Japan Airlines on Monday posted a narrower first-quarter loss, helped by brisk demand on international routes and efforts to trim its payroll.
JAL, Asia's biggest airline by revenue, said its April-June operating loss came in at 8.55 billion yen ($73 million), down from a 31.94 billion yen loss in the same period a year earlier.
It maintained its full-year outlook for an operating profit of 35 billion yen.
The carrier has had a rough ride in recent years. Like many of its peers it was battered by the aftermath of Sept. 11 and an outbreak of SARS in Asia that weakened demand.
But it has taken longer to recover, weighed down by heavier oil costs as it uses a higher proportion of older gas-guzzling jumbo jets and comparatively high personnel costs.
On domestic flights, a string of safety problems, such as an engine catching on fire, has also pushed customers to rival All Nippon Airways.
JAL rolled out a restructuring plan in February this year that focused on using smaller planes to improve fuel efficiency, cutting jobs, overhauling its pension system and selling non-core assets.
Banking sources said in May that JAL had asked its main lenders to swap part of its $14 billion of debt for equity to prop up its capital.
But a media report has since suggested that plan is now on hold in the face of reluctance from its banks and because the airline thought it might obtain better terms if it waited until progress on restructuring was clearer.
Analysts have warned of the risk of share dilution with a capital increase.
Efforts to cut personnel costs, however, appear to be bearing fruit, and sources familiar with the matter have said that JAL aims to trim 4,300 jobs by April 2009, a year earlier than planned.