined to

prevail in the next stage of global competition in the upcoming decade.

5P A G E

JAL IS DETERMINED TO OPERATE IN ATRANSPARENT FASHION, TREAT CUSTOM-

ERS AND PARTNERS FAIRLY, MAKE DECISIONSRAPIDLY, SHOW STRATEGIC FORESIGHT AND

TAKE A GLOBAL PERSPECTIVE IN ALL ITS ACTIVITIES.TOGETHER, THESE QUALITIES DEFINE HOW JAL ISTACKLING THE ISSUES THAT FACE ALL GROUPMEMBERS.

CorporateGovernance

Safety

CorporateCitizenship

Shareholder Value

FundamentalPriorities

JAL Group

6P A G E

JAPANESE TRAVELING OVERSEAS

(Millions)

Years Ended December 31

Tourism Business Other

Source: Government white paper on travel

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20

15

10

5

0

7P A G E

S A F E T Y A N D S E R V I C E

Vital to JAL’s future, safety and servicehave precedence above all other aspectsof JAL’s operations.

ALLIANCES WITH INTERNATIONAL PARTNERS

In today’s airline industry, companies are forming relation-

ships that extend far beyond a single activity. Airlines world-

wide now regard broad-based alliances as a highly effectiveand valuable strategic tool.

JAL is no exception. Teams have conducted exhaustive

studies of the advantages and disadvantages of possible alliances,particularly in relation to the Japanese air-transportation

market. As a result, JAL is building multi-faceted relation-

ships grounded in a long-term perspective. The year to March1999 was an active one. In the passenger sector, JAL entered

into agreements with American Airlines, British Airways,

Swissair, Cathay Pacific and other carriers of world repute. Tieswith Lufthansa Cargo, Singapore Airlines and other partners

bolstered JAL’s cargo operations. In all, JAL has ties with 16foreign airlines in passenger and cargo service, as well as fre-

quent flyer programs. Few rivals have as many partnerships.

JAL plans to maintain and enlarge where appropriatebilateral ties with other airlines. The resulting benefits are

essential to improving services for all its customers worldwide.

HOW DEREGULATION SPAWNS OPPORTUNITIES FOR JAL

Deregulation is redefining Japan’s air-transportation market.

One result is the appearance of new airline companies for thefirst time in 36 years. Skymark Airlines began service in

September 1998 and Hokkaido International Air the follow-

ing December. Five airline companies now operate on majordomestic routes, offering a wide variety of deeply discounted

tickets. Average fares have fallen steeply as a result.

Airlines will soon have the freedom to enter and with-draw from routes as they wish. This is certain to spark more

competition. JAL has responded with new fares and other

efforts to become more competitive, thus generating higherrevenues. One move in the past fiscal year was the abolition

of the extra jet charges. All expenses are now included in

ordinary ticket prices. An advance purchase discount calledMaeuri 21 was introduced to spur demand in the new year

A Relentless Drive to

Achieve Higher Goals

period. Another discount ticket, Tokuuri Kippu, wasexpanded to cover more flights.

Protecting profit margins is essential as fares move

downward. On this front, JAL formed a subsidiary carriercalled JAL Express (JEX) that started service in July 1998.

With expenses about 20 percent lower than at JAL itself, JEX

turned in a strong performance during its first year in the sky.

DEMONSTRATING THAT SAFETY COMES FIRST

Safety is integral to everything that JAL does. Every memberof the JAL team keeps safety uppermost in his or her mind.

At this time, JAL is following up on revisions to Japanese air

safety laws and is mobilizing the latest technology to ensuresafety of operations. New systems include a ground proximity

warning system for aircraft and a new navigation system.Adopting new ideas and improving on existing systems are

two of many ways in which JAL is constantly enhancing its

safety procedures.In 1999, airlines are tackling an additional safety issue:

year 2000 compliance. JAL is placing top priority on ensuring

that safe airline operations can continue uninterrupted whenthe new year comes. Remediation programs are supervised by

a Year 2000 Committee. Air traffic control and other critical

systems around the world are being monitored and back-upsystems installed to prepare for an unforeseen problem.

Reaffirming JAL’s safety posture is the regular disclosure

of information. Data is available through many channels,including the Internet.

8P A G E

NUMBER OF EMPLOYEES

(JAL ONLY)(Thousands)

Years Ended March 31

Ground Staff Cockpit Crew

Cabin Crew

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5

10

15

20

25

9P A G E

I N T E R N A L S T R U C T U R E

A RELENTLESS COST CONTAINMENT DRIVE

JAL has been remolding its cost structure for many years.

General operating expenses are just the beginning. The processencompasses a review of contracts with external service pro-

viders, the suspension of almost all new investments and struc-

turing the network of offices to optimize efficiency. Personnelexpenses are going down, too. An annual salary system was

started in 1997 for general managers and a new selective career

path introduced for managers desiring other means of advance-ment. JAL’s entire salary system was then reviewed in 1998.

In the air, many subtle improvements have yielded substantial

savings with no sacrifice in passenger services.Benefits are already becoming apparent. Costs per seat-

kilometer at JAL have fallen to a level comparable with most

major U.S. and European airlines. But changes in the airlineindustry are outpacing the drop in expenses. To prevail against

even harsher competition, JAL must slash costs even more. In

this drive, a number of specific targets have been set forth:✦ Cut costs per seat-kilometer at JAL for the year ending

March 31, 2000 by 10 percent compared with the year

ended March 31, 1998.✦ Cut ground employment of the JAL Group, both in

Japan and overseas, by 10 percent from 36,000 as of

March 31, 1999 during the next three years. This willinclude a reduction of about 2,300 at JAL.

In terms of financial goals, the following guidelines have

been established:✦ Cut interest-bearing debt including leases of the JAL

Group from ¥1,526 billion at March 31, 1999 to

¥1,400 billion by March 31, 2002 by reviewing fleetprocurement plans and improving operating cash flows.

✦ An accounting center was formed in April 1999 to cen-

tralize all JAL Group accounting services and improvethe efficiency of administrative activities. In April 2000,

plans call for the establishment of a treasury center to

handle all fund procurement and management activities.✦ A comprehensive review of the pension system, includ-

ing the revision of projected returns, for the purpose of

preserving the financial soundness of JAL’s pensionsystem in line with yields on funds under management.

A NEW ROLE FOR DIRECTORS

To simplify and accelerate the decision-making process, JAL

has decided to completely redefine the role of directors andother members of the management team. Under the guidelines

of the new management plan, directors will become respon-

sible for making decisions regarding strategies and policies.Corporate executive officers will then implement those strate-

gies, and assume responsibility for their respective operations.

In line with resolutions approved at the June 1999 stock-holders’ meeting, JAL has taken the following actions:

✦ The board of directors now has 15 members instead

of the previous 28. Two of these directors are notemployed by JAL. At the same time, the position of

corporate executive officer was established.

✦ One-year terms were established for directors andcorporate executive officers.

✦ The post of senior advisor was eliminated.

Groundwork is being laid for other actions as well:✦ A management conference will replace the previous

executive management board. This will provide a forum

for the president, directors, auditors and corporate ex-ecutive officers to make decisions about corporate issues.

✦ All JAL Group members will adopt similar systems.

FULFILLMENT OF SOCIAL RESPONSIBILITIES

Determined to restore the confidence of the public, JAL has

created the Business Activities Reappraisal Committee andoverhauled a number of internal procedures and corporate

governance policies:

✦ JAL will continue to implement a rigorous internalinspection and supervision system.

✦ A comprehensive auditing function has been added to

the Business Activities Reappraisal Department with theobjective of ensuring that all operations are conducted in

an appropriate, transparent and efficient manner.

✦ Knowledge gained about such environmental issuesthrough the acquisition of ISO 14001 certification at

JAL’s maintenance facilities will be shared among all

JAL Group members.

The Productivityand Flexibility for Success

10P A G E

11P A G E

T H E J A L G R O U P

A MANAGEMENT VISION FOR THE JAL GROUP

To map out the future direction of the JAL Group, members

have collectively formulated a management vision. The impor-

tance of this task is immense. Investors, business partners andothers place increasing importance on the strength of entire

corporate groups. At JAL, this drive extends from the parent

company to the restructuring of subsidiaries and affiliates.To coordinate strategies and more closely unify the group,

a strategic management data system, auditing function and

other organizations spanning the entire group will be added.Assigning the proper role to each group member is

imperative to success. In this respect, JAL is active on many

fronts. On passenger flights, subsidiaries JALways, formerlyJapan Air Charter (JAZ), and JAL Express (JEX) will be used

as much as possible to raise productivity. During the fiscalyear ending in March 2000, JALways will inaugurate sched-

uled services, taking over from JAL on routes to and from

resort destinations in Southeast Asia, Oceania and elsewherein the Pacific. Within Japan, JAL plans to complete the trans-

fer of its B737 fleet to JEX by the end of March 2001. B767

aircraft will also be transferred to JEX as soon as possible. JALis preparing to reorganize the cargo operation as an internal

company by the end of March 2000, so it can react more

quickly to changes in the marketplace.Group improvements cover marketing, too. To maximize

customer satisfaction, JAL is stepping up efforts to devise

travel packages and other services from the customer’s stand-point. For passengers, more products that closely reflect

individuals’ needs will be developed. At the same time, sales

and marketing activities will increasingly tap informationtechnology. In the cargo field, JAL will target new business

opportunities created by customers’ supply chain manage-

ment programs. The data infrastructure will be enhanced aswell, forming a base from which to spin off cargo sales as a

separate company. For maintenance, JAL’s operations may be

reorganized as an internal company in a fashion that preservesthe company’s high safety standards. Accompanying this

move would be closer ties with business partners who already

perform maintenance services under consignment. This will

facilitate the gradual increase in external servicing of aircraftwithin the scope of JAL’s comprehensive quality assurance

and supervision system.

Airport operations and administrative functions excludinggroup oversight will be organized as separate companies or

contracted to external vendors. An accounting center is

already operative, and a treasury center is likely to be next.Concentrating all group accounting and financial services in

these two organizations will contribute to JAL’s drive to cut

debt, improve cash flows and raise returns on capital.Many JAL Group operations have the potential to

become viable businesses in their own right. Examples are

hotels, trading, in-flight meals and data processing. In each ofthese fields, a core company will be designated to oversee all

operations. If a suitable operating base is established, selectedcompanies may conduct an initial public offering. Upgrading

group functions also has the advantage of facilitating the

movement of people from one JAL field to another, an essen-tial prerequisite for offering rewarding career opportunities.

JAL itself will concentrate on two functions: operating

aircraft on trunk routes and overseeing all activities of thegroup in its role as a holding company. Enhancing over-

sight functions is essential. This is why JAL is creating

internal “virtual companies” and spinning off other opera-tions where appropriate. Through this process, JAL is

clarifying lines of responsibility and establishing the ideal

framework for each function.

PERFORMANCE INDICATORS THAT TARGET STOCKHOLDER VALUE

While reinforcing group performance, JAL is adopting apolicy that places more weight on building value for stock-

holders. To improve stockholder services and investor rela-

tions activities, the parent company’s Shareholders’ ServiceDepartment has been upgraded to an autonomous division.

In conjunction with this move, JAL plans to begin releasing

operating results on a quarterly basis. Giving stockholders aconsistently good return on their investments is another

objective. JAL aims to keep earnings per share above ¥10 and

maintain a return on assets of at least 2 percent.

A Plan to Optimizethe Deployment of Resources

12P A G E

BREAKDOWN OF INTERNATIONAL

PASSENGERS CARRIED BY ROUTE

(Millions of Passengers)


INTERNATIONAL REVENUE PASSENGER-KM

& AVAILABLE SEAT-KM

(Billions of Passenger-km)


CONSOLIDATED INTERNATIONAL

PASSENGER REVENUES

(Billions of Yen)


RPK

ASK

RESULTS—YEAR ENDED MARCH 31, 1999

Demand for business and leisure travel from Japan declined

in the past fiscal year, impacted by Japan’s persistent eco-nomic downturn and soft consumer spending. Solid demand

on Asia-U.S. routes, however, enabled JAL to achieve a 0.6

percent increase in international passenger volume to 12,831thousand. Revenues were affected by intense competition and

a drop in first class and executive class passengers due to a

decrease in business travel. As a result, non-consolidatedinternational passenger revenues were down 6.9 percent to

¥581.6 billion (US$4.8 billion). On a consolidated basis,

revenues fell 10.9 percent to ¥595.2 billion (US$4.9 billion).This is the result of the transfer to the incidental and other

category of revenues generated by sales of JAL Group airline

tickets at the 29 overseas JALPAK subsidiaries. The inclusion

R E V I E W O F O P E R A T I O N S

PASSENGER OPERATIONS(International)

JAL is attracting passengers to international flights by offering more flights and destinations and utilizing codesharing agreements. New advance purchase discounts and the extension of the JAL Mileage Bank to package tourpassengers are also making JAL more appealing. To hold down costs, JAL will soon begin transferring responsibilityfor certain flights to subsidiary JALways.

Korea/China Guam/Saipan

S.E. Asia/Oceania Europe

Trans-Pacific

of these sales lifted incidental and other revenues 20.9 percent

to ¥489.8 billion (US$4.0 billion).

HIGHLIGHTS OF THE YEAR

In light of the trend toward independent individual travel,

JAL increased the number of official fare discounts. The JALGoku discounts have already demonstrated their popularity;

to these were added the Maeuri Goku 28 and Maeuri Goku 42advance purchase discounts. All fares aim to stimulatedemand for leisure travel. To make the JAL Mileage Bank

more attractive, group-fare tickets were brought under this

program in January 1999.Several sales campaigns targeted leisure travelers during

the year. Among them were a campaign to promote Reso’cha,

a program now in its fifth year that offers flights to resorts in

’95 ’96 ’97 ’98 ’99 0

100

200

300

400

500

600

700

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20

40

60

80

100

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2

4

6

8

10

12

14

13P A G E

the Pacific Ocean, and marketing efforts to raise awareness ofthe new Tokyo-Las Vegas service.

A significant number of new flights were inaugurated

during the year. In April 1998, service began on the Nagoya-Los Angeles, Nagoya-London, Hiroshima-Honolulu, Osaka-

Tianjin and Nagoya-Tianjin routes. Tokyo-Dalian and

Tokyo-Qingdao service started in July and Tokyo-Las Vegasflights the following October. Niigata-Honolulu flights

started in December and Tokyo-Dallas service was inaugu-

rated in March 1999. Code sharing agreements were anothermeans of growth. Tokyo-Zurich and Osaka-Zurich service

began with Swissair and Tokyo-Istanbul with Turkish Air-

lines, both in October. Flight frequency was raised on manyhigh-volume routes including those between Tokyo and New

York, Los Angeles, San Francisco and Shanghai, and service

linking Osaka with Honolulu, London and Shanghai. In June1998, JAL operated a large number of charter flights to meet

demand generated by the World Cup in France.

OUTLOOK

On Pacific routes, JAL plans to begin services between Osaka

and Chicago and add Tokyo-Dallas and Tokyo-Las Vegas

routes, among others. The first step in the code sharingagreement with American Airlines was taken in May 1999

with cooperation on 28 routes. This collaboration will be

extended to about 150 routes by March 2000, thus enablingJAL to better serve independent travelers. Code sharing

flights with Canadian Air and Cathay Pacific are slated to

begin during the summer of 1999. An agreement linkingJAL’s mileage program with that of British Airways took

effect in June 1999. To enlarge the Resocha Pacific Resort

strategy and serve more group travelers, JAL began servicebetween Nagoya and Guam and added other flights. And to

take full advantage of its cost competitiveness, subsidiary

JALways began operating its first scheduled flights. Thiscompany will gradually take over JAL’s Southeast Asian,

Oceania and Pacific resort routes.

MAEURI GOKU 28 AND 42 MAKE THEIR DEBUT

The Maeuri Goku plan was created specifically to attract passengers from Japan who are

traveling overseas on their own. The 28-day advance-purchase option, launched in April 1998,

offers fares below the standard JAL Goku discount. The 42-day option, introduced in October

1998, has an even steeper discount.

DIRECT FLIGHTS BETWEEN TOKYO AND LAS VEGAS

In October 1998, JAL inaugurated service linking Tokyo and Las Vegas. A series of new casinos,

theme parks and other attractions has made this entertainment capital an appealing destina-

tion for the entire family. JAL plans to aggressively promote travel to the “entertainment

capital of the world” to a variety of passenger categories.

CHARTER FLIGHTS MEET DEMAND FOR JAPANESE WORLD CUP FANS

A lot of Japanese fans went to France in June 1998 to watch the World Cup. JAL was involved

in the event too, shuttling fans between Tokyo and Paris on a total of 14 charter flights and

painting slogans of support for the Japanese team on its planes.

14P A G E

RPK

ASK


Demand for domestic air travel remained flat during the past

fiscal year, a reflection of the stagnation in the Japaneseeconomy. JAL did manage a 1.0 percent increase in passenger

volume to 22,660 thousand. However, domestic passenger

revenues decreased 4.5 percent to ¥307.4 billion (US$2.5billion) as competition, especially on trunk lines, exerted

pressure on ticket prices.


The addition of slots at Haneda and Itami airports allowed JAL

to increase flight frequency on routes between Tokyo (Haneda)and Fukuoka and Osaka (Itami) and Okinawa and Nagasaki

in April 1998. In July, flights were added on routes between

Itami and Fukuoka, Sapporo, Okinawa and Fukushima.

DOMESTIC PASSENGERS CARRIED

BY JAL, JTA AND JEX(Millions of Passengers)


DOMESTIC REVENUE PASSENGER-KM

& AVAILABLE SEAT-KM

(Billions of Passenger-km)


CONSOLIDATED DOMESTIC

PASSENGER REVENUES

(Billions of Yen)



PASSENGER OPERATIONS(Domestic)

Deregulation is altering the dynamics of Japan’s air travel industry. JAL is responding in many ways. JALExpress, JAL’s low-cost subsidiary, took to the air in July 1998. Flights will be added at Haneda and Itamiairports, including early-morning and late-night services. JAL is also expanding its popular Tokuuri Kippudiscount fares and making more passengers eligible for the JAL Mileage Bank.

JAL JTA JEX

Seasonal service between Fukushima and Sapporo took off in

May 1998. JAL’s low-cost subsidiary JEX inaugurated sched-

uled service in July 1998 by taking over the Itami-Miyazakiand Itami-Kagoshima routes. Flexibility was another theme.

More seasonal, early-morning and late-night flights were

added during peak travel periods, thus boosting efficiency.Aggressive actions were taken to keep fares attractive.

Symbolizing this program was the new Tokuuri Kippu that

offers discounts on routes that compete directly with newairline companies and the Shinkansen bullet train. Addition-

ally, marketing campaigns targeting Okinawa, Hokkaido

and other destinations served to raise interest in domesticpleasure travel.

The JAL Mileage Bank (JMB) frequent flyer program was

significantly enlarged. In October 1998, this program was

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extended to cover travel on group fare tickets. Furthermore,JMB members can now earn miles by patronizing other

businesses, such as hotels, car rental companies, moving

companies and telecommunications companies.

OUTLOOK

A new overland flight path has been opened at KansaiInternational Airport, resulting in an increase in takeoff and

landing slots. JAL plans to use this opportunity to add flights

serving Haneda, Okinawa and Sapporo. Frequency on theFukuoka-Sapporo route will be raised in stages. Resulting

improvements in convenience are expected to increase

demand from business travelers. Other plans for the up-coming year include more flights on the Nagoya-Kagoshima

and other routes as well as operation of Fukushima-Sapporo

service throughout the year.

The resources of JEX and Japan Transocean Air (JTA)will be employed as much as possible to improve productivity.

With regard to JEX, selected operations, mainly local service

to and from Itami, will be shifted from JAL in line withgrowth in JEX’s B737 fleet. JTA will deploy its new B737-

400 aircraft on service between Fukuoka and Okinawa,

Hakodate and Nagoya. More flights will be operated on theKansai-Okinawa route and service is slated to begin between

Kansai and Matsuyama. Some JTA operations will be oper-

ated under leases that cover aircraft and crew members.Ticket prices will be an increasingly critical issue at JAL.

Japan’s complete deregulation of fares in February 2000 and

other events are rapidly altering the competitive dynamics ofthe air-transportation market. JAL will continue to implement

a fare policy that reconciles the needs to stimulate demand,

meet passenger expectations and preserve an appropriateprofit margin.

JEX TAKES TO THE SKIES OF JAPAN

The JAL Group’s new cost-efficient airline subsidiary JEX began scheduled service in July 1998.

All flights currently use Osaka’s Itami airport. To mark the inauguration of this service, all

Itami-Miyazaki and Itami-Kagoshima ticket prices were halved for the two weeks from July 1

through 16.

FREQUENT FLYER PROGRAM NOW COVERS GROUP FARES

Making the popular JAL Mileage Bank program even more attractive, JAL in October 1998

began crediting mileage from travel using domestic group fares. International package tours

and group fares were added to the program in January 1999. Passengers can now count on

building up miles almost any time they fly JAL.

THE BOEING 777-300 MAKES ITS DEBUT

JAL’s first B777-300 made its maiden flight in August 1998, entering service on the Haneda-

Kagoshima route. It boasts the longest fuselage of any passenger aircraft, and offers excellent

safety, economy and environmental advantages. JAL expects that the B777-300 will eventually

become the mainstay of its domestic fleet.

16P A G E


International cargo volumes remained weak, hurt by economic

softness in Southeast Asia and Japan. Declines were recordedon almost all routes. The only meaningful growth occurred

on flights from Southeast Asia to North America. Overall,

international cargo volume decreased 1.0 percent to 3,965million ton-kilometers and revenues dropped 8.3 percent to

¥145.6 billion (US$1,213 million).

In addition to a sluggish economy, domestic operationsfelt the effects of unfavorable weather that caused a steep

drop in shipments of fresh produce from Okinawa. Domestic

cargo volume was down 2.8 percent to 264 million ton-kilometers and revenues decreased 0.3 percent to ¥27.9

billion (US$233 million).


To expand overseas service, JAL has been making use of

code sharing agreements to increase frequency on new routes

CONSOLIDATED CARGO

REVENUES

(Billions of Yen)



CARGO OPERATIONS

Code sharing is extending JAL’s cargo reach. Partners include Lufthansa Cargo, SAS, Air France and SingaporeAirlines. JAL is adding flights of its own as well. Highlighting the drive for excellence, JAL’s Narita district cargooperations earned ISO 9001 certification, a first among Japan’s airlines. Within Japan, JAL conducts high-profile sales campaigns that stress its outstanding services.

International

Domestic

and operate new ones. One such tie-up with Lufthansa Cargo

led to the September 1998 inauguration of freighter flights

between Kansai and Frankfurt. The addition of ScandinavianAirlines extended this service to Gothenburg in March 1999.

In October 1998, code-share flights with Air France increased

and the next month JAL began operating these flights withSingapore Airlines.

To improve cargo service, JAL earned ISO 9001 certifica-

tion for its Narita export operations, in the process becomingthe first Japanese airline to meet this quality assurance stan-

dard. In Europe, truck and other land transportation services

were reorganized into a unified organization JAL calls itsEuro Network. For customers sending cargo to Mexico and

Latin America, JAL inaugurated two services: the Amigo

Express and the Latin American Express.Within Japan, competing airlines are adding capacity at

the same time that demand is shrinking. JAL is responding

with a range of sales campaigns to protect its market shareand capture business from new customers.

OUTLOOK

On international routes, JAL is placing priority on utilizing its

nine freighters as much as possible to maintain a high level of

capacity. One area of growth is the southern U.S. and LatinAmerica. JAL plans to resume flights to Atlanta and expand its

New South Network truck delivery network. This will connect

with interline shipping via Miami to serve destinations inCentral and South America. At the same time, JAL will seek

new alliances with other airlines and expand existing ones.

The central goal in Japan is improving marketing by lever-aging JAL’s reputation for quality transportation services.

Raising demand by convincing shippers to shift from trucks and

other services to air is one theme. More non-scheduled cargoflights will be operated to add flexibility as well. JAL is working

with shippers to improve transportation of frozen cargo and

create containers that can be used by aircraft and trucks.

NARITA CARGO OPERATIONS

EARN ISO 9001 CERTIFICATION

In April 1998, the Narita cargo

operations of JAL received ISO

9001 certification, This attests

to JAL’s ability to meet inter-

national standards for quality

management and assurance.

With this certification, JAL is in

an even better position to sell

its services to Japanese exporters.

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Revenues in other operations rose 20.9 percent to ¥489.8

billion (US$4.0 billion). This growth was achieved despite a9.8 percent decline in hotel and resort operations to ¥57.4

billion (US$478 million). Most of the increase was attribut-

able to a 72.3 percent rise in travel agency operations to¥337.6 billion due to the inclusion of a larger number of

consolidated subsidiaries.


In the hotel and resort field, JAL Hotels’ Hotel Nikko Pudong

Shanghai held its grand opening in November 1998. In March1999, JAL sold Essex House Hotel Nikko New York. In other

fields of business, revenues rose at JAL Trading, Inc. (JLT) due

to the popularity of wine in Japan and other factors.

CONSOLIDATED INCIDENTAL AND

OTHER REVENUES

(Billions of Yen)



OTHER OPERATIONS

Actions are being taken throughout the JAL Group to bolster the collective strengths of group members. Part ofthis process entails consolidation and restructuring selected businesses. One example was the March 1999 saleof a JAL-owned hotel in New York. Where possible, administrative and other functions not directly linked toflight operations will be spun off or outsourced.

OUTLOOK

JAL plans to continue to reorganize airport operations as

separate companies and transfer some functions to externalservice providers. This process will cover all operations not

directly related to core businesses, excluding functions

required for managing the JAL Group. As the reorganizationprogresses, JAL will foster companies in fields such as trading

activities, in-flight meals and information services with the

aim of taking them public.

JAL TRADING, INC., THE NEXUS OF THE JAL GROUP’S

COMMERCIAL ACTIVITIES

Responsible for a diverse array of commercial services, JLT’s

activities support the airline business in many ways. Catalog

sales, insurance, real estate and airport shops are just a few

examples. JLT is known for its skill in the selection of fine

wines. Handling hundreds of labels, JLT supplies wines for

JAL’s first class cabins as well as various fine hotels, restaurants

and shops throughout Japan.

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London Amsterdam

Gothenburg

ParisFrankfurtZurich

Milan

Rome

Beijing

Seoul

Pusan

TOKYOMemanbetsuSapporoObihiroHakodateAkitaYamagataSendaiFukushimaKomatsuNagoya

OSAKAMatsuyamaKochiHiroshimaFukuokaOitaKumamotoNagasakiMiyazakiKagoshimaOkinawa (Naha)

HonoluluKona (Hawaii)

San Francisco

Los Angeles

Vancouver

Anchorage

Chicago

Atlanta

Mexico City

New York

São Paulo

Shanghai

Delhi Hong Kong

Taipei

Kaohsiung

Ho Chi Minh City

Manila SaipanBangkok

PenangKuala Lumpur

Singapore

Jakarta

Denpasar

Guam

Brisbane

Cairns

SydneyAuckland

New Caledonia (Noumea)

Christchurch

Moscow

MadridIstanbul

TianjinDalian

Qingdao

Seattle

San Jose

San DiegoLas Vegas

Dallas

St. Louis

Indianapolis

Washington Columbus

Boston

Code Sharing Destinations

International Routes

J A L R O U T E N E T W O R K

Japan Airlines Company, Ltd. and affiliated companiesAs of June 30, 1999

18P A G E

Air France

Air New Zealand

American Airlines

British Airways

Canadian Airlines

Cathay Pacific Airways

KLM Royal Dutch Airlines

Lufthansa Cargo

Malaysia Airlines

Qantas Airways

Scandinavian Airlines System

Singapore Airlines

Swiss Air Transport

Thai Airways InternationalPublic Company

Turkish Airlines

Vietnam Airlines

19P A G E

Domestic Routes

Sapporo Obihiro

Hakodate

Akita

Yamagata

Sendai

FukushimaNiigata

Komatsu

Nagoya

Narita

Tokyo

Osaka

MatsuyamaHiroshima

Okayama

OitaFukuoka

KumamotoNagasaki

Miyazaki

Kagoshima

Okinawa (Naha)

Yoron

Kita DaitoMinami Daito

Kerama

MiyakoTarama

IshigakiHateruma

Yonaguni

AguniKume

Izumo

KochiNanki-Shirahama

Tottori

Memanbetsu

Hanamaki

Amami

19P A G E

20P A G E

All JAL aircraft proudly proclaim “We support UNICEF”as part of a company-wide effort to assist in the programsof this global charity for children.

Under its “Wings of Friendship” program, JAL bringsdisadvantaged children to Tokyo each year to tour itsfacilities and visit Tokyo Disneyland.

C O R P O R A T E C I T I Z E N S H I P

JAL believes that its corporate mission involves much more

than generating a good return on investments. This is why

operations worldwide strive to play a part in supportinglocal community, cultural and environmental programs.

Translating this belief into actions, JAL participates in a

broad spectrum of programs and provides other forms ofsupport for worthy endeavors.

SOCIAL ACTIVITIES THAT TIE IN WITH THE AIRLINE BUSINESS

As a purveyor of global air transportation services, JAL is in a

unique position to conduct a variety of social programs. The

Fureai no Tsubasa, or “Wings of Friendship” program, is adirect offshoot of JAL’s corporate philosophy. Now in its

twelfth year, the program originated as an expression of grati-

tude to customers. Staff members contribute time and moneyto bring handicapped and orphaned children from all over

Japan to visit aircraft maintenance facilities at Haneda. Held

each spring, the 1999 event enabled 98 children from 20cities in Japan to enjoy a trip to Tokyo.

To support UNICEF, JAL solicits donations during

flights through the Change for Good program, collects for-eign coins and sells UNICEF cards to passengers. For the

Association of Medical Doctors of Asia, a volunteer medical

group, JAL extends support to emergency rescue activities.The past fiscal year was an eventful one. JAL helped transport

materials and personnel after a cyclone in India, an earth-

quake in Bolivia, a tidal wave in Papua New Guinea and anearthquake in Honduras.

Services on JAL flight reflect a solid commitment to

serving passengers with special needs, all of whom are treated

as priority guests. This policy covers physically challenged andelderly people as well as children, pregnant women, people

with illnesses and others requiring extra attention.

JAL AND ENVIRONMENTAL ISSUES

Since 1990, JAL has held regular meetings of its environ-

mental committee, which includes company directors, andhas staged environmental conferences that bring together

general managers of relevant divisions. Through these gath-

erings, JAL has made steady headway in tackling environ-mental issues. There were a number of significant events

during the past fiscal year:

✦ A fundamental environmental philosophy was releasedin November 1998 to set forth guidelines for activities

of the entire JAL Group. Concurrently, JAL’s corporate

code of behavior was revised to reflect today’s environ-mental concerns.

✦ To bolster environmental management systems, the

maintenance operations of the Engineering & Mainte-nance Division acquired ISO 14001 certification in

January 1999, a first among Japanese airlines.

✦ Various activities were undertaken to address globalwarming, air pollution, depletion of the ozone layer,

noise pollution, water pollution and conservation,

waste disposal, energy conservation and other environ-mental issues.

21P A G E

C O N S O L I D A T E D S I X - Y E A R F I N A N C I A L S U M M A R YJapan Airlines Company, Ltd. and Consolidated Subsidiaries



1999 1998 1997 1996 1995 1994 1999

Income dataOperating revenues:

Passenger:Domestic ¥ 307,447 ¥ 321,945 ¥ 310,878 ¥ 303,160 ¥ 296,628 ¥ 284,599 $ 2,562,063International 595,226 667,693 670,530 620,481 560,236 518,246 4,960,221

Cargo:Domestic 27,964 28,046 29,988 29,401 28,980 28,463 233,040International 145,639 158,776 147,834 132,603 126,677 119,559 1,213,659

Incidental and other 489,816 405,098 407,901 363,394 335,893 305,743 4,081,801

Total operating revenues 1,566,094 1,581,559 1,567,133 1,449,041 1,348,417 1,256,612 13,050,785

Operating income (loss) 32,856 41,626 11,218 18,621 (11,861) (28,698) 273,808

Income (loss) before income taxesand minority interests 36,290 (60,481) (6,404) (5,202) (18,277) (41,305) 302,418

Net income (loss) 26,773 (62,918) (14,478) (9,098) (14,620) (37,463) 223,109

Share dataPer share (Yen and U.S. dollars):

Net income (loss) ¥ 15.05 ¥ (35.37) ¥ (8.14) ¥ (5.11) ¥ (8.22) ¥ (21.06) $ 0.125Cash dividends applicable to the year – – – – – – –Net assets 121.96 103.97 138.62 150.83 157.31 170.24 1.016

Financial position at year endAssets

Current assets:Cash and cash equivalents, time deposits

and marketable securities ¥ 244,022 ¥ 194,457 ¥ 150,677 ¥ 204,030 ¥ 301,092 ¥ 308,365 $ 2,033,520Other current assets 339,622 360,537 340,679 341,535 299,297 329,010 2,830,191

Total current assets 583,645 554,995 491,356 545,565 600,390 637,375 4,863,711

Investments and advances 180,640 230,923 283,917 271,431 252,313 310,443 1,505,343Property and equipment, net 1,117,032 1,173,581 1,170,876 1,190,812 1,190,328 1,068,181 9,308,603Long-term loans 20,136 19,515 19,546 20,475 39,071 82,120 167,804Other assets 39,820 49,612 53,034 51,238 38,950 41,333 331,833Translation adjustments 14,346 14,133 31,891 31,529 34,706 10,057 119,556

Total assets ¥1,955,622 ¥2,042,761 ¥2,050,623 ¥2,111,053 ¥2,155,761 ¥2,149,512 $16,296,851

Liabilities and stockholders’ equityCurrent liabilities ¥ 557,194 ¥ 681,843 ¥ 674,261 ¥ 645,693 ¥ 600,512 ¥ 588,524 $ 4,643,290Long-term debt 1,066,862 1,064,235 1,022,383 1,091,993 1,171,365 1,155,808 8,890,522Accrued severance indemnities 97,837 97,393 102,018 99,987 96,839 95,624 815,314Minority interests 16,768 14,326 5,365 5,062 7,198 6,716 139,740Stockholders’ equity 216,957 184,961 246,593 268,315 279,846 302,837 1,807,983

Total liabilities and stockholders’ equity ¥1,955,622 ¥2,042,761 ¥2,050,623 ¥2,111,053 ¥2,155,761 ¥2,149,512 $16,296,851

22P A G E

M A N A G E M E N T ’ S R E V I E W A N D A N A L Y S I S O F F I N A N C I A L P O S I T I O NJapan Airlines Company, Ltd. and Consolidated Subsidiaries

Fiscal Years Ended March 31, 1999 and 1998

CONSOLIDATED OPERATING

REVENUES

(Billions of Yen)


OPERATING REVENUES

Consolidated operating revenues decreased 1.0 percent to

¥1,566.0 billion. This was the result of a 8.8 percent

decline in passenger revenues to ¥902.6 billion, a 7.1

percent decline in cargo revenues to ¥173.6 billion and a

20.9 percent increase in incidental and other revenues to

¥489.8 billion.

International passenger revenues were down 10.9 per-

cent to ¥595.2 billion as international revenue passenger

kilometers climbed 0.3 percent to 65,472 million. The

number of international passengers was up 0.6 percent to

12,831 thousand. Revenues fell despite this growth because

of competitive pressures on ticket prices and lower levels of

first class and executive class passengers.

Domestic passenger revenues declined 4.5 percent to

¥307.4 billion as revenue passenger kilometers increased

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1.3 percent to 18,620 million. The number of domestic

passengers rose 1.0 percent to 22,660 thousand. Offsetting

this growth was a decrease in ticket prices due to intense

competition, mostly on high-volume routes.

International cargo revenues decreased 8.3 percent to

¥145.6 billion because of soft demand on many important

routes, excluding those from Southeast Asia to North

America. Domestic cargo revenues decreased 0.3 percent to

¥27.9 billion as the impact of Japan’s sluggish economy

offset an effective marketing program.

Incidental and other revenues increased 20.9 percent to

¥489.8 billion. There was a 9.8 percent decline in hotel

and resort operations to ¥57.4 billion, partially due to the

yen’s strength. Revenues in travel agency operations were

up 72.3 percent to ¥337.6 billion because of growth in the

number of consolidated subsidiaries.

JAL FLEETMarch 31, 1999

Type of Aircraft Capacity Owned Leased Total

Boeing 747-400 266-568 seats 28 8 36Boeing 747LR 341-468 seats 14 14 28Boeing 747SR 533, 563 seats 7 0 7Boeing 747F 115 tons 0 9 9Boeing 767 213-270 seats 9 12 21Boeing 737 150 seats 1 4 5Boeing 777 389, 470 seats 4 4 8Douglas MD-11 233-300 seats 2 8 10Douglas DC-10 266-318 seats 9 4 13

Total 74 63 137

PERSONNEL (JAL ONLY)March 31, 1999

Ground Staff 7,547

Cockpit Crew 2,568

Cabin Crew 6,210

Total 16,325

(Non-Japanese) 3,130Note: These figures exclude directors who have concurrent employee responsibili-

ties, personnel dispatched to other companies (2,240) and employees onleave (600).

23P A G E

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CONSOLIDATED COSTS OF

FLYING OPERATIONS

(Billions of Yen)


CONSOLIDATED NET INCOME

(LOSS)(Billions of Yen)


CONSOLIDATED OPERATING

INCOME (LOSS)(Billions of Yen)


OPERATING AND NET INCOME

Operating expenses decreased 0.5 percent to ¥1,533.2

billion. Low fuel prices brought down fuel expenses, thus

reducing flight operations expenses. Expenses in the air-

craft and traffic servicing and the sales and advertising

categories decreased as well, both reflections of a concerted

cost containment program. Despite these improvements,

operating income fell 21.1 percent to ¥32.8 billion because

of the decline in revenues.

Non-operating income (expenses) improved from a net

expense of ¥102.1 billion to a net contribution of ¥3.4

billion. This was mainly attributable to a decline in loss on

investments in subsidiaries and affiliates and increases in

gain on sales of aircraft and aircraft purchase incentives.

These factors resulted in income before income taxes and

minority interests of ¥36.2 billion compared with the prior

year’s loss of ¥60.4 billion. After income taxes and minor-

ity interests, the result was net income of ¥26.7 billion

compared with a net loss of ¥62.9 billion in the prior year.

PERSONNEL COMPOSITION BY LABOR UNION (JAL ONLY)March 31, 1999

Union Employees Number of Members

Japan Airlines Workers’ Union Ground staff, cabin crew 11,639

Japan Airlines Cabin Attendants’ Union Cabin crew 1,179

Japan Airlines Flight Crew Union Cockpit crew 1,307

Japan Airlines Captain Association Captains 1,029

Japan Airlines Labor Union Ground staff 286

Japan Airlines Senior Flight Engineer Union Senior flight engineers 107

Total 15,547

Note: These figures exclude union members who are employed by Japan Asia Airways Co., Ltd.

24P A G E

CONSOLIDATED TOTAL ASSETS

(Billions of Yen)

March 31

CONSOLIDATED CURRENT

LIABILITIES

(Billions of Yen)

March 31

Current Assets Total Assets

CONSOLIDATED TOTAL

STOCKHOLDERS’ EQUITY

(Billions of Yen)

March 31

BALANCE SHEET ANALYSIS

Total assets as of March 31, 1999 amounted to ¥1,955.6

billion, 4.3 percent less than one year earlier. Current

assets increased 5.2 percent to ¥583.6 billion, mainly

owing to growth in marketable securities because of

temporary investments of funds for the purchase of

aircraft. Investments and advances decreased 21.7 per-

cent to ¥180.6 billion because of the sale of non-core

assets by a financial services subsidiary. Property and

equipment was down 4.8 percent to ¥1,117.0 billion due

to the sale of Essex House and addition of leased rather

than owned aircraft.

Total liabilities decreased 6.4 percent to ¥1,738.6

billion. Current liabilities were down 18.3 percent to

¥557.1 billion as the proceeds from sales of non-core

assets were used to reduce short-term borrowings and

commercial paper.

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Stockholders’ equity was up 17.3 percent to ¥216.9

billion, but the year’s earnings were not sufficient to

eliminate the cumulative deficit.

ANALYSIS OF CASH FLOWS

Net cash provided by operating activities decreased from

¥94.4 billion to ¥35.5 billion. The main reason was a

decrease in accounts payable and accrued expenses. Invest-

ing activities provided cash of ¥6.5 billion compared with

net cash used of ¥137.7 billion in the prior year. This was

chiefly attributable to the substantial volume of sales of

property and equipment. Financing activities used cash

amounting to ¥30.0 billion after providing cash of ¥34.4

billion in the prior year as payments of long-term debt

exceeded proceeds. The net result of these activities was an

increase of ¥12.1 billion in cash and cash equivalents to

¥90.3 billion.

25P A G E

CONSOLIDATED CASH FLOWS

(Billions of Yen)


Net Cash Provided by(Used in) FinancingActivitiesNet Cash Used in(Provided by) InvestingActivitiesNet Cash Provided byOperating Activities

YEAR 2000 READINESS DISCLOSURE

JAL places top priority on ensuring that its computer

systems are Year 2000 compliant. Work on Year 2000

computer system issues began in 1995. A project team

was established in June 1998 to implement all necessary

measures, including the examination of all applicable

equipment and services. In February 1999, a Year 2000

Committee was established to supplement the systems

and programs already in place.

Year 2000 programs encompass three areas: computers

and software managed and held by the Information Systems

Office; aircraft, equipment throughout the company that

incorporates microchips and PCs; and JAL Group members

and business partners that are essential to the company’s

operations. Regarding the first area, work on flight and

other core systems was completed in March 1999 and

comprehensive tests covering all systems were conducted

during the following three months. In the second area,

manufacturers completed their examinations of aircraft at

the end of June 1999 and the necessary revisions have been

made to items requiring attention. With regard to other

systems in the first and second areas, work is under way

and scheduled to be completed by October 1999. In the

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third area, JAL Group members are working on Year 2000

compliance in accordance with a uniform set of procedures.

JAL is monitoring compliance status at other business

partners and service vendors.

Through March 31, 1999, Year 2000 expenditures for

major computer systems totaled approximately ¥1.0

billion. During the fiscal year ending March 31, 2000,

JAL estimates that additional payments to external vendors

will amount to between ¥1.7 and ¥2.0 billion. These

expenditures represent only the cost of revising software

and replacing hardware for major computer systems.

Furthermore, these expenditures incorporate measures to

be taken during the fiscal year ending March 31, 2000.

Consequently, Year 2000 expenses are not expected to

have a material impact on future operating results.

JAL will continue to monitor closely the Year 2000

compliance status of companies, organizations and others

that have a bearing on its business activities, although no

airline can independently verify the assertions of such

third parties regarding their own Year 2000 readiness.

Nonetheless, JAL fully expects the Year 2000 transition

to be smooth and successful for its services.

26P A G E

C O N S O L I D A T E D B A L A N C E S H E E T SJapan Airlines Company, Ltd. and Consolidated Subsidiaries

March 31, 1999 and 1998

Thousands ofU.S. dollars

Millions of yen (Note 2)

ASSETS 1999 1998 1999

Current assets:Cash and cash equivalents ¥ 90,328 ¥ 78,226 $ 752,739Time deposits 13,920 12,660 116,003Marketable securities, at cost 139,773 103,571 1,164,777Accounts receivable:

Trade (Note 7) 153,213 159,537 1,276,778Unconsolidated subsidiaries and affiliates 20,692 27,346 172,439Allowance for doubtful accounts (2,464) (2,409) (20,538)

Flight equipment spare parts, at cost 57,413 54,436 478,442Prepaid expenses and other 110,768 121,626 923,068

Total current assets 583,645 554,995 4,863,711

Investments and advances:Unconsolidated subsidiaries and affiliates 65,332 70,731 544,433Other, at cost 115,308 160,192 960,904

Total investments and advances 180,640 230,923 1,505,337

Property and equipment (Notes 1, 3 and 6):Flight equipment 1,557,114 1,506,036 12,975,950Ground property and equipment 740,704 822,534 6,172,541

2,297,818 2,328,571 19,148,491Accumulated depreciation (1,228,975) (1,232,928) (10,241,459)

1,068,843 1,095,643 8,907,032Advances on aircraft purchases and other 48,188 77,938 401,570

Property and equipment, net 1,117,032 1,173,581 9,308,603

Long-term loans (Note 7) 20,136 19,515 167,804Deferred income taxes (Note 4) 3,753 7,485 31,282Other assets 36,066 42,126 300,551Translation adjustments 14,346 14,133 119,556

¥ 1,955,622 ¥ 2,042,761 $ 16,296,851

27P A G E



LIABILITIES AND STOCKHOLDERS’ EQUITY 1999 1998 1999

Current liabilities:Short-term bank loans ¥ 79,593 ¥ 76,284 $ 663,280Current portion of long-term debt (Note 3) 136,530 172,443 1,137,751Accounts payable:

Trade 167,938 189,462 1,399,490Construction 14,533 11,159 121,109Unconsolidated subsidiaries and affiliates 5,477 7,466 45,647

Accrued expenses 55,395 72,130 461,632Accrued income taxes (Note 4) 3,176 3,276 26,473Other 94,548 149,620 787,904

Total current liabilities 557,194 681,843 4,643,290

Long-term debt (Note 3) 1,066,862 1,064,235 8,890,522

Accrued severance indemnities (Note 5) 97,837 97,393 815,314

Minority interests 16,768 14,326 139,740

Commitments and contingent liabilities (Notes 6 and 7)

Stockholders’ equity:Common stock, ¥50 par value:

Authorized: 6,000,000,000 sharesIssued: 1,778,943,439 shares 188,323 188,323 1,569,365

Additional paid-in capital (Note 8) 31,808 161,776 265,070Deficit (Note 8) (3,167) (165,128) (26,394)

216,964 184,971 1,808,041Common stock in treasury, at cost;21,068 shares in 1999 and 20,675 shares in 1998 (6) (9) (57)

Total stockholders’ equity 216,957 184,961 1,807,983

¥1,955,622 ¥2,042,761 $16,296,851

The accompanying notes are an integral part of these statements.

28P A G E

C O N S O L I D A T E D S T A T E M E N T S O F O P E R A T I O N SJapan Airlines Company, Ltd. and Consolidated Subsidiaries




1999 1998 1997 1999

Operating revenues:Passenger:

Domestic ¥ 307,447 ¥ 321,945 ¥ 310,878 $ 2,562,063International 595,226 667,693 670,530 4,960,221

Cargo:Domestic 27,964 28,046 29,988 233,040International 145,639 158,776 147,834 1,213,659

Incidentals and other 489,816 405,098 407,901 4,081,801

1,566,094 1,581,559 1,567,133 13,050,785

Operating expenses:Flight operations 287,076 328,047 311,673 2,392,300Maintenance 83,228 83,001 86,018 693,568Passenger services 123,888 128,177 127,949 1,032,402Aircraft and traffic servicing 194,747 200,788 209,401 1,622,893Sales and advertising 183,586 212,123 222,783 1,529,887General and administrative 118,721 106,668 105,780 989,347Depreciation and amortization 95,942 91,245 100,165 799,519Cost of incidentals and other 446,047 389,879 392,143 3,717,059

1,533,237 1,539,932 1,555,915 12,776,977

Operating income 32,856 41,626 11,218 273,808

Non-operating income (expenses):Interest and dividend income 4,584 4,025 6,415 38,204Interest expense (39,160) (43,021) (45,842) (326,336)Exchange (loss) gain, net (3,298) (478) 3,217 (27,488)Aircraft purchase incentives 19,101 6,642 5,725 159,177Gain on sales of marketable securities 22 203 4,617 184Gain on sales of aircraft 15,908 1,463 221 132,569Gain on sales of ground property 6,287 12,422 25,744 52,391Special termination benefits (Note 5) (5,844) (15,462) (4,810) (48,704)Loss on disposal of fixed assets (1,269) (1,179) (3,890) (10,576)Loss on revaluation of marketable securities (2,819) – – (23,495)Loss on investments in subsidiaries and affiliates (1,032) (63,246) (1,528) (8,607)Equity in earnings of unconsolidated

subsidiaries and affiliates 6,539 2,221 1,499 54,494Other, net 4,415 (5,698) (8,990) 36,797

3,433 (102,108) (17,622) 28,610

Income (loss) before income taxes and minority interests 36,290 (60,481) (6,404) 302,418

Income taxes (Note 4):Current 4,836 5,596 5,202 40,301Deferred 3,731 33 1,840 31,099

8,568 5,630 7,043 71,401

Income (loss) before minority interests 27,722 (66,111) (13,447) 231,017Minority interests (948) 3,192 (1,031) (7,908)

Net income (loss) ¥ 26,773 ¥ (62,918) ¥ (14,478) $ 223,109


29P A G E

C O N S O L I D A T E D S T A T E M E N T S O F S T O C K H O L D E R S ’ E Q U I T YJapan Airlines Company, Ltd. and Consolidated Subsidiaries


Millions of yen

Number of Additionalshares of Common paid-in Deficit

common stock stock capital (Note 8)

Balance at March 31, 1996 1,778,943,439 ¥188,323 ¥ 161,776 ¥ (81,765)Net loss for the year ended March 31, 1997 (14,478)Bonuses to directors and statutory auditors (26)Decrease resulting from changes in equityinterest in subsidiaries and affiliates (7,227)

Balance at March 31, 1997 1,778,943,439 188,323 161,776 (103,498)Net loss for the year ended March 31, 1998 (62,918)Bonuses to directors and statutory auditors (25)Increase resulting from changes inscope of consolidation 1,313

Balance at March 31, 1998 1,778,943,439 188,323 161,776 (165,128)Net income for the year ended March 31, 1999 26,773Elimination of accumulated deficit (Note 8) (129,968) 129,968Bonuses to directors and statutory auditors (24)Increase resulting from changes inscope of consolidation 5,906

Decrease resulting from changes inscope of consolidation (662)

Balance at March 31, 1999 1,778,943,439 ¥188,323 ¥ 31,808 ¥ (3,167)

Thousands of U.S. dollars (Note 2)

AdditionalCommon paid-in Deficit

stock capital (Note 8)

Balance at March 31, 1998 $ 1,569,365 $ 1,348,138 $(1,376,072)Net income for the year ended March 31, 1999 223,109Elimination of accumulated deficit (1,083,067) 1,083,067Bonuses to directors and statutory auditors (200)Increase resulting from changes in scope of consolidation 49,219Decrease resulting from changes in scope of consolidation (5,518)

Balance at March 31, 1999 $1,569,365 $ 265,070 $ (26,394)


30P A G E

C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W SJapan Airlines Company, Ltd. and Consolidated Subsidiaries




1999 1998 1997 1999

Operating activities:Net income (loss) ¥ 26,773 ¥ (62,918) ¥ (14,478) $ 223,109Adjustments to reconcile net income (loss) to net cash

provided by operating activities:Depreciation and amortization 97,130 94,416 104,941 809,417Net provision for severance indemnities 443 (4,625) 2,031 3,698Provision for deferred income taxes 3,731 33 1,840 31,099Equity in earnings of unconsolidated subsidiaries and affiliates (6,539) (2,221) (1,499) (54,494)Loss on revaluation of marketable securities 2,819 – – 23,494Loss on revaluation of investment securities and other investments 1,273 – – 10,613Loss on investments in subsidiaries and affiliates 153 63,072 146 1,276Gain on sales, disposal and revaluation of flight equipment

spare parts, property and equipment (18,660) (9,352) (17,899) (155,506)Minority interests 948 (3,192) 1,031 7,908Foreign currency translation (gain) loss (213) 1,677 (362) (1,780)Changes in operating assets and liabilities:

Accounts receivable 13,032 774 16,359 108,607Flight equipment spare parts, prepaid expenses and other 7,250 3,422 (15,204) 60,421Accounts payable and accrued expenses (92,595) 13,356 14,448 (771,627)

Net cash provided by operating activities 35,548 94,442 91,354 296,236

Investing activities:(Increase) decrease in time deposits and marketable securities (40,278) (52,599) 27,862 (335,652)Additions to property and equipment (132,138) (142,292) (91,364) (1,101,156)Proceeds from sales of property and equipment 124,093 23,618 36,798 1,034,113Decrease (increase) in investments and advances 45,114 22,417 (22,162) 375,950Decrease (increase) in long-term loans (621) 31 929 (5,175)Decrease (increase) in other assets 3,647 (5,698) (6,109) 30,393Other 6,737 16,812 (8,684) 56,146

Net cash provided by (used in) investing activities 6,555 (137,711) (62,730) 54,630

Financing activities:Proceeds from long-term debt 182,116 279,181 119,401 1,517,637Payments of long-term debt (215,402) (245,727) (177,686) (1,795,023)Increase in short-term bank loans 3,308 1,023 4,185 27,572Dividends paid and bonuses to directors and statutory auditors (24) (25) (26) (200)

Net cash (used in) provided by financing activities (30,001) 34,452 (54,126) (250,013)

Net increase (decrease) in cash and cash equivalents 12,102 (8,817) (25,502) 100,854Cash and cash equivalents at beginning of the year 78,226 87,043 112,545 651,885

Cash and cash equivalents at end of the year ¥ 90,328 ¥ 78,226 ¥ 87,043 $ 752,739

Supplemental disclosures of cash flow information:Cash paid during the year for:

Interest ¥ 36,976 ¥ 39,348 ¥ 47,670 $ 308,140Income taxes 5,301 5,509 4,873 44,181


31P A G E

N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T SJapan Airlines Company, Ltd. and Consolidated Subsidiaries

March 31, 1999

1. Summary of Significant Accounting Policiesa. Basis of presentationJapan Airlines Company, Ltd. (the “Company”) and its consoli-dated domestic subsidiaries maintain their accounting records andprepare their financial statements in accordance with accountingprinciples and practices generally accepted in Japan, and its consoli-dated foreign subsidiaries in conformity with those of the countriesof their domicile. The accompanying consolidated financial state-ments have been compiled from the consolidated financial state-ments filed with the Minister of Finance as required by theSecurities and Exchange Law of Japan and include certain addi-tional financial information for the convenience of readers outsideJapan. Accordingly, the accompanying consolidated financialstatements are not intended to present the consolidated financialposition, results of operations and cash flows in accordance withaccounting principles and practices generally accepted in countriesand jurisdictions other than Japan.

As permitted by the Securities and Exchange Law of Japan,amounts of less than one million yen have been omitted. As aresult, the totals shown in the accompanying consolidated finan-cial statements (both in yen and U.S. dollars) do not necessarilyagree with the sum of the individual amounts.

Certain amounts previously reported have been reclassified toconform to the current year classifications.

b. Principles of consolidation and accounting for investmentsin unconsolidated subsidiaries and affiliates

The consolidated financial statements include the accounts of theCompany and all its significant subsidiaries. All significant inter-company accounts and transactions and unrealized gain or loss fromintercompany accounts and transactions have been eliminated.

Investments in certain unconsolidated subsidiaries and in sig-nificant affiliates (companies owned 20% to 50%) are accountedfor by the equity method.

The difference between the cost and the underlying net equityin the net assets at the dates of acquisition of the consolidated sub-sidiaries and companies accounted for by the equity method isamortized by the straight-line method over a period of five years.

c. Foreign currency accountsForeign currency receivables and payables are translated into yenas follows:(1) Current receivables and payables are translated at the appli-

cable year-end rates;(2) Non-current receivables and payables not hedged by forward

exchange contracts are translated at the historical rates, whichapproximate the prevailing rates at the time of the trans-actions; and

(3) Long-term debt hedged by forward exchange contracts is trans-lated at the forward rates, and the resulting translation differ-ences are allocated to income or expenses on the basis of thenumber of months in the contract period.

The accounts of the consolidated foreign subsidiaries are trans-lated into yen as follows:(1) Capital stock is translated at historical rates;(2) Retained earnings (deficit) at the beginning of the year is trans-

lated at the preceding year-end rate;(3) All other accounts are translated at the applicable year-end

rate; and

(4) The translation adjustments between the historical rates andthe year-end rate of capital stock, and between the beginningand ending rates of retained earnings (deficit) at the beginningof the year are charged to the consolidated balance sheet.

The accounts of the unconsolidated foreign subsidiaries andaffiliates accounted for by the equity method are translated intoyen as follows:(1) Capital stock is translated at historical rates;(2) Retained earnings (deficit) at the beginning of the year is trans-

lated at the preceding year-end rate;(3) Retained earnings (deficit) at the end of the year and net in-

come (loss) for the year are translated at the applicable year-endrate; and

(4) The translation adjustments between the historical rates andthe year-end rate of capital stock, and between the beginningand year-end rates of retained earnings (deficit) at the begin-ning of the year are charged to the consolidated balance sheet.

d. Property and equipmentProperty and equipment is stated at cost except as indicated in thefollowing paragraph.

In Japan, companies are permitted by tax legislation to defercertain capital gains principally arising from insurance claims bycrediting them to the cost of certain properties. Such deferred gainsat March 31, 1999 and 1998 amounted to ¥10,696 million($89,134 thousand) and ¥10,698 million, respectively.

Depreciation of property and equipment is computed as follows:

Flight equipment:Aircraft and spare engines:

Boeing 747 — principally the declining-balance(with the exception method based on their estimated of Boeing 747-400) useful livesBoeing 747-400 — the straight-line method based on

their estimated useful livesBoeing 767 — the straight-line method based on



their estimated useful livesDouglas DC-10 — principally the declining-balance

method based on their estimateduseful lives

Douglas MD-11 — the straight-line method based ontheir estimated useful lives

Spare parts contained in flight equipment:— principally the declining-balance

method based on each aircraft’s orengine’s estimated useful life

Ground property and equipment:— principally the straight-line method

Costs for maintenance, repairs and minor renewals, andimprovements are charged to income in the year incurred; majorrenewals and improvements are capitalized.

32P A G E

2. U.S. Dollar Amountsinclusion of such amounts is not intended to imply that yen havebeen or could be readily converted, realized or settled in U.S.dollars at that or any other rate.

Effective April 1, 1997, the Company revised the estimated use-ful lives of flight equipment from 15 years for international use and13 years for domestic use, to economic useful lives determined bytype of aircraft and ranging from 13 years through 22 years. Theeffect of this revision was to decrease operating expenses andincrease operating income by ¥17,381 million, and to decrease lossbefore income taxes and minority interests by ¥17,343 million forthe year ended March 31, 1998.

In general, when assets are sold or otherwise disposed of, the profitor loss, computed on the basis of the difference between the net bookvalue of the assets and the sales proceeds, is credited or charged toincome in the year of the sale or disposal, and the related cost andaccumulated depreciation are removed from the accounts.

e. Bond issuance expensesBond issuance expenses are principally capitalized and amortizedover a period of three years.

f. Accrued bonusesAt March 31, 1999, no accrual for employees’ bonuses of theCompany was provided because of a revision of the term for thepayment of bonuses to employees. The effect of this revision was todecrease operating expenses and to increase operating income, andincome before income taxes and minority interest by ¥15,351million ($127,925 thousand) for the year ended March 31, 1999.

g. Accrued severance indemnitiesAn employee whose employment is terminated is entitled, in mostcases, to a lump-sum severance payment, the amount of which isdetermined by reference to the basic rate of pay, length of serviceand the conditions under which the termination occurs. TheCompany has followed the accounting policy of providing for theliability for employees’ severance indemnities to the extent of 40%of such liability.

In addition to the lump-sum payment plan, the Company andcertain significant domestic subsidiaries have established contribu-tory funded defined benefit pension plans pursuant to the Welfare

Pension Insurance Law of Japan to substitute for their non-contributory funded pension plans, whereas most other domesticsubsidiaries have maintained non-contributory funded pensionplans. The costs of the pension plans are determined actuariallyand the amortization of prior service cost is charged to income.Prior service cost is being amortized over a period of between 10and 20 years.

h. Passenger revenuePassenger revenue is principally recognized when the transporta-tion services are rendered.

i. LeasesAs lesseeThe Company and its consolidated subsidiaries lease certainequipment under noncancelable lease agreements referred to ascapital leases. In the Company and its domestic subsidiaries,capital leases, defined as leases which do not transfer the owner-ship of the leased property to the lessee, are principally accountedfor as operating leases.

As lessorCertain of the Company’s consolidated subsidiaries lease certainequipment under noncancelable lease agreements referred to asdirect financing leases. Direct financing leases, defined as leaseswhich do not transfer the ownership of the leased property to thelessee, are principally accounted for as operating leases.

j. Appropriation of retained earnings (deficit)Under the Commercial Code of Japan, the appropriation ofretained earnings (deficit) with respect to a financial period is madeby resolution of the stockholders at a general meeting held sub-sequent to the close of the financial period and the accounts forthat period do not, therefore, reflect such appropriations.

k. Cash equivalentsThe Company defines cash equivalents as highly liquid, short-terminvestments with an original maturity of three months or less.

Amounts in U.S. dollars are included solely for the convenience ofthe reader. The rate of ¥120=U.S.$1.00, the approximateexchange rate prevailing on March 31, 1999, has been used. The

33P A G E

Under the provisions of this issue, the conversion price is subjectto adjustment in certain cases which include stock splits.

The aggregate annual maturities of long-term debt subsequentto March 31, 1999 are summarized as follows:

Millions Thousands ofYear ending March 31, of yen U.S. dollars

2000 ¥ 136,530 $ 1,137,7512001 180,765 1,506,3812002 140,834 1,173,6232003 162,482 1,354,0212004 and thereafter 582,779 4,856,495

¥1,203,392 $10,028,274

A summary of assets pledged as collateral for long-term debt atMarch 31, 1999 is as follows:

Millions Thousands ofof yen U.S. dollars

Flight equipment, net ofaccumulated depreciation ¥335,488 $2,795,734

Ground property and equipment,net of accumulated depreciation,and other 126,841 1,057,010

¥462,329 $3,852,745

The effective interest rates on certain foreign currency bonds,which resulted from hedging the bonds with cross-currency inter-est rate swaps, were lower than the long-term prime rate in Japan ateach issuance date.

3. Long-Term DebtLong-term debt at March 31, 1999 and 1998 consisted of the following:


1999 1998 1999

Bonds:Bonds in U.S. dollars, guaranteed by the Japanese government,due 1998, with interest at 10.875% at March 31, 1998 ¥ – ¥ 1,411 $ –

Bonds in U.S. dollars, due 2003, with interest at 6.625% at March 31, 1999 26,845 26,845 223,708Bonds in foreign currencies, due 1998, at rates varying accordingto LIBOR at March 31, 1998 – 3,903 –

Euro-yen bonds, due 1999 to 2003, with interest from at 4.0% to 6.9% andat rates varying according to LIBOR at March 31, 1999 126,122 138,695 1,051,020

Japanese yen bonds, due 2001 to 2018, with interest atfrom 1.25% to 3.2% at March 31, 1999 327,350 266,100 2,727,916

Convertible bonds, due 2005, with interest at 1.6% at March 31, 1999 18,664 35,678 155,533Loans with collateral, due 1999 to 2024, with interest at

from 1.125% to 6.6% at March 31, 1999 322,080 337,349 2,684,007Loans without collateral 356,193 393,554 2,968,277Other 26,137 33,142 217,809

1,203,392 1,236,679 10,028,274Less current portion (136,530) (172,443) (1,137,751)

¥1,066,862 ¥1,064,235 $ 8,890,522

Convertible bonds, unless previously redeemed, are convertible into shares of common stock of the Company at the following currentconversion price:

Conversionprice per share Conversion period

1.6% convertible bonds in yen due 2005 ¥1,751.10 February 1, 1990 – March 30, 2005

4. Income TaxesThe Company is subject to a number of taxes based on taxableincome, i.e. corporation, inhabitants’ and enterprise taxes, which,in the aggregate, resulted in statutory rates of approximately 47%in 1999 and 52% in 1998 and 1997.

Deferred income taxes are recognized only insofar as they relateto the elimination of intercompany items on consolidation.

34P A G E

5. Accrued Severance Indemnities

6. LeasesAs lesseeThe following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of leased property as ofMarch 31, 1999, and the related depreciation and interest expense for the year ended March 1999 which would have been reflected in thebalance sheet and the related statement of operations if capital lease accounting had been applied to the capital lease transactions currentlyaccounted for as operating leases:

Millions of yen Thousands of U.S. dollars

Ground GroundFlight property and Flight property and

March 31, 1999 equipment equipment Total equipment equipment Total

Acquisition costs ¥384,122 ¥26,117 ¥410,240 $3,201,021 $217,648 $3,418,669Less accumulated depreciation 158,009 15,971 173,980 1,316,743 133,093 1,449,836

Net book value ¥226,113 ¥10,146 ¥236,260 $1,884,277 $␣ ␣ 84,555 $1,968,833

Charges to income for severance indemnities including specialtermination benefits for the years ended March 31, 1999, 1998and 1997 were as follows:


1999 1998 1997 1999

¥21,800 ¥33,942 ¥20,628 $181,670

The unamortized balance of prior service cost of the pension planspursuant to the Welfare Pension Insurance Law of Japan at March31, 1998, the most recent valuation date, was ¥43,761 million.


Depreciation expense ¥32,476 $270,634

Interest expense ¥ 9,762 $ 81,350.

Lease expenses relating to capital lease transactions accountedfor as operating leases amounted to ¥39,499 million ($329,164thousand), ¥40,380 million and ¥32,523 million for the yearsended March 31, 1999, 1998 and 1997, respectively.

The present value of future rental expenses under capital leases accounted for as operating leases outstanding at March 31, 1999 and1998 was as follows:


1999 1998 1999

Within 1 year ¥ 34,280 ¥ 28,939 $ 285,673Over 1 year 234,792 193,085 1,956,603

¥269,073 ¥222,024 $2,242,277

Future rental expenses under operating leases outstanding at March 31, 1999 and 1998 were as follows:Thousands of

Millions of yen U.S. dollars

1999 1998 1999

Within 1 year ¥13,915 ¥ 8,649 $115,962Over 1 year 68,276 42,904 568,970

¥82,191 ¥51,553 $684,932

35P A G E

As lessorThe following pro forma amounts represent the acquisition costs, accumulated depreciation and net book value of lease property as ofMarch 31, 1999, and the related depreciation and interest revenue for the year ended March 1999 which would have been reflected in thebalance sheet and the related statement of operations if direct financing lease accounting had been applied to the capital lease transactionscurrently accounted for as operating leases:


Ground GroundFlight property and Flight property and

March 31, 1999 equipment equipment Total equipment equipment Total

Acquisition costs ¥348 ¥7,475 ¥7,823 $2,900 $62,295 $65,195Less accumulated depreciation 150 4,023 4,173 1,255 33,527 34,782

Net book value ¥197 ¥3,452 ¥3,649 $1,644 $28,768 $30,412


Depreciation expense ¥1,299 $10,831

Interest expense ¥ 207 $ 1,728

Lease revenues relating to direct financing lease transactions ac-counted for as operating leases amounted to ¥1,494 million($12,453 thousand), ¥1,649 million and ¥1,648 million for theyears ended March 31, 1999, 1998 and 1997, respectively.

The present value of future rental revenue under direct financing leases accounted for as operating leases outstanding at March 31,1999 and 1998 was as follows:


1999 1998 1999

Within 1 year ¥1,153 ¥1,303 $ 9,616Over 1 year 2,689 3,452 22,411

¥3,843 ¥4,756 $32,027

Future rental revenue under operating leases outstanding at March 31, 1999 and 1998 were as follows:Thousands of

Millions of yen U.S. dollars

1999 1998 1999

Within 1 year ¥211 ¥327 $1,761Over 1 year 128 382 1,071

¥339 ¥709 $2,832

7. Commitments and Contingent LiabilitiesCommitments outstanding at March 31, 1999 for purchases ofproperty and equipment amounted to ¥361,564 million($3,013,039 thousand).

The Company leases aircraft, office space, warehouses and officeequipment. These leases are customarily renewed upon expiration.

At March 31, 1999, contingent liabilities for guarantees, princi-pally for unconsolidated subsidiaries, affiliates and employees,amounted to ¥31,880 million ($265,668 thousand). In addition,at March 31, 1999, contingent liabilities for commitments such asguarantees, keep well agreements and others, principally for

subsidiaries, affiliates and employees, amounted to ¥9,296 million($77,466 thousand).

In addition, at March 31, 1999, the Company was liable underdebt assumption agreements for in-substance defeasance of certainbonds in the aggregate amount of ¥80,000 million ($666,666thousand).

The Company has sold certain receivables and loans to banks.At March 31, 1999, the outstanding balance of the receivables andloans sold was ¥67,731 million ($564,429 thousand).

36P A G E

10. Segment Information

a. Business segment informationBusiness segment information of the Company and its consolidated subsidiaries for the years ended March 31, 1999, 1998 and 1997 issummarized as follows:

Millions of yen

General corporateHotel assets and

Air Travel and resort intercompanyYear ended March 31, 1999 transportation services operations Other Total eliminations Consolidated

Operating revenues ¥1,038,482 ¥331,500 ¥ 52,178 ¥143,932 ¥1,566,094 ¥ – ¥1,566,094Intra-group sales and transfers 169,202 6,171 5,249 214,322 394,946 (394,946) –

Total 1,207,685 337,672 57,427 358,254 1,961,040 (394,946) 1,566,094Operating expenses 1,181,635 337,942 55,791 349,137 1,924,507 (391,270) 1,533,237

Operating income (loss) ¥ 26,049 ¥ (270) ¥ 1,635 ¥ 9,117 ¥ 36,532 ¥ (3,675) ¥ 32,856

Depreciation ¥ 62,789 ¥ 893 ¥ 5,843 ¥ 17,479 ¥ 87,005 ¥ (929) ¥ 86,075

Capital expenditures ¥ 70,699 ¥ 64 ¥ 1,719 ¥ 26,741 ¥ 99,224 ¥ (4,556) ¥ 94,668

Identifiable assets ¥1,401,607 ¥ 63,750 ¥122,133 ¥542,974 ¥2,130,467 ¥(174,844) ¥1,955,622

8. Elimination of Accumulated Deficit

9. Amounts Per Share

The Company’s non-consolidated accumulated deficit at March31, 1998 consisted of the following:

Millions of yen

Reserve for special depreciation ¥ 8,665Special reserve 5,808Accumulated deficit brought forward (151,772)

¥(137,298)

A proposal for disposition of the Company’s non-consolidatedaccumulated deficit to be carried forward of ¥151,772 million atMarch 31, 1998 was approved at a stockholders’ meeting held onJune 26, 1998. A portion of the deficit in the amount of ¥165,128million at March 31, 1998 was offset against a reversal of addi-tional paid-in capital of ¥129,968 million. As a result, at June 26,1998, the balance of consolidated accumulated deficit to be carriedforward amounted to ¥35,160 million.

Net income (loss) per share and diluted net income per share havebeen computed based on the weighted average number of shares ofcommon stock outstanding during each year.

Yen U.S. dollars

Year ended March 31, 1999 1998 1997 1999

Net income (loss) ¥15.05 ¥(35.37) ¥(8.14) $0.125Diluted net income ¥15.05 – – $0.125

Net assets per share have been computed based on the numberof shares of common stock outstanding at each balance sheet date.

Yen U.S. dollars

March 31, 1999 1998 1999

Net assets ¥121.96 ¥103.97 $1.016

The Company and its consolidated subsidiaries conduct worldwideoperations in air transportation, hotel and resort operations, travelservices, card and lease operations, trading and other airline-relatedbusiness. This segmentation has been made for internal manage-ment purposes. Businesses other than the air transportation

business, hotel and resort operations, and travel services are insig-nificant to the consolidated results of operations of the Companyand its consolidated subsidiaries and, accordingly, have beenincluded in “Other.”

37P A G E

Thousands of U.S. dollars



Operating revenues $ 8,654,022 $2,762,507 $ 434,819 $1,199,435 $13,050,785 $ – $13,050,785Intra-group sales and transfers 1,410,024 51,426 43,745 1,786,022 3,291,218 (3,291,218) –

Total 10,064,046 2,813,934 478,564 2,985,458 16,342,004 (3,291,218) 13,050,785Operating expenses 9,846,964 2,816,187 464,931 2,909,481 16,037,565 (3,260,587) 12,776,977

Operating income (loss) $ 217,082 $ (2,252) $ 13,632 $ 75,976 $ 304,439 $ (30,631) $ 273,808

Depreciation $ 523,242 $ 7,445 $ 48,696 $ 145,662 $ 725,045 $ (7,748) $ 717,297

Capital expenditures $ 589,164 $ 535 $ 14,331 $ 222,842 $ 826,873 $ (37,966) $ 788,907

Identifiable assets $11,680,064 $ 531,258 $1,017,781 $4,524,788 $17,753,892 $(1,457,040) $16,296,851

As described in Note 1-f, the Company revised the term for the payment of bonuses to employees. The effect of this revision was todecrease operating expenses and increase operating income in the air transport segment by ¥15,351 million ($127,925 thousand) for theyear ended March 31, 1999.

Millions of yen





Operating income (loss) ¥ 33,800 ¥ (1,161) ¥ 1,969 ¥ 9,491 ¥ 44,099 ¥ (3,916) ¥ 40,182

Depreciation ¥ 60,763 ¥ 319 ¥ 7,701 ¥ 14,875 ¥ 83,660 ¥ (933) ¥ 82,726

Capital expenditures ¥ 118,135 ¥ 209 ¥ 2,950 ¥ 21,719 ¥ 143,015 ¥ (154) ¥ 142,861


As described in Note 1-d, the Company revised the estimated useful lives of flight equipment. The effect of this revision was todecrease operating expenses and increase operating income in the air transportation segment by ¥17,381 million for the year endedMarch 31, 1998.

Millions of yen





Operating income (loss) ¥ 6,349 ¥ (871) ¥ 2,299 ¥ 5,310 ¥ 13,087 ¥ (3,255) ¥ 9,832

Depreciation ¥ 71,563 ¥ 240 ¥ 7,254 ¥ 14,245 ¥ 93,304 ¥ (840) ¥ 92,464

Capital expenditures ¥ 63,710 ¥ 835 ¥ 4,375 ¥ 24,951 ¥ 93,873 ¥ (1,024) ¥ 92,849


Operating expenses for the years ended March 31, 1998 and 1997 includes enterprise taxes, which have been reclassified to incometaxes in the accompanying statements of operations, of ¥1,444 million and ¥1,386 million, respectively.

38P A G E

b. Operating revenues from foreign operationsOperating revenues from foreign operations, which include international passenger and cargo services of the Company and two domesticsubsidiaries, export sales of domestic subsidiaries, and sales of subsidiaries outside Japan, for the year ended March 31, 1999 and 1998were as follows:

Millions of yen

Asia and North andYear ended March 31, 1999 Oceania South America Europe Total

Operating revenues from foreign operations ¥340,878 ¥326,148 ¥186,758 ¥ 853,785Consolidated operating revenues ¥1,566,094Percentage of consolidated operating revenues 21.8% 20.8% 11.9% 54.5%



Operating revenues from foreign operations $2,840,658 $2,717,905 $1,556,318 $ 7,114,881Consolidated operating revenues $13,050,785Percentage of consolidated operating revenues 21.8% 20.8% 11.9% 54.5%

Millions of yen


Operating revenues from foreign operations ¥365,189 ¥331,061 ¥186,070 ¥ 882,321Consolidated operating revenues ¥1,581,559Percentage of consolidated operating revenues 23.1% 20.9% 11.8% 55.8%

Operating revenues from foreign operations accounted for 56.4% of the total operating revenues for the year ended March 31, 1997.

c. Geographic informationFor the years ended March 31, 1999, 1998 and 1997, operating revenues from operations in Japan represented more than 90% ofconsolidated operating revenues. As a result, geographic information is not required to be disclosed in accordance with accountingprinciples generally accepted in Japan.

39P A G E

R E P O R T O F C E R T I F I E D P U B L I C A C C O U N T A N T SJapan Airlines Company, Ltd. and Consolidated Subsidiaries

To the Board of Directors of

Japan Airlines Company, Ltd.

We have examined the consolidated balance sheets of Japan Airlines Company, Ltd. and its

consolidated subsidiaries as of March 31, 1999 and 1998, and the related consolidated statements

of operations, stockholders’ equity, and cash flows for each of the three years in the period ended

March 31, 1999, all expressed in yen. Our examinations were made in accordance with auditing

standards, procedures and practices generally accepted and applied in Japan and, accordingly,

included such tests of the accounting records and such other auditing procedures as we considered

necessary in the circumstances.

In our opinion, the accompanying consolidated financial statements, expressed in yen, present

fairly the financial position of Japan Airlines Company, Ltd. and its consolidated subsidiaries at

March 31, 1999 and 1998, and the results of their operations and their cash flows for each of the

three years in the period ended March 31, 1998 in conformity with accounting principles and

practices generally accepted in Japan applied on a consistent basis.

The U.S.␣ dollar amounts in the accompanying consolidated financial statements with respect to

the year ended March 31, 1999 are presented solely for convenience. Our examination also

included the translation of yen amounts into U.S.␣ dollar amounts and, in our opinion, such trans-

lation has been made on the basis described in Note 2 to the consolidated financial statements.

June 29, 1999

40P A G E

N O N - C O N S O L I D A T E D B A L A N C E S H E E T SJapan Airlines Company, Ltd.

March 31, 1999 and 1998



ASSETS 1999 1998 1999

Current assets:Cash and cash equivalents ¥ 30,513 ¥ 28,662 $ 254,276Time deposits 851 19,930 7,096Marketable securities, at cost (Note 3) 123,182 86,243 1,026,520Accounts receivable (Note 11):

Trade (Note 8) 76,963 85,176 641,363Subsidiaries and affiliates 41,022 42,906 341,853Allowance for doubtful accounts (595) (589) (4,963)

Flight equipment spare parts, at cost 54,259 51,233 452,164Prepaid expenses and other 59,869 71,818 498,909

Total current assets 386,066 385,382 3,217,221

Investments and advances:Subsidiaries and affiliates 154,063 122,253 1,283,862Other, at cost 37,940 29,626 316,173

Total investments and advances 192,004 151,880 1,600,036

Property and equipment (Notes 1, 4 and 8):Flight equipment 1,302,095 1,319,460 10,850,794Ground property and equipment 458,501 455,304 3,820,846

1,760,596 1,774,765 14,671,640Accumulated depreciation (943,315) (954,428) (7,860,964)

817,281 820,336 6,810,676Advances on aircraft purchases and other (Note 11) 44,732 72,076 372,773

Property and equipment, net 862,014 892,413 7,183,450

Long-term loans (Note 8) 13,060 14,790 108,833Other assets 22,439 27,867 186,995

¥1,475,584 ¥1,472,333 $12,296,536

41P A G E



LIABILITIES AND STOCKHOLDERS’ EQUITY 1999 1998 1999

Current liabilities:Current portion of long-term debt (Notes 4 and 11) ¥ 74,884 ¥ 75,711 $ 624,037Accounts payable (Note 11):

Trade 109,613 131,820 913,448Construction 8,486 9,150 70,721Subsidiaries and affiliates 44,276 45,303 368,971

Accrued expenses 33,065 53,529 275,544Accrued income taxes 250 304 2,088Other 76,906 78,947 640,889

Total current liabilities 347,484 394,767 2,895,702

Long-term debt (Notes 4 and 11) 779,299 749,160 6,494,160

Accrued severance indemnities (Note 5) 82,676 83,279 688,972

Reserve for loss on investments in subsidiaries and affiliates 19,709 24,994 164,241

Commitments and contingent liabilities (Notes 7, 8 and 11)

Stockholders’ equity:Common stock, ¥50 par value:

Authorized:␣ 6,000,000,000 sharesIssued:␣ 1,778,943,439 shares 188,323 188,323 1,569,365

Additional paid-in capital 31,808 161,776 265,070Legal reserve (Notes 6 and 9) – 7,330 –Retained earnings (deficit) (Note 9) 26,282 (137,298) 219,023

Total stockholders’ equity 246,415 220,132 2,053,459

¥1,475,584 ¥1,472,333 $12,296,533


42P A G E

N O N - C O N S O L I D A T E D S T A T E M E N T S O F O P E R A T I O N SJapan Airlines Company, Ltd.




1999 1998 1997 1999

Operating revenues:Passenger:

Domestic ¥ 279,059 ¥ 293,364 ¥ 287,948 $2,325,497International 581,623 624,469 625,961 4,846,859

Cargo:Domestic 26,768 28,046 28,808 223,067International 142,395 150,214 139,602 1,186,626

Incidentals and other 127,807 123,611 113,012 1,065,062

1,157,653 1,219,706 1,195,334 9,647,113

Operating expenses (Note 7):Flight operations 317,436 349,068 331,663 2,645,305Maintenance 96,330 94,486 96,664 802,755Passenger services 137,867 143,456 145,157 1,148,895Aircraft and traffic servicing 234,132 238,547 243,684 1,951,106Sales and advertising 177,540 191,953 192,293 1,479,505General and administrative 34,425 38,151 39,052 286,875Depreciation and amortization 66,664 62,672 75,172 555,533Cost of incidentals and other 68,436 70,115 66,846 570,302

1,132,833 1,188,451 1,190,535 9,440,280

Operating income 24,820 31,254 4,798 206,833

Non-operating income (expenses):Interest and dividend income 8,145 4,739 6,962 67,880Interest expense (32,687) (35,115) (36,302) (272,396)Exchange (loss) gain, net (2,596) (232) 2,632 (21,640)Aircraft purchase incentives 19,101 6,642 5,725 159,177Gain on sales of marketable securities 3,766 188 4,538 31,384Gain on sales of aircraft 15,366 3,259 34 128,054Gain on sales of ground property 2,650 11,696 17,063 22,088Special termination benefits (Note 5) (5,414) (15,203) (4,810) (45,118)Loss on disposal of fixed assets (834) (858) (6,695) (6,957)Loss on liquidation of operations of

subsidiaries and affiliates (167) (366) (1,108) (1,393)Loss on revaluation of marketable securities (2,819) – – (23,495)Loss on revaluation of investments

in subsidiaries and affiliates – (72,053) – –Provision for reserve for loss on investments

in subsidiaries and affiliates (2,529) (24,994) – (21,081)Other, net 373 (2,793) (1,536) 3,116

2,353 (125,091) (13,496) 19,615

Income (loss) before income taxes 27,173 (93,836) (8,697) 226,449

Income taxes 891 353 541 7,426

Net income (loss) ¥ 26,282 ¥ (94,189) ¥ (9,238) $ 219,023


43P A G E

N O N - C O N S O L I D A T E D S T A T E M E N T S O F S T O C K H O L D E R S ’ E Q U I T YJapan Airlines Company, Ltd.


Millions of yen

RetainedNumber of Additional Legal earnings

shares of Common paid-in reserve (deficit)common stock stock capital (Note 6) (Note 9)

Balance at March 31, 1996 1,778,943,439 ¥188,323 ¥ 161,776 ¥ 7,330 ¥ (33,869)Net loss for the year ended March 31, 1997 (9,238)

Balance at March 31, 1997 1,778,943,439 188,323 161,776 7,330 (43,108)Net loss for the year ended March 31, 1998 (94,189)

Balance at March 31, 1998 1,778,943,439 188,323 161,776 7,330 (137,298)Net income for the year ended March 31, 1999 26,282Elimination of accumulated deficit (129,968) (7,330) 137,298

Balance at March 31, 1999 1,778,943,439 ¥188,323 ¥ 31,808 ¥ – ¥ 26,282

Thousands of U.S. dollars (Note 2)

RetainedAdditional Legal earnings

Common paid-in reserve (deficit)stock capital (Note 6) (Note 9)

Balance at March 31, 1998 $1,569,365 $ 1,348,138 $ 61,083 $(1,144,151)Net income for the year ended March 31, 1999 219,023Elimination of accumulated deficit (1,083,068) (61,083) 1,144,151

Balance at March 31, 1999 $1,569,365 $ 265,070 $ – $ 219,023


44P A G E

N O N - C O N S O L I D A T E D S T A T E M E N T S O F C A S H F L O W SJapan Airlines Company, Ltd.




1999 1998 1997 1999

Operating activities:Net income (loss) ¥ 26,282 ¥ (94,189) ¥ (9,238) $ 219,023Adjustments to reconcile net income (loss) tonet cash provided by operating activities:

Depreciation and amortization 66,663 66,171 78,707 555,533Net provision for severance indemnities (602) (5,049) 1,688 (5,023)Loss on revaluation of marketable securities 2,819 – – 23,494Loss on liquidation of operations of subsidiaries and affiliates – 191 146 –Loss on revaluation of investments in subsidiaries and affiliates – 72,053 – –Provision for reserve for loss on investments

in subsidiaries and affiliates 2,529 24,994 – 21,081Reversal of reserve for loss on investments

in subsidiaries and affiliates (7,814) – – (65,123)Gain on sales, disposal and revaluation of flight equipment

spare parts, property and equipment (14,514) (10,700) (10,092) (120,954)Changes in operating assets and liabilities:

Accounts receivable 10,103 2,667 6,664 84,199Flight equipment spare parts, prepaid expenses and other 10,359 (1,890) (13,380) 86,332Accounts payable and accrued expenses (46,967) 4,812 20,220 (391,393)

Net cash provided by operating activities 48,860 59,060 74,715 407,169

Investing activities:Increase in time deposits and marketable securities (27,771) (48,688) (7,486) (231,430)Additions to property and equipment (65,012) (83,661) (56,056) (541,773)Proceeds from sales of property and equipment 52,520 29,912 22,883 437,671Increase in investments and advances (33,032) (3,958) (5,335) (275,266)Decrease (increase) in long-term loans 1,730 1,094 (248) 14,416Increase in other assets (6,328) (6,838) (8,850) (52,737)Other 1,572 (3,624) (926) 13,100

Net cash used in investing activities (76,321) (115,763) (56,018) (636,014)

Financing activities:Proceeds from long-term debt 120,471 194,331 67,834 1,003,929Payments of long-term debt (91,159) (143,966) (123,957) (759,665)

Net cash provided by (used in) financing activities 29,311 50,365 (56,123) 244,263

Net increase (decrease) in cash and cash equivalents 1,850 (6,338) (37,426) 15,418Cash and cash equivalents at beginning of the year 28,662 35,000 72,426 238,857

Cash and cash equivalents at end of the year ¥ 30,513 ¥ 28,662 ¥ 35,000 $ 254,276

Supplemental disclosures of cash flow information:Cash paid during the year for:Interest ¥ 30,375 ¥ 31,381 ¥ 34,731 $ 253,131Income taxes 53 626 494 441


45P A G E

N O T E S T O N O N - C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T SJapan Airlines Company, Ltd.

March 31, 1999

1. Summary of Significant Accounting Policies

2. U.S. Dollar AmountsThe same method of translating yen amounts into U.S. dollar amounts as that described in Note 2 to the consolidated financialstatements has been followed.

4. Long-Term DebtLong-term debt at March 31, 1999 and 1998 comprised the following:


1999 1998 1999

Bonds:Bonds in foreign currencies, guaranteed by the Japanese government,due 1998, with interest at 10.875% at March 31, 1998 ¥ – ¥ 1,411 $ –

Bonds in U.S. dollars, due 2003, with interest at 6.625% at March 31, 1999 26,845 26,845 223,708Euro-yen bonds, due 1999 to 2003, with interest at from 4.0% to 6.9% andat rates varying according to LIBOR at March 31, 1999 120,000 130,000 1,000,000

Japanese yen bonds, due 2001 to 2018, with interest atfrom 1.9% to 3.2% at March 31, 1999 322,000 267,000 2,683,333

Convertible bonds, due 2005, with interest at 1.6% at March 31, 1999 18,664 35,678 155,533Loans with collateral, due 1999 to 2013, with interest at

from 2.70% to 6.6% at March 31, 1999 233,915 248,143 1,949,29Loans without collateral 107,201 86,657 893,342Other 25,558 29,136 212,983

854,183 824,871 7,118,197Less current portion (74,884) (75,711) (624,037)

¥779,299 ¥749,160 $6,494,160

See Note 3 to the consolidated financial statements with respect to convertible bonds.

The accompanying non-consolidated financial statements areprepared on the basis of the same accounting policies as thosediscussed in Note 1 to the consolidated financial statements exceptfor the following policies:

a. Basis of presentationThe Company maintains its accounting records and prepares itsfinancial statements in accordance with accounting principles andpractices generally accepted in Japan. The accompanying non-consolidated financial statements have been compiled from thenon-consolidated financial statements filed with the Minister ofFinance as required by the Securities and Exchange Law of Japanand include certain additional financial information for the conve-nience of readers outside Japan. Accordingly, the accompanyingnon-consolidated financial statements are not intended to presentthe non-consolidated financial position, results of operations andcash flows in accordance with accounting principles and practices

generally accepted in countries and jurisdictions other than Japan.Certain amounts previously reported have been reclassified to

conform to the current year classifications.

b. Investments in subsidiaries and affiliatesInvestments in subsidiaries and affiliates (companies owned 20%to 50%) are stated at cost.

c. Reserve for loss on investments in subsidiaries and affiliatesThe reserve for loss on investments in subsidiaries and affiliates isprovided for the contingent losses which may be incurred upon thetermination of business at certain subsidiaries and affiliates.

d. LeasesThe Company leases certain equipment under noncancelable leaseagreements referred to as capital leases. Capital leases, defined asleases which do not transfer the ownership of the leased property tothe Company, are accounted for as operating leases.

3. Marketable SecuritiesMarketable securities, which are stated at cost based on the moving average method at March 31, 1999 and 1998 consisted of the following:


1999 1998 1999

Book Market Unrealized Book Market Unrealized Book Market Unrealizedvalue value gain (loss) value value gain (loss) value value gain (loss)

Marketable securities:Stocks ¥ 34,628 ¥40,700 ¥6,071 ¥31,929 ¥33,435 ¥1,506 $ 288,573 $339,172 $50,599Bonds 5,000 4,910 (89) 5,000 4,987 (12) 41,666 40,919 (747)

39,628 ¥45,611 ¥5,982 36,929 ¥38,423 ¥1,494 330,240 $380,092 $49,851

Other securities 83,553 49,313 696,280

¥123,182 ¥86,243 $1,026,520

Other securities represent those whose market value is not required to be disclosed.

46P A G E

7. Leases

The aggregate annual maturities of long-term debt subsequentto March 31, 1999 are summarized as follows:


2000 ¥ 74,884 $ 624,0372001 97,289 810,7412002 102,422 853,5162003 114,781 956,5082004 and thereafter 464,807 3,873,394

¥854,183 $7,118,197

A summary of assets pledged as collateral for long-term debt atMarch 31, 1999 is as follows:

Millions Thousands ofof yen U.S. dollars

Flight equipment, net ofaccumulated depreciation ¥324,072 $2,700,600

Ground property and equipment,net of accumulated depreciation 24,285 202,381

¥348,357 $2,902,981

See Note 3 to the consolidated financial statements with respectto the effective interest rates on certain foreign currency bonds,which resulted from hedging the bonds with cross-currency inter-est rate swaps.

5. Accrued Severance Indemnities

6. Legal Reserve

Charges to income for severance indemnities including specialtermination benefits for the years ended March 31, 1999, 1998and 1997 were as follows:


1999 1998 1997 1999

¥17,586 ¥28,556 ¥17,005 $146,557

The unamortized balance of prior service cost of the pensionplan at March 31, 1998, the most recent valuation date, was¥41,718 million.

In accordance with the provisions of the Commercial Code ofJapan, the Company has provided a legal reserve by appropriatingretained earnings. The legal reserve may be used to reduce or elimi-

nate a deficit or may be transferred to stated capital through suit-able stockholders’ or directors’ action but is not available for thepayment of dividends.

The following pro forma amounts represent the acquisition costs,accumulated depreciation and net book value of leased property asof March 31, 1999 and 1998, and the related depreciation expenseand interest expense for the years ended March 31, 1999 and1998, respectively, which would have been reflected in the balancesheets and the related statements of operations if capital leaseaccounting had been applied to the capital lease transactionscurrently accounted for as operating leases:

Millions of yen

GroundFlight property and

March 31, 1999 equipment equipment Total

Acquisition costs ¥450,726 ¥33,722 ¥484,448Less accumulateddepreciation 176,743 20,685 197,428

Net book value ¥273,982 ¥13,037 ¥287,019




Acquisition costs $3,756,050 $281,022 $4,037,073Less accumulateddepreciation 1,472,862 172,378 1,645,241

Net book value $2,283,188 $108,643 $2,391,831

Millions of yen



Acquisition costs ¥422,462 ¥38,724 ¥461,186Less accumulateddepreciation 205,504 19,801 225,305

Net book value ¥216,957 ¥18,923 ¥235,880


Year ended March 31, 1999 1998 1999

Depreciation expense ¥32,204 ¥38,754 $318,370Interest expense ¥11,992 ¥13,102 $ 99,936

Lease expenses relating to capital lease transactions accountedfor as operating leases amounted to ¥46,557 million ($387,976thousand), ¥46,357 million and ¥43,838 million for the yearsended March 31, 1999, 1998 and 1997, respectively.

47P A G E

The present value of future rental expenses under capital leasesaccounted for as operating leases outstanding at March 31, 1999and 1998 was as follows:


1999 1998 1999

Within 1 year ¥ 39,795 ¥ 33,423 $ 331,633Over 1 year 285,265 236,846 2,377,211

¥325,061 ¥270,269 $2,708,844

Future rental expenses under operating leases outstanding atMarch 31, 1999 and 1998 were as follows:


1999 1998 1999

Within 1 year ¥13,178 ¥ 9,855 $109,820Over 1 year 54,735 38,431 456,129

¥67,913 ¥48,287 $565,949

8. Commitments and Contingent Liabilities

9. Elimination of Accumulated Deficit

10. Amounts Per Share

11. Derivatives and Hedging Activities

Commitments outstanding at March 31, 1999 for purchases ofproperty and equipment amounted to ¥348,852 million($2,907,100 thousand).

See Note 7 to the consolidated financial statements with respectto contingent liabilities under debt assumption agreements.

At March 31, 1999, contingent liabilities for guarantees, princi-pally for subsidiaries, affiliates and employees, amounted to¥22,125 million ($184,382 thousand). In addition, at March 31,

1999, contingent liabilities for commitments such as guarantees,keep well agreements and others, principally for subsidiaries,affiliates and employees, amounted to ¥64,294 million ($535,783thousand).

The Company has sold certain receivables and loans to banks.At March 31, 1999, the outstanding balance of the receivables andloans sold amounted to ¥67,731 million ($564,429 thousand).

The Company’s accumulated deficit at March 31, 1998 consistedof the following:

Millions of yen

Reserve for special depreciation ¥ 8,665Special reserve 5,808Accumulated deficit brought forward (151,772)

¥(137,298)

A proposal for disposition of accumulated deficit was approvedat stockholders’ meeting held on June 26, 1998. The deficit of¥151,772 million at March 31, 1998 was offset against a reversal ofthe reserve for special depreciation of ¥8,665 million, the specialreserve of ¥5,808 million, the legal reserve of ¥7,330 million and areversal of additional paid-in capital of ¥129,968 million. As aresult, at June 26, 1998, the balance of accumulated deficit to becarried forward was zero.

The Company has utilized forward exchange and options contractsto hedge certain foreign currency transactions related to foreignpurchase commitments, principally of flight equipment, liquida-tion of certain foreign operations and foreign accounts receivableand payable on a consistent basis. The Company has also utilizedinterest-rate and currency swap agreements and foreign exchangecontracts to minimize the impact of foreign exchange and interest-rate movements related to its outstanding debt on the Company’soperating results. The Company has also entered into a variety ofswaps and options in its management of risk exposure related tothe commodity prices of fuel.

The purpose of the Company’s hedging activities in the form offorward exchange contracts, currency options and commodity de-rivatives is to protect the Company from the related market risks.In addition, the purpose of interest-rate and currency swap agree-ments is effectively to modify the characteristics of the interest andunderlying principal of its outstanding debt.

The Company is exposed to certain market risks arising from itsforward exchange contracts, swap agreements and written currencyoptions. The Company is also exposed to the risk of credit loss inthe event of non-performance by the counterparties to the cur-rency, interest and commodity derivatives; however, the Companydoes not anticipate nonperformance by any of these counterpartiesall of whom are financial institutions with high bond ratings.

Amounts per share have been computed by the same method asthat described in Note 9 to the consolidated financial statementsand are summarized as follows:

Yen U.S. dollars

Year ended March 31, 1999 1998 1997 1999

Net income (loss) ¥14.77 ¥(52.95) ¥(5.19) $0.123Diluted net income ¥14.77 – – $0.123

Yen U.S. dollars

March 31, 1999 1998 1999

Net assets ¥138.52 ¥123.74 $1.154

48P A G E

At March 31, 1999 and 1998, the forward exchange contracts outstanding were as follows:Millions of yen

1999 1998

Notional Market Unrealized Notional Market Unrealizedamount value gain amount value gain

U.S. dollar forward exchange contracts ¥13,530 ¥13,586 ¥56 ¥6,907 ¥7,520 ¥612

The above amounts exclude contracts entered into in order to hedge receivables and payables denominated in foreign currencies whichhave been translated and reflected at the corresponding contracted rates in the accompanying balance sheets at March 31, 1999 and 1998.

At March 31, 1999 and 1998, the currency option agreements outstanding were as follows:


1999 1998 1999

Notional Carrying Market Unrealized Notional Carrying Market Unrealized Notional Carrying Market Unrealizedamounts amounts value gain amounts amounts value gain (loss) amounts amounts value gain

Writtencurrencyoptions:

Calls ¥ – ¥ – ¥ – ¥ – ¥ – ¥ – ¥ – ¥ – $ – $ – $ – $ –Puts 5,009 189 77 111 14,988 517 77 439 41,741 1,575 648 926

¥5,009 ¥189 ¥77 ¥111 ¥14,988 ¥517 ¥77 ¥439 $41,741 $1,575 $648 $926

Purchasedcurrencyoptions:

Calls ¥5,214 ¥189 ¥303 ¥114 ¥15,572 ¥371 ¥917 ¥ 545 $43,450 $1,575 $2,526 $951Puts – – – – 4,428 145 10 (134) – – – –

¥5,214 ¥189 ¥303 ¥114 ¥20,000 ¥517 ¥927 ¥ 411 $43,450 $1,575 $2,526 $951

At March 31, 1999 and 1998, interest rates were effectively converted on the following notional principal amounts:


1999 1998 1999

Notional Unrealized Notional Unrealized Notional Unrealizedamounts gain (loss) amounts gain (loss) amounts gain (loss)

Interest-rate swap agreements:Fixed-rate into variable-rate obligations ¥20,000 ¥ 1,483 ¥20,000 ¥␣ 1,880 $166,666 $ 12,359

Variable-rate into fixed-rate obligations ¥60,000 ¥(6,994) ¥60,000 ¥(5,443) $500,000 $(58,289)

The above amounts exclude swap agreements entered into in order to hedge the principal amounts of outstanding debt and the relatedinterest denominated in foreign currencies, which have been translated and reflected at the corresponding swap rates in the accompanyingbalance sheets at March 31, 1999 and 1998.

At March 31, 1999 and 1998, the carrying amounts and notional amounts of fuel price commodity derivatives were as follows:


1999 1998 1999

Notional Carrying Unrealized Notional Carrying Unrealized Notional Carrying Unrealizedamounts amounts loss amounts amounts loss amounts amounts loss

Fuel price swaps ¥2,653 ¥ – ¥338 ¥13,408 ¥ – ¥(3,113) $22,113 $ – $2,821

Fuel price protection arrangements:Cap ¥8,124 ¥370 ¥636 ¥ – ¥ – ¥ – $67,700 $3,089 $5,303Collar – – – 3,424 – (224) – – –

¥8,124 ¥370 ¥636 ¥ 3,424 ¥ – ¥ (224) $67,700 $3,089 $5,303

49P A G E

R E P O R T O F C E R T I F I E D P U B L I C A C C O U N T A N T SJapan Airlines Company, Ltd.

To the Board of Directors of

Japan Airlines Company, Ltd.

We have examined the non-consolidated balance sheets of Japan Airlines Company, Ltd. as of

March 31, 1999 and 1998, and the related non-consolidated statements of operations, stock-

holders’ equity, and cash flows for each of the three years in the period ended March 31, 1999,

all expressed in yen. Our examinations were made in accordance with auditing standards, proce-

dures and practices generally accepted and applied in Japan and, accordingly, included such

tests of the accounting records and such other auditing procedures as we considered necessary in

the circumstances.

In our opinion, the accompanying non-consolidated financial statements, expressed in yen,

present fairly the financial position of Japan Airlines Company, Ltd. at March 31, 1999 and 1998,

and the results of its operations and its cash flows for each of the three years in the period ended

March 31, 1999 in conformity with accounting principles and practices generally accepted in

Japan applied on a consistent basis.

The U.S. dollar amounts in the accompanying non-consolidated financial statements with

respect to the year ended March 31, 1999 are presented solely for convenience. Our examina-

tion also included the translation of yen amounts into U.S. dollar amounts and, in our opinion,

such translation has been made on the basis described in Note 2 to the non-consolidated

financial statements.

June 29, 1999

50P A G E

C O N S O L I D A T E D S U B S I D I A R I E S

JAL’sDate of Equity

Company Name Establishment Paid-in Capital Ownership Principal Business

J Air Co., Ltd. August 8, 1996 ¥200 million 100.0% Air transport• JAL Express Co., Ltd. April 1, 1997 ¥5,800 million 100.0 Air transport

Japan Air Charter Co., Ltd. October 5, 1990 ¥3,000 million 82.4* Air transportJapan Asia Airways Co., Ltd. August 8, 1975 ¥4,310 million 90.5 Air transportJapan Trans Ocean Air Co., Ltd. June 20, 1967 ¥4,537 million 51.1* Air transportabc Sky-Partners Inc. December 15, 1977 ¥100 million 51.0 Passenger support servicesJAL Kansai Aircargo System Co., Ltd. December 10, 1975 ¥123 million 53.4 Cargo servicesJAL Logistics Inc. March 28, 1970 ¥144 million 100.0* Cargo servicesJALTOS Co., Ltd. October 14, 1982 ¥50 million 80.0* Cargo servicesJupiter Air Limited May 17, 1983 HK$1 million 80.0* Cargo servicesAirport Engineering & Service Co., Ltd. September 11, 1958 ¥315 million 67.5* Maintenance of special-purpose vehicles

and equipmentJAL Aero Maintenance Co., Ltd. April 1, 1983 ¥20 million 75.0* Aircraft maintenanceJAL Avionics Co., Ltd. July 1, 1988 ¥40 million 90.0* Aircraft maintenanceJAL Component Technology Co., Ltd. June 1, 1990 ¥50 million 100.0 Aircraft maintenanceJAL Engine Technologies Co., Ltd. October 1, 1988 ¥350 million 100.0 Aircraft servicesJAL Maintenance Service Co., Ltd. February 10, 1982 ¥10 million 100.0* Aircraft maintenanceJapan Turbine Technologies Co., Ltd. April 1, 1988 ¥400 million 51.0 Aircraft maintenanceNihon Service Co., Ltd. November 11, 1969 ¥12 million 57.5* Ground support servicesNikko Aviation Maintenance Co., Ltd. April 1, 1988 ¥40 million 100.0* Aircraft maintenanceHiroshima Catering Co., Ltd. November 30, 1992 ¥100 million 55.0* In-flight catering servicesInternational Catering Ltd. October 14, 1982 GBP4 million 100.0 In-flight catering servicesInternational In-Flight Catering Co., Ltd. July 20, 1971 US$2.2 million 56.7 In-flight catering servicesJAL Royal Catering Co., Ltd. January 28, 1992 ¥2,000 million 51.0 In-flight catering servicesNikko In-Flight Catering Co., Ltd. November 15, 1984 US$2.4 million 83.3 In-flight catering servicesOkinawa Catering Service Co., Ltd. April 5, 1975 ¥25 million 60.0* In-flight catering servicesJapan Fuel Trading Co., Ltd. November 16, 1988 ¥25 million 100.0 Sales of aviation fuelOkinawa Fueling Facilities Co., Ltd. November 1, 1974 ¥100 million 60.0* Sales of aviation fuelPacific Fuel Trading Corporation November 1, 1982 US$1 million 100.0* Sales of aviation fuelAirport Ground Service Co., Ltd. March 1, 1957 ¥480 million 95.5* Ground support servicesAvix Nagasaki Co., Ltd. December 23, 1987 ¥50 million 65.0* Ground support servicesFukushima International Service Co., Ltd. September 21, 1992 ¥30 million 80.0* Ground support servicesHokkaido Passenger Service Co., Ltd. December 24, 1987 ¥30 million 55.0 Ground support services

• JAL Frontier Co., Ltd. February 2, 1998 ¥50 million 100.0 Ground support services• JAL Hawaii, Incorporated July 1, 1998 US$100,000 100.0 Ground support services• JAL Passenger Services America, Inc. January 26, 1996 US$205,000 100.0* Ground support services

JAL PLAZA Co., Ltd. December 1, 1988 ¥50 million 100.0* Travel services and retail salesJAL PLUS Co., Ltd. November 16, 1988 ¥50 million 100.0 Ground support servicesJAL Sky Hakodate Co., Ltd. May 9, 1989 ¥50 million 72.0* Ground support servicesJAL Sky Osaka Service Co., Ltd. January 26, 1988 ¥30 million 51.0 Ground support servicesJAL Sky Service Co., Ltd. September 13, 1982 ¥100 million 99.0* Ground support services

• JAL Tohoku International Service Co., Ltd. November 11, 1998 ¥10 million 100.0 Ground support servicesJAL Wing Co., Ltd. June 1, 1992 ¥50 million 100.0* Ground support servicesJapan Airport Ground Power Co., Ltd. December 16, 1965 ¥1,968 million 63.3* Ground support servicesJLCOS Company, Ltd. May 8, 1997 ¥20 million 100.0 Reservation centerKansai Airport Ground Service Co., Ltd. April 14, 1989 ¥120 million 100.0* Ground support servicesKyushu International Service Co., Ltd. April 3, 1986 ¥30 million 51.0 Ground support servicesNagoya International Service Co., Ltd. March 5, 1984 ¥30 million 51.0* Ground support services

• Okinawa Airport Service Co., Ltd. October 1, 1965 ¥33 million 83.5* Ground support servicesService Creation Inc. December 25, 1989 ¥30 million 95.0* Ground support servicesJAL Information Technology Co., Ltd. August 26, 1978 ¥702 million 92.5* Development, operation and maintenance

of information processing systemsNansei Computer and Communication April 16, 1984 ¥50 million 86.0* Development, operation and maintenanceSystem Development Co., Ltd. of information processing systems

Asia Creative Tours Co., Ltd. October 14, 1975 ¥50 million 100.0* Planning and marketing of package toursAXESS International Network Inc. July 1, 1991 ¥700 million 75.0 CRS (Computer Reservation System)BENKAY (U.S.A.), Inc. February 6, 1986 US$1,000 100.0* Management and operation of restaurantsCocos Lagoon Development Corporation January 17, 1976 US$21 million 100.0* Resort and restaurant business

• Creative Greeting Service, Inc. October 1, 1991 US$10,000 100.0* Travel services• Creative Reise GmbH March 1, 1981 DEM200,000 87.5* Travel services

Creative Service Co., Ltd. July 1, 1987 ¥90 million 100.0* Travel services• Creative Tours Ltd. September 14, 1973 GBP96,000 100.0* Travel services• Creative Tours (Asia) Pte Ltd. February 4, 1997 S$100,000 100.0* Holding company• Creative Tours Dusseldorf GmbH April 1, 1991 DEM250,000 100.0* Travel services• Creative Tours (Europe) B.V. November 1, 1979 NLG2 million 100.0* Holding company• Creative Tours (Holland) B.V. April 1, 1979 NLG100,000 100.0* Travel services• Creative Tours Micronesia, Inc. August 1, 1974 US$1.5 million 100.0* Travel services• Creative Tours (Singapore) Pte Ltd. May 1, 1979 S$100,000 100.0* Travel services• Creative Tours (Spain) S.A. March 23, 1983 ESP30 million 100.0* Travel services• Creative Tours (Thailand) Orient October 1, 1979 THB6 million 73.3* Travel services• EURO Creative Tours (UK) Ltd. October 17, 1980 GBP80,000 65.5* Travel services• Hawaii Hotel Reservation System, Inc. October 1, 1997 US$10,000 100.0* Travel services

Hotel New Nikko de Paris. S.A.S. June 5, 1996 FRF10 million 100.0* Hotel and restaurant businessHotel Nikko Annupuri Co., Ltd. November 5, 1984 ¥2,200 million 70.5* Hotel and restaurant businessHotel Nikko de Paris S.A. June 26, 1973 FRF210 million 98.3* Hotel and restaurant businessHotel Nikko of Atlanta, Inc. July 13, 1988 US$1 100.0* Hotel and restaurant businessHotel Nikko of Beverly Park, Inc. December 7, 1989 US$1,000 100.0* Hotel and restaurant businessHotel Nikko of Chicago, Inc. November 30, 1985 US$100 100.0* Hotel and restaurant businessHotel Nikko of Honolulu, Inc. August 21, 1984 US$1,000 100.0* Hotel and restaurant business

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Hotel Nikko of New York, Inc. December 2, 1983 US$1,000 100.0* Hotel and restaurant businessHotel Nikko of San Francisco, Inc. July 19, 1984 US$1,000 100.0* Hotel and restaurant businessHotel Nikko Osaka Co., Ltd. December 10, 1980 ¥100 million 100.0* Hotel and restaurant businessHotel Nikko Saipan, Inc. September 26, 1984 US$21 million 87.0* Hotel and restaurant businessHotel Nikko Shanghai May 27, 1985 CNY71 million 100.0* Hotel and restaurant businessHotel Nikko Shanghai Investment Corporation April 12, 1985 ¥2,320 million 56.2* Investments in hotels and other enterprisesHotel Nikko (U.S.A.), Inc. July 18, 1984 US$1 100.0* Hotel and restaurant businessIhilani Resort, Inc. January 1, 1993 US$1,000 100.0* Hotel and restaurant business

• J Inter Orient February 7, 1997 ¥10 million 100.0* Travel services• J Pro Orient December 4, 1998 ¥30 million 100.0* Travel services

JAL Hotels Co., Ltd. July 1, 1970 ¥3,700 million 89.3* Hotel management for JAL Group andother interests

JALPAK Co., Ltd. April 4, 1969 ¥900 million 76.8* Planning and marketing of I’ll and otherpackage tours

JALSTORY Co., Ltd. October 9, 1976 ¥35 million 70.9* Planning and marketing of JALSTORY andother package tours

• JALTOUR GmbH June 1, 1993 DEM150,000 100.0* Travel servicesJapan Air Lines Hotel Co., Ltd. February 7, 1958 ¥572 million 99.6* Hotel and restaurant business

• Japan Tours System Orient April 10, 1976 ¥300 million 75.7* Travel services• JCT Australia Pty Ltd. March 27, 1984 A$500,000 100.0* Travel services• JCT International (France) S.A. November 19, 1973 FRF1 million 100.0* Travel services• Micronesian Hospitality, Inc. January 15, 1975 US$120,000 50.0* Travel services

Nansei Marketing and DistributionPlanning Co., Ltd. July 1, 1985 ¥20 million 78.0* Travel services and retail sales

Nansei Tourist Development Co., Ltd. May 1, 1981 ¥3,000 million 76.7* Hotel and restaurant businessNarita Nikko Hotel Co., Ltd. November 24, 1977 ¥470 million 100.0* Hotel and restaurant businessNikko Hotels (U.K.) Ltd. May 24, 1985 GBP22 million 100.0* Hotel and restaurant businessOkuma Beach Land Co., Ltd. June 12, 1978 ¥1,080 million 94.4* Hotel and restaurant business

• Orient Dynamic Orient August 1, 1974 HK$550,000 100.0* Travel services• Orient Network (Hong Kong) Ltd. March 1, 1988 HK$500,000 100.0* Travel services• Orient Network (International) Pte Ltd. February 27, 1997 S$100,000 100.0* Holding company• Orient Network Japan Orient June 9, 1988 ¥10 million 100.0* Travel services• Orient Network (Singapore) Pte Ltd. April 9, 1979 S$122,000 100.0* Travel services• Orient Network Tours & Travel (M) Sdn Bhd. November 16, 1973 MYR466,000 100.0* Travel services• P.T. Taurina Travel Jaya April 1, 1982 IDR500 million 51.0* Travel services

Pacific Air Service Co., Ltd. October 10, 1967 ¥48 million 74.9* Travel services• Pacifico Creative Service, Inc. July 29, 1970 US$2.5 million 100.0* Travel services• Pacifico Creative Service Hawaii, Inc. April 1, 1990 US$1 million 100.0* Travel services

Pan Pacific Hoteliers, Inc. April 18, 1978 US$158 million 100.0 Hotel and restaurant business• Reiseburo Creative Tours GmbH March 19, 1985 ATS1 million 75.0* Travel services• Satellite Tours Orient August 17, 1979 HK$750,000 100.0* Travel services

Shuri Kanko Co., Ltd. December 10, 1969 ¥1,116 million 57.8* Hotel and restaurant business• Tour Create, Inc. April 1, 1994 US$10,000 100.0* Travel services• Trans Quality, Inc. June 1, 1990 US$200,000 100.0* Travel services• Universal Holidays Inc. February 21, 1978 PHP3.4 million 88.9* Travel services

KGC Management, Inc. January 1, 1993 US$1,000 100.0* Management of Ko Olina Golf ClubTomakomai Ryokka Kaihatsu Co., Ltd. April 10, 1989 ¥50 million 51.0 Management of Tomakomai Country Club

Brooks CourseEssex House Real Estate Corp. July 15, 1981 US$1,000 100.0* Real estateGlobal Building Co., Ltd. April 14, 1989 ¥5,854 million 100.0 Real estateJAL Construction Co., Ltd. June 1, 1976 ¥180 million 100.0* ConstructionJapan Airlines Management Corp. October 20, 1989 US$93 100.0* Real estateAlive Insurance Pte., Ltd. April 26, 1989 US$2 million 100.0 Insurance servicesJAL Capital Corporation September 4, 1992 US$20 100.0* Financing servicesJAL Finance Corp. April 8, 1988 ¥1,000 million 100.0 Financing servicesJAL Finance Europe B.V. June 13, 1989 ¥101 million 100.0* Financing servicesJAL Leasing Co., Ltd. July 25, 1988 ¥1,000 million 100.0* LeasingJAL Card Inc. October 30, 1984 ¥400 million 100.0* Credit card servicesJF Carib A.E.C. August 31, 1990 US$1 100.0* Financing servicesPacific Business Base, Inc. October 20, 1989 US$400 100.0 InvestmentsPacific World Corporation October 24, 1989 US$300 100.0 Investments in hotels and other enterprisesAGS Commerce Co., Ltd. April 2, 1981 ¥48 million 65.4* Trading and travel servicesJAL Trading Inc. March 28, 1962 ¥2,398 million 69.5* Wholesale and retail sales; agent for

property, casualty, and other insuranceJAL Trading Americas, Inc. April 26, 1982 US$5 million 100.0* Trading and leasingJAL Trading U.K. Ltd. April 13, 1972 GBP500,000 100.0* Retail salesJAL/DFS Duty Free Shoppers Co., Ltd. July 1, 1992 ¥300 million 60.0* Sales of duty free itemsOkinawa Free Zone Trading Co., Ltd. July 8, 1988 ¥20 million 95.0* WholesaleJAL Academy Co., Ltd. June 10, 1985 ¥240 million 100.0 Human resource development and trainingJAL Business Service Co., Ltd. November 8, 1979 ¥100 million 100.0* Staff and office servicesJAL Cultural Development Co., Ltd. August 1, 1988 ¥100 million 100.0 PublishingJAL Flight Academy Co., Ltd. August 8, 1989 ¥1,850 million 100.0 Flight training and air transportJAL Planning Co., Ltd. March 1, 1985 ¥72 million 85.0* Advertising and publicationsJAL Sunlight Co., Ltd. November 15, 1995 ¥30 million 100.0* Staff and office servicesOfficial Filing Co., Ltd. February 10, 1984 ¥10 million 87.0* Publishing

• Newly consolidated in fiscal year ended March 31, 1999.

* Includes holdings of the parent company and those of subsidiaries and affiliates.

Notes: On April 1, 1999, JCT Australia Pty Ltd was renamed JALPAK International Oceania Pty Ltd.On October 1, 1999, Japan Air Charter Co., Ltd. was renamed JALways Co., Ltd.

(As of March 31, 1999)

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Air TransportJAPAN AIRLINES CO., LTD.

• J AIR CO., LTD.• JAL EXPRESS CO., LTD.• JAPAN AIR CHARTER CO., LTD.• JAPAN ASIA AIRWAYS CO., LTD.• JAPAN TRANS OCEAN AIR CO., LTD.

RYUKYU AIR COMMUTER CO., LTD.

Air Cargo• ABC SKY-PARTNERS INC.

CONTACT AIR CARGO SERVICES, INC.CONTACT MIDWEST INC.DAIWA AIRPORT SERVICE CO., LTD.

• DHL INTERNATIONAL LIMITEDF.B. ON BOARD COURIER SERVICES INC.

• FACT INC.FAIRWAY EXPRESS CO., LTD.FLEETPAK ENTERPRISES PTE. LTD.

• FUKUOKA AIR CARGO TERMINAL CO., LTD.• GLOBAL LOGISTICS SYSTEM ASIA COMPANY LTD.• GLOBAL LOGISTICS SYSTEM WORLDWIDE GMBH

INTEGRATED EXPRESS LIMITED• JAL KANSAI AIRCARGO SYSTEM CO., LTD.• JAL LOGISTICS INC.• JALTOS CO., LTD.

JET FRESH THAILAND CO., LTD.J-TRANS CO., LTD.JUPICOM COMPANY LIMITED

• JUPITER AIR LIMITEDJUPITER AIR (CANADA) LTD.JUPITER AIR (HONG KONG) LIMITEDJUPITER AIR (UK) LIMITEDJUPITER AIR OCEANIA LIMITEDJUPITER AIR SERVICES(MALAYSIA) SDN. BHD.JUPITER INTERNATIONAL CO., LTD.JUPITER JAPAN CO., LTD.JUPITER LOGISTICS PHILIPPINES, INC.JUPITER PACIFIC FORWARDING JOINT

VENTURE CO., LTD.JUPITER SINGAPORE PTE. LTD.

• LANOVAC, INC.MERCURY INTERNATIONAL CO., LTD.

• NISHINIHON AIR CARGO SERVICE COMPANYLIMITED

• OVERSEAS AIR CARGO CO., LTD.PAN JUPITER TRANSPORT CO., LTD.SHEEN CHART LIMITEDSOUTHERN TRANSPORT SERVICE

• TOKYO AIR CARGO CITY TERMINAL CO., LTD.TRENDY AIR SERVICES SDN.BHD.U-FREIGHT JAPAN CO., LTD.WHOLESALE COURIER (S) PTE. LTD.

Aircraft MaintenanceAIR COMPONENT MAINTENANCE COMPANY

• AIRPORT ENGINEERING & SERVICE CO., LTD.FUKUOKA A.E.C. CO., LTD.

• JAL AERO MAINTENANCE CO., LTD.• JAL AVIONICS CO., LTD.• JAL COMPONENT TECHNOLOGY CO., LTD.• JAL ENGINE TECHNOLOGIES CO., LTD.• JAL MAINTENANCE SERVICE CO., LTD.• JAPAN TURBINE TECHNOLOGIES CO., LTD.

KANTO KIGYO CO., LTD.• KUKOU BOUSAI CO., LTD.

NARITA A.E.C. SERVICE CO., LTD.NIHON SERVICE CO., LTD.

• NIKKO AVIATION MAINTENANCE CO., LTD

J A L A N D I T S S U B S I D I A R I E S A N D A F F I L I A T E S

In-Flight Catering Services• AAS CATERING CO., LTD.

CATE CO., LTD.• HIROSHIMA CATERING CO., LTD.• INTERNATIONAL CATERING LTD.• INTERNATIONAL IN-FLIGHT CATERING

CO., LTD.• JAL ROYAL CATERING CO., LTD.• NAGOYA AIR CATERING CO., LTD.• NIKKO INFLIGHT CATERING CO., LTD.• OKINAWA CATERING SERVICE CO., LTD.• TFK CORPORATION

Aircraft Fuels• CHITOSE AIRPORT FUELLING FACILITIES

COMPANY, LTD.• FUKUSHIMA AIRPORT FUELLING FACILITIES

CO., LTD.JAMAL INC.

• JAPAN FUEL TRADING CO., LTD.• OKINAWA FUELING FACILITIES CO., LTD.• OSAKA HYDRANT CO., LTD.• PACIFIC AIRCRAFT & AIRPORT SERVICE CO., LTD.

PACIFIC FUEL TRADING CORPORATION• SAGA AIRPORT FUELING FACILITIES CO., LTD.

Limousine Services• AIRPORT TRANSPORT SERVICE CO., LTD.

AZUMA KOTSU CO., LTD.• KANSAI AIRPORT TRANSPORTATION

ENTERPRISE• OSAKA AIRPORT TRANSPORT CO., LTD.• SOUTHERN AIRPORT KOTSU CO., LTD.

Airport-Related ServicesADVANCE MANAGEMENT, INC.AGP DEVELOPMENT CO., LTD.AGP HOKKAIDO CO., LTD.AGP KANSAI CO., LTD.AGP KYUSHU CO., LTD.AIRPORT AVIATION SERVICE CO., LTD.

• AIRPORT GROUND SERVICE CO., LTD.• AVIX NAGASAKI CO., LTD

FUKUOKA TAS CORPORATION• FUKUSHIMA INTERNATIONAL SERVICE CO., LTD.• HOKKAIDO PASSENGER SERVICE CO., LTD.

JAL AVIATION CONSULTING INCORPORATED• JAL FRONTIER CO., LTD.• JAL HAWAII, INCORPORATED• JAL PASSENGER SERVICES AMERICA, INC.• JAL PLAZA CO., LTD.• JAL PLUS CO., LTD.• JAL SKY HAKODATE CO,. LTD.• JAL SKY OSAKA CO., LTD.• JAL SKY SERVICE CO., LTD.• JAL TOHOKU INTERNATIONAL SERVICE

CO., LTD.• JAL WAVE CO., LTD.• JAL WING CO., LTD.• JAPAN AIRPORT GROUND POWER CO., LTD.

JAPAN GROUND SERVICE CO., LTD.JAPAN SECURITY SUPPORT CO., LTD.

• JLCOS COMPANY, LTD.JUPITER GROUND SERVICE LIMITEDKANSAI AIRPORT GROUND SERVICE CO., LTD.KYUSHU AIRPORT SERVICE CO., LTD.

• KYUUSHUU INTERNATIONAL SERVICE CO., LTD.• NAGOYA GROUND SERVICE CO., LTD.• NAGOYA INTERNATIONAL SERVICE CO., LTD.

NAHA AIRPORT GROUND SERVICE CO., LTD.NAHA AIRPORT PASSENGER SERVICE CO., LTD.NEW CHITOSE AIRPORT SERVICE CO., LTD.NISHINIHON AIRPORT SERVICE CO., LTD.NISHINIHON PASSENGER SERVICE CO., LTD.OAS MAINTENANCE CO., LTD.

• OKINAWA AIRPORT SERVICE CO., LTD.PASSENGER SERVICE CO., LTD.SANEI MAINTENANCE CO., LTD.

• SERVICE CREATION INC.• SHIMOJISHIMA AIRPORT FACILITY CO., LTD.

SUN MAINTENANCE CO., LTD.TSURUYA KOGYO CO., LTD.

Information Services• AVICOM JAPAN CO., LTD.

AVIONET (THAILAND) COMPANY LTD.• AVIONET (USA) LTD.

AVIONET COMPUTER LTD.• AVIONET (H.K.) LTD.

JAL AVIONET SYSTEMS, INC.• JAL AVIONET (EUROPE) LTD.• JAL INFORMATION TECHNOLOGY CO., LTD.

NANSEI COMPUTER AND COMMUNICATIONSYSTEM DEVELOPMENT CO., LTD.

Hotel and Travel ServicesA AND P TRAVEL, INC.AIRPORT HOTEL MANAGEMENT CO., LTD.AMERASIA REPRESENTACIONES C.A.ASIA CREATIVE TOURS CO., LTD.ASIA CREATIVE TOURS HONGKONG LTD.

• AXESS INTERNATIONAL NETWORK, INC.BENKAY (U.S.A.), INC.CARGO CREATIVE SERVICE CO., LTD.CHITOSE INTERNATIONAL HOTEL CO., LTD.

• COCOS LAGOON DEVELOPMENTCORPORATION

COCOS LAGOON UTILITY CORPORATIONCREATIVE GREETING SERVICE, INC.CREATIVE MARKETING MANAGEMENT, INC.CREATIVE REISE GMBHCREATIVE SERVICE CO., LTD.CREATIVE TOURS (EUROPE) B.V.CREATIVE TOURS (SINGAPORE) PTE LTD.CREATIVE TOURS (SPAIN) S.A.CREATIVE TOURS (THAILAND) CO., LTD.CREATIVE TOURS DUSSELDORF GMBHCREATIVE TOURS LTD.CREATIVE TOURS MICRONESIA, INC.CREATIVE TOURS SCANDINAVIA APSCREATIVE TOURS (ASIA) PTE LTD.CREATIVE TOURS (HOLLAND) B.V.CREATIVE TRAVEL (TAIWAN) LTD.EURO CREATIVE TOURS (UK) LTD.FOOD DESIGN INC.HOTEL NIKKO OF BEVERLY PARK, INC.HAWAII HOTEL RESERVATION SYSTEM, INC.HOKKAIDO TOUR SYSTEM CO., LTD.HOTEL NEW NIKKO DE PARIS S.A.S.HOTEL NIKKO SHANGHAIHOTEL NIKKO (U.S.A.), INC.

• HOTEL NIKKO ANNUPURI CO., LTD.HOTEL NIKKO DE PARIS S.A.HOTEL NIKKO MICRONESIA, INC.HOTEL NIKKO OF ATLANTA, INC.HOTEL NIKKO OF CHICAGO, INC.HOTEL NIKKO OF HONOLULU, INC.HOTEL NIKKO OF NEW YORK, INC.

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HOTEL NIKKO OF SAN FRANCISCO, INC.HOTEL NIKKO OSAKA CO., LTD.

• HOTEL NIKKO SAIPAN, INC.HOTEL NIKKO SHANGHAI INVESTMENT

CORPORATIONHOTELES NIKKO S.A. DE C.V.HUAYA DEVELOPMENT CO., LTD.IHILANI RESORT, INC.IMPERIAL TRAVEL SERVICE CO., LTD.INCONTRA, INC.

• INDO JAPAN AIR SERVICES PVT. LTD.INTER REPRESENTACOES E SERVICOS LTDA.INTERNATIONAL FOODS CO., LTD.J INTER CO., LTD.J PRO CO., LTD.

• JAL HOTELS COMPANY LTD.JALPAK BRASIL OPERADORA TURISTICA LTDA.

• JALPAK CO., LTD.JALPAK DE MEXICO S.A. DE C.V.

• JALSTORY CO., LTD.JALTOUR GMBH

• JAPAN AIR LINES HOTEL CO., LTD.JAPAN AIRLINES DEVELOPMENT GMBH

DUSSELDORFJAPAN TOUR SYSTEM KYUSHU CO., LTD.JAPAN TOURS SYSTEM CO., LTD.JAPAN TOURS SYSTEM EHIME CO., LTD.JAPAN TOURS SYSTEM FUKUSHIMA CO., LTD.JAPAN TOURS SYSTEM HIROSHIMA CO., LTD.JAPAN TOURS SYSTEM SAGA CO., LTD.JAPAN TOURS SYSTEM TOCHIGI CO., LTD.JAPAN TOURS SYSTEM TOHOKU CO., LTD.JCT AUSTRALIA PTY LTDJCT INTERNATIONAL (FRANCE) S.A.JDC (PACIFIC) LTD.JDC GUAM INC.JHC GLOBAL SERVICE CO., LTD.

• JIMNA LIMITEDMICRONESIAN HOSPITALITY, INC.

• MTJ DEVELOPMENT SDN. BHD.NAHA GENERAL BUILDING SERVICE CO., LTD.NANSEI MARKETING AND DISTRIBUTION

PLANNING CO., LTD.• NANSEI TOURIST DEVELOPMENT CO., LTD.

NARITA NIKKO HOTEL CO., LTD.NEW NIKKO HOTEL CO., LTD.NIKKO CREATIVE SERVICE S.A.NIKKO HOTEL MANAGEMENT (THAILAND)

CO., LTD.• NIKKO HOTELS (U.K.) LTD.

NIKKO HOTELS AUSTRALIA PTY. LTD.• OKUMA BEACH LAND CO., LTD.

ORIENT DYNAMIC CO., LTD.ORIENT NETWORK (HONG KONG) LTD.ORIENT NETWORK (SINGAPORE) PTE LTD.ORIENT NETWORK JAPAN CO., LTD.ORIENT NETWORK TOURS & TRAVEL (M)

SDN BHD.ORIENT NETWORK (INTERNATIONAL) PTE LTD.P.T. TAURINA TRAVEL JAYAPACIFIC AIR SERVICE CO., LTD.PACIFICO CREATIVE SERVICE HAWAII, INC.PACIFICO CREATIVE SERVICE, INC.

• PALAU DEVELOPMENT CORP.• PAN PACIFIC HOTELIERS, INC.

PARIS LIMOUSINE SERVICE S.A.R.L.REISEBURO CREATIVE TOURS GMBHSATELLITE TOURS CO., LTD.SHURI KANKO CO., LTD.

STS ENTERPRISE INC.SUN INTERNATIONAL TRAVEL, INC.SUPER SONIC TOURIST INC.

• TNN GUAM INC.TOKYO BAY RESTAURANT CO., LTD.

• TOKYO HUMANIA ENTERPRISE INC.TOUR CREATE, INC.TRANS QUALITY, INC.TRAVEL MARKETING SERVICE, INC.TROPICAL LAUNDRY AND LINEN SUPPLY

CO., LTD.UNIVERSAL HOIDAYS INC.

• VIEW WORLD COMPANY LIMITED

Leisure and Tourism ServicesASIA WINDS DEVELOPMENT CO., LTD.

• HIROKAWA RESORT TOWN CO., LTD.• J & N CRUISE PTE., LTD.• JAPAN SUBMARINE TOURISM CO., LTD.

KGC MANAGEMENT, INC.• TOMAKOMAI RYOKKA KAIHATSU CO., LTD.

Real Estate and ConstructionBLANCO VENDE, LTD.ESSEX HOUSE REAL ESTATE CORPORATION

• GLOBAL BUILDING CO., LTD.GLOBAL REAL ESTATE USA INC.

• JAL CONSTRUCTION CO., LTD.JAPAN AIRLINES MANAGEMENT CORP.KOKEN CO., LTD.

• OCEAN CLUB DEVELOPMENT COMPANY, INC.REAL KEEN LTD.

• TERMINAL ONE MANAGEMENT INC.

Technology Development• HSST DEVELOPMENT CORPORATION

Financial ServicesACRES LEASING CO., LTD.AILERON LEASING CO., LTD.AIMS LEASING CO., LTD.

• ALIVE INSURANCE PTE., LTD.AVIONET LEASING INC.AVIONET LEASING LTD.CAMBER LEASING CO., LTD.FANS LEASING CO., LTD.FILLET LEASING CO., LTD.FLAP LEASING CO., LTD.GEAR LEASING CO., LTD.HIGH SKY LEASING CO., LTD.HONEYCOMB LEASING CO., LTD.HORIZONTAL LEASING CO., LTD.JAL CAPITAL CORPORATION

• JAL FINANCE CORPORATION.JAL FINANCE EUROPE B.V.

• JAL FSC LESSEE (CHI) COMPANY, LTD.• JAL FSC LESSEE (NC) COMPANY, LTD.• JAL FSC LESSEE (NC2) COMPANY, LTD.• JAL FSC LESSEE (PB) COMPANY, LTD.• JAL FSC LESSEE (PB2) COMPANY, LTD.

JAL LEASING (CAYMAN) CO., LTD.JAL LEASING (COOK) CO., LTD.JAL LEASING (NETHERLANDS) B.V.JAL LEASING ASSET MANAGEMENT CO., LTD.

• JAL LEASING COMPANY, LIMITED• JALCARD INC.

JET LINER LEASING CO., LTD.JF CARIB A.E.C.JL AIRCRAFT LEASING CO., LTD.

KEEL LEASING CO., LTD.NACELLE LEASING CO., LTD.

• PACIFIC BUSINESS BASE, INC.• PACIFIC WORLD CORPORATION

PITOT LEASING CO., LTD.PULSEJET LEASING CO., LTD.PYLON LEASING CO., LTD.RAM JET LEASING CO., LTD.REDOME LEASING CO., LTD.RUDDER LEASING CO., LTD.SCRUM JET LEASING CO., LTD.SLAT LEASING CO., LTD.SPINNER LEASING CO., LTD.STAR JET LEASING CO., LTD.TILLER LEASING CO., LTD.TOGA LEASING CO., LTD.

• TRIPLE A LIMITEDWINGLET LEASING CO., LTD.

TradingAGS COMMERCE CO., LTD.JAL TRADING AMERICAS, INC.JAL TRADING ASIA CO., LTD.JAL TRADING BLUE SKY, INC.JAL TRADING H.K. LTD.JAL TRADING HAWAII INC.JAL TRADING ITALY S.R.L.JAL TRADING SINGAPORE PTE LTD.JAL TRADING U.K. LTD.

• JAL TRADING, INC.• JAL/DFS DUTY FREE SHOPPERS CO., LTD.

MARUYOSHI CO., LTD.NICCO LETTANJS COMPANY, LTD.NORDIS CO., LTD.OKINAWA FREE ZONE TRADING CO., LTD.SHURI RYUTSU LIMITED.TOKYO KINAI YOHIN SEISAKUSHO CO., LTD.TOKYO KOKU CLEANING CO., LTD.

Cultural Activities and PublishingASIA ADVERTISING CO., LTD.CHICAGO TOKYO TELEVISION, INC.

• JAL ACADEMY CO., LTD.• JAL BUSINESS SERVICE CO., LTD.

JAL BUSINESS SERVICE MINAMI KYUSYUCO., LTD.

• JAL CULTURAL DEVELOPMENT CO., LTD.• JAL FLIGHT ACADEMY CO., LTD.• JAL INTERNATIONAL SERVICE INC.• JAL PLANNING CO., LTD.• JAL SUNLIGHT CO., LTD.

NAUI ENTERPRISES INC.• OFFICIAL FILING CO., LTD.

SINO ASIA CULTURE ENTERPRISECORPORATION

TOURISM ESSENTIALS INC.WINDS PUBLICATIONS CO., LTD.

• Indicates subsidiaries and affiliates in which JAL hasdirect equity investments.

Notes: Includes companies in which JAL directly or indirectlyowns an equity interest of 20% or more.On April 1, 1999, JCT AUSTRALIA PTY LTD wasrenamed JALPAK INTERNATIONAL OCEANIAPTY LTD.On October 1, 1999, JAPAN AIR CHARTER CO.,LTD. was renamed JALWAYS CO., LTD.

54P A G E

D I R E C T O R YJapan Airlines Company, Ltd.

DETROIT3000 Town Center, Suite 710,Southfield, Michigan 48075, U.S.A.Phone: 1-800-525-3663 (Reservations)

1-800-553-4525 (Sales)

DUSSELDORF1st Floor, Deutsch-Japanisches Center,Immermannstrasse 43B,40210 Dusseldorf, GERMANYPhone: 01802228700

(Reservations & Information)(0211) 1679150 (Administration)

FRANKFURTRossmarkt 15,60311 Frankfurt/Main 1, GERMANYPhone: 01802228700

(Reservations & Information)(069) 13600 (Administration)

GENEVA42, Rue De Lausanne,CH-1201 Geneva, SWITZERLANDPhone: 0844-888-700

(Reservations & Information)(022) 731-7160 (Sales)

GUAMGuam International Airport,Guam, U.S.A.Phone: 642-6425~6 (Reservations & Ticketing)

HO CHI MINH CITYSun Wah Tower GroundFloor, 115 Nguyen Hue St. Dist. 1Ho chi minh City, VIETNAMPhone: (8) 8219098

HONG KONG20th Floor, Gloucester Tower,The Landmark, 11 Pedder St.,Hong Kong S.A.R., P.R. of CHINAPhone: 2523-0081 (Reservations)

HONOLULUWaikiki Ticket Office:Waikiki Business Plaza Bldg.,2272 Kalakaua Ave.,Honolulu, Hawaii 96815, U.S.A.Phone: (808) 521-1441

999 Bishop St., Suite 1800,Honolulu, Hawaii 96813, U.S.A.Phone: 1-800-525-3663, (808) 521-1441

(Reservations)(808) 544-8202 (Sales)

JAKARTAKyoei Prince Building Ground Floor, JL.,Jenderal Sudirman, Kav. 3-4,Jakarta, 10220 INDONESIAPhone: (021) 572-3211 (Reservations)

(021) 572-3223 (Sales)(021) 572-3227 (Ticketing)

KAOHSIUNGJapan Asia AirwaysKaohsiung Chung-Cheng Bldg. 4F 2,Chung-Cheng 3rd., Kaohsiung, TaiwanPhone: (07) 223-1156

KONAKONA INTERNATIONAL AIRPORTAT KEAHOLEP.O. Box 3300, Kailua-Kona, Hawaii 96745Phone: 1-800-525-3663 (Reservations)

KUALA LUMPURSuite 20•03 Level 20 Menara Lion 165Jalan Ampang, 50450 Kuala Lumpur, MALAYSIAPhone: (03) 2611722~6 (Reservations)

(03) 2611733 (Sales)

LAS VEGASMC CARRAN INTERNATIONAL AIRPORTP.O. Box 11185, Las Vegas,Nevada 89111-1185, U.S.A.Phone: 1-800-525-3663 (Reservations)

LONDONHanover Court, 5 Hanover Square,London W1R 0DR, U.K.Phone: (0345) 747-700

(Reservations & Information)

LOS ANGELES300 N. Continental Blvd., Suite 401,El Segundo CA 90245, U.S.A.Phone: 1-800-525-3663

(Reservations & Ticketing)(310) 607-2330 (Sales)

MADRIDC/ Luchana, 23 6-228010 Madrid, SPAINPhone: 9011-74770


MANILADusit Hotel Nikko, Ayala Center,Makati Metro Manila, PHILIPPINESPhone: (02) 812-1591~99 (Reservations)

MEXICO CITYPaseo de la Reforma, 295,06500 Mexico City, D.F. MEXICOPhone: (5) 533-5515~9

MILANVia San Clemente 1, 20122 Milan, ITALYPhone: 1-478-74700


MONTREAL2000 Peel #620Montreal, Quebec, CANADA H3A 2W5Phone: 1-800-525-3663 (Reservations)

(514) 286-3880 (Sales)

MOSCOWKuznetsky Most 3, Moscow, RUSSIAPhone: (095) 921-6448, 921-6648

AMSTERDAMOffice Centre Bldg. 2nd FloorJozef Israelskade 48e1072 SB Amsterdam, THE NETHERLANDSPhone: 0900-747-7000


BANGKOKJAL Bldg., 254/1 Ratchadaphisek RoadHuaykwang, Bangkok, 10320, THAILANDPhone: (02) 692-5151~65 (Reservations)

Suriwongse Road Ticket Office:21st Floor, Wall Street Tower,33/33-34 Suriwongse Road,Bangkok, 10500, THAILANDPhone: (02) 234-9114~5 (Ticketing)

BARCELONA2nd Floor, Paseo de Gracia 55-5708007 Barcelona, SPAINPhone: 9011-74770


BEIJING1st Floor, Chang Fu Gong Office Bldg.,Jianguo Menwai Dajie,Beijing, P.R. of CHINAPhone: (010) 6513-0888

BOSTONSuite 606, The Statler Bldg., 20 Park Plaza,Boston, Massachusetts 02116, U.S.A.Phone: 1-800-525-3663 (Reservations)

(617) 695-3525 (Sales)

BRUSSELSAvenue Louise 283, Box 6,1050 Brussels, BELGIUMPhone: (02) 745-4400


CAIROFlat No.22 1, El Saleh Ayoub St. ZamalekCairo, EGYPTPhone: 3321422

CHICAGOBldg. 516, Express Center DriveO’Hare International Airport,Chicago Illinois 60666, U.S.A.Phone: 1-800-525-3663 (Reservations)

CINCINNATI36 East 4th St., Suite 801,Cincinnati, Ohio 45202, U.S.A.Phone: 1-800-525-3663 (Reservations)

DALIAN14th Floor Senmao Bldg., 147 Zhongshan Road,Xigang District, Dalian, P.R. of CHINAPhone: (0411) 369-2525

DALLAS1425 Greenway Drive, suite 375 Irving,Texas 75038 U.S.A.Phone: 1-800-525-3663 (Reservations)

55P A G E

NEW YORK655 5th Ave., New York, New York 10022,U.S.A.Phone: 1-800-525-3663 (Reservations)

(212) 310-1318 (Sales)

PARIS1, Rond-Point des Champs Elysées,Marcel Dassault, 75008 Paris, FRANCEPhone: 0801-747-700

(Reservations & Information)0144355525 (Administration)

PUSAN6th Floor, Kookje Bldg.,6-69 Jungang-Dong, Jung-Ku,Pusan, KOREAPhone: (051) 469-1215

(Reservations & Ticketing)

QINGDAO1st Floor, Hotel Equatorial (Guidu)Qingdao, 28, XianggangZhong Lu, 266071 Qingdao, P.R. of CHINAPhone: (0532) 571-0088

ROMERome Leonardo Da Vinci International Airport,00050, Fiumicino, Rome, ITALYPhone: 1-478-74700


SAIPANP.O. Box 469, Saipan, MP 96950, U.S.A.Phone: 234-6553~4 (Reservations & Ticketing)

SAN FRANCISCO5th Floor, Hotel Nikko San Francisco,222 Mason St., Suite 508San Francisco, California 94102, U.S.A.Phone: 1-800-525-3663 (Reservations)

(415) 765-8555 (Sales)

SAO PAULOAv. Paulista No. 542 2nd/3rd Ander Bela Vista,Sao Paulo-SP., BRAZILPhone: (011) 251-5222 (Reservations)

(011) 288-9055 (Sales)

SEOULPaiknam Bldg., 188-3, Eulchi-Ro,1-Ka Chung-Ku, Seoul, KOREAPhone: (02) 757-1711 (Reservations)

SHANGHAIRoom 201, Shanghai Rui Jin Bldg.,205 Mao Ming Nan Lu,Shanghai, P. R. of CHINAPhone: (021) 6472-3000

(Reservations & Ticketing)

SINGAPORE16 Raffles Quay #03-01,Hong Leong Bldg., Singapore 048581Phone: 2210522

SYDNEY14th Floor Darling Park, 201 Sussex Street,Sydney, NSW 2000, AUSTRALIAPhone: (02) 9272-1111 (Reservations)

(02) 9272-1100 (Sales)

TAIPEIJapan Asia AirwaysIBM Bldg., No. 2, Tun Hua S. Rd.,Taipei, TaiwanPhone: (02) 2776-5151

TAICHUNGJapan Asia AirwaysEnterprise Bldg. 4F No. 393 Sec 1, TaichungKang Rd., Taichung, TaiwanPhone: (04) 321-7700

TIANJIN1st Floor, Tianjin International Bldg.,75 Nanjing Road, Tianjin, P.R. of CHINAPhone: (010) 6513-0888 (Reservations)

(022) 2313-9766 (Ticketing)

TORONTO21st Floor, 130 Adelaide St.West Toronto, Ontario, CANADA M5H 3P5Phone: 1-800-525-3663 (Reservations)

(416) 364-7229 (Sales)

VANCOUVER7th Floor, 777 Hornby St.,Vancouver, B.C. CANADA, V6Z 1S4Phone: 1-800-525-3663 (Reservations)

(604) 606-7715 (Sales)

VIENNAKärntnerstrasse 11/4 Stock Eingang:Weihburggasse 2, A-1010 Vienna, AUSTRIAPhone: (01) 5029-18888

(Reservations & Information)(01) 512-7522 (Ticketing)

WASHINGTON, D.C.1050 Connecticut Ave., N.W. Suite 200,Washington, D.C. 20036, U.S.A.Phone: 1-800-525-3663 (Reservations)

(202) 223-3310 (Sales)

YANGONRoom No. 1, FMI Centre, Ground Floor,No. 380 Bogyoke Aung San St., PebedanTownship, Yangon, MYANMARPhone: (01) 243030

ZURICHSihlstrasse 55, 8001Zurich, SWITZERLANDPhone: 0844-888-700


JAPANHead Office:4-11, Higashi-shinagawa 2-chome,Shinagawa-ku, Tokyo 140-8637, JAPANToll-free general reservations:0120-25-5931 (International)0120-25-5971 (Domestic)

TokyoSapporoObihiroKitamiHakodateAkitaYamagataSendaiFukushimaUtsunomiyaOmiyaChibaYokohamaHachiojiNiigataNaganoShizuokaNagoyaKanazawaKyotoOsakaKobeOkayamaHiroshimaTakamatsuMatsuyamaKochiKitakyushuFukuokaNagasakiOitaKumamotoMiyazakiKagoshimaOkinawa

56P A G E

OperatingManagingCommittee

ExecutiveManagementBoard

President

C O R P O R A T E O R G A N I Z A T I O NJapan Airlines Company, Ltd.

Flight Safety Flight SafetyBoard Committee

InformationSystemsCommittee

Customer BusinessRestructuring Satisfaction Environmental ActivitiesCommittee Promotion Committee Reappraisal

Committee Committee

Executive Office

Customer Relations Office

Corporate Planning Office

Int’l Affairs Department

Alliances Department

Information Systems Office

Associated Business Office

CS Promotion Department

Secretariat ofEnvironmental Committee

Corporate SafetyDepartment

Public RelationsDepartment

Legal Affairs Department

Business ActivitiesReappraisal Department

Shareholders’ ServiceDepartment

Personnel & OrganizationDepartment

Industrial RelationsDepartment

Medical Services Office

Accounting Department

Finance Department

Revenue AccountingDepartment

Purchasing Department

Facilities & Airport ProjectsDepartment

General Affairs Department,Haneda

General Affairs Department,Narita

57P A G E

(As of July 15, 1999)

Product Planning &Marketing Department

DomesticPassenger SalesPlanning Department

Area Offices: HONG KONG (Asia & Oceania)LONDON (Europe, Middle East & Africa)NEW YORK (The Americas)

Flight OperationsDivision

Engineering &Maintenance Division

Operations &EngineeringGroup

OperationsDivision

CabinAttendantsDivision

Cargo &Mail Division

Operations Services Flight OperationsDepartment Center

Aviation Security& Risk ManagementDepartment

Administration& PlanningDepartment

Training Department

The 2nd CabinAttendantsDepartment

InternationalFlight & PassengerDepartment

Administration& ServicesDepartment

Cabin ServicesPlanning Department

The 1st CabinAttendantsDepartment

Passenger MarketingDepartment

Field ManagementSupport Department

AdvertisingDepartment

Area Offices &Field Organizations

Planning MarketingDepartment

Services PlanningDepartment

PassengerMarketingDivision

Passenger SystemsDepartment

InternationalPassenger SalesPlanning Department

Mileage CenterDepartment

58P A G E

B O A R D O F D I R E C T O R SJapan Airlines Company, Ltd.

Isao Kaneko*PresidentChief Officer, Passenger Marketing & SalesChairman, Flight Safety BoardChairman, Restructuring CommitteeChairman, Cs Promotion CommitteeChairman, Business Activities Reappraisal

CommitteeChairman, Year2000 Committee

Yasushi Yuasa*Senior Managing DirectorChief Officer, Operations & Engineering GroupSenior Vice President & General Manager,

Flight Operations DivisionSenior Vice President, Flight Safety BoardChairman, Flight Safety Committee

Zenta YokoyamaSenior Managing DirectorChief Officer, Industrial RelationsSenior Vice President, Corporate PlanningSenior Vice President, Information SystemsChairman, Information Systems Committee

Masahide OchiSenior Managing DirectorChief Officer, Airport ProjectsSenior Vice President,• Facilities & Airport Projects• Legal Affairs• Purchasing• Business Activities Reappraisal• Customer Relations

Katsuo HanedaManaging DirectorPassenger Marketing (Passenger Marketing,

International Affairs/Alliances, Mileage,Passenger Systems, Product Planning &Marketing, Cs Promotion)

Tatsuru FukayaManaging DirectorFinance• Accounting• Finance• Revenue Accounting

Norio OgoManaging DirectorSenior Vice President, Engineering &

Maintenance DivisionSenior Vice President, Chairman,

Environmental Committee

Toshiki OkazakiSenior Vice President, Passenger Sales

(Domestic Passenger Sales Planning,International Passenger Sales Planning,Advertising)

Senior Vice President & General Manager,Eastern Japan

Senior Vice President & Regional Manager,Tokyo

Takashi MasukoSenior Vice President Cabin Attendants

Division

Toshiyuki ShinmachiSenior Vice President,• Executive Office• Associated Business• Public Relations

Hidekazu NishizukaSenior Vice President, Human Resources• Personnel & Organization Administration• Industrial RelationsSenior Vice President & General Manager,

Medical ServicesSenior Vice President & Deputy General

Manager, Associated Business

Hiroyuki FunayamaSenior Vice President, Operations• Flight Operations Center• Operations Services• Aviation Security & Risk ManagementSenior Vice President, Field Management

SupportSenior Vice President, Shareholders’ Service

Juntaro ShimizuSenior Vice President, Cargo & Mail

Shunji KounoSenior Vice President

Ken MoroiSenior Vice President

Corporate Auditors of the Board

Sadao Hara

Yasunaka Furukawa

Yo Kurosawa

Yoshihisa Akiyama

* Representative Director

(As of June 29, 1999)

Date of Foundation: August 1, 1951

Head Office: 4-11, Higashi-shinagawa 2-chome, Shinagawa-ku, Tokyo 140-8637, JapanPhone: 03-5460-3191 Fax: 03-5460-5929

Domestic Offices: 23 offices in major cities, including Sapporo, Tokyo, Nagoya, Osaka,Fukuoka, and Naha

Overseas Offices: 43 offices in major cities, including New York, London, Paris, Moscow,Sydney, Beijing, and Hong Kong

Paid-in Capital: ¥188,323,835,984

Number of Shares of Common Stock:

Authorized 6,000,000,000 sharesIssued 1,778,943,439 shares

Floating Stock: 31.32%

Number of Stockholders: 238,704, including 442 non-Japanese

Major Stockholders:

Number of Shares Held (Thousands)/Name Percentage of Total Shares Outstanding

Eitaro Itoyama 60,000/3.4

The Tokio Marine and Fire Insurance Co., Ltd. 51,131/2.9

The Industrial Bank of Japan, Limited 49,811/2.8

The Bank of Tokyo-Mitsubishi, Ltd. 44,341/2.5

The Dowa Fire and Marine Insurance Co., Ltd. 44,222/2.5

Nippon Life Insurance Company 44,064/2.5

Fukoku Mutual Life Insurance Company 43,406/2.4

The Yasuda Fire and Marine Insurance Co., Ltd. 34,876/2.0

The Dai-Ichi Kangyo Bank, Limited 34,752/2.0

Kokusai Kogyo Co., Ltd. 34,627/1.9

Stock Listings: Tokyo, Osaka, and Nagoya stock exchanges; Depositary receipts traded through theNASDAQ System and SEAQ International

Fiscal Year-End: March 31

General Meeting of Stockholders: June

Stock Transfer Agent: The Toyo Trust & Banking Co., Ltd.

Share Handling Office: 10-11, Higashi-Suna 7-chome, Koto-ku, Tokyo 137-8081, Japan

Date for Confirmation of Stock Ownership: March 31

Newspaper for Public Notices: Nihon Keizai Shimbun

Auditor: Showa Ota & Co.

(As of March 31, 1999)

I N V E S T O R I N F O R M A T I O N

Printed in Japan

4-11, Higashi-shinagawa 2-chome, Shinagawa-ku, Tokyo 140-8637, Japan

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