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JAL Narrows Third-Quarter Loss, Keeps Profit Forecast

Japan Airlines said Tuesday its quarterly loss narrowed as it cut unprofitable routes and domestic demand started to recover, and it kept its full-year profit forecast.

JAL, Asia's largest airline by revenue but ranked sixth by market value, also said it would sell its stake in a Tokyo hotel to U.S. investment fund Aetos Capital, generating a special profit of 12 billion yen (US$100 million).

Despite the windfall gain, JAL said it would not change its net profit forecast for the year to March of 3 billion yen. Like other airlines, JAL's earnings have been hurt by persistently high oil
prices.

While demand for JAL's domestic flights has recovered somewhat, it is still struggling to win back customers who shifted to rival All Nippon Airways after a series of JAL safety mishaps, including an engine catching fire.

JAL said its group operating loss came to 14.02 billion yen (US$116.5 million) in the three months ended December, against a 16.6 billion yen loss a year earlier. Revenue rose 5% to 584.15 billion yen.

JAL is scheduled to announce a business plan for the four years through March 2011 later in the day. The plan is expected to include about 3,000 job cuts.

The Nikkei business daily reported on Saturday that JAL plans to reduce staff costs by some 50 billion yen in 2009/10 compared with the current business year.

JAL is also accelerating its disposal of non-core assets, such as its stakes in trading house Jalux and hotel buildings, while it plans to further restructure its international and domestic routes to boost profit.

JAL said it would sell its 48.55% holding in Tokyo Humania Enterprise, which owns the building of Hotel Nikko Tokyo, to Aetos for an undisclosed sum.

ANA, Japan's No. 2 airline, has been buoyed by a leaner operational model and its younger, more fuel-efficient fleet, and it raised it 2006/07 operating profit forecast by 17% in January after posting a 2% increase in nine-month profit.

Shares in JAL fell 7.8% in the October-December period, outperforming a 9% decline in the Tokyo Stock Exchange's air transport subindex.