Japan Airlines, Asia's biggest carrier, said yesterday that it lost $1 billion in the last quarter as the global economic downturn and swine flu fears triggered a severe slump in demand.

The group announced drastic cuts to its flight services as it braces for a second straight year in the red.

The net loss ballooned to 99.04 billion yen (one billion dollars) in the April-June quarter, from 3.41 billion yen in the same period of last year, a company statement said.

The carrier swung to an operating loss of 86.11 billion yen from a year-earlier profit of 3.91 billion yen.

Revenue slumped 31.7 per cent to 334.90 billion yen, more than offsetting the positive effect of operating cost reductions of 65.4 billion yen.

"In the face of the severe business environment and the impact of the new influenza since May... our earnings results turned out to be very grim," JAL senior vice president Yoshimasa Kanayama told reporters.

"We strived to cut costs," he said. "But it was not enough to offset the drop in income."

JAL maintained its forecast for a loss of 63 billion yen in the year to March 2010, after ending last year 63.2 billion yen in the red.

There are some signs of a recovery in travel by leisure passengers thanks to receding swine flu fears and lower fares, it said. "The first-quarter results were certainly severe. As far as revenue is concerned, however, there are somewhat bright signs for September onwards. Various cost cuts will also take effect," Mr Kanayama said.

But "business demand is unlikely to recover sharply," he added.

Passenger demand on JAL's international routes plunged 18.6 per cent in the first quarter while domestic routes saw a fall of 12.4 per cent.

"While business travel is projected to remain slow, JAL will persevere in the drastic adjustments to our network," the company said.

JAL said it would reduce flights on eight international routes within Asia from October 25 and suspend services between Nagoya in central Japan and Paris as well as between Nagoya and Seoul. It will also cut the number of flights on six domestic routes and downsize to smaller planes on 14 international passenger routes and one domestic route.

In May JAL announced 1,200 job cuts - or about 2.5 percent of its workforce - in addition to the more than 10,000 posts it has shed since 2005.

All Nippon Airways, Japan's second-largest carrier, last week posted a net loss of 29.2 billion yen for the quarter to June, compared with a profit of 6.6 billion yen in the same period the previous year.

But it aims to end the year to March 2010 in profit, helped by cost cuts and an expected gradual improvement in passenger numbers.