Japan's national carrier must buy new fuel-efficient planes to compete

Asia's biggest airline by revenue said its April to June operating loss came in at 8.5bn yen ($73m; �36m), smaller than a 31.9bn yen loss a year before.

Demand on routes to China and South East Asia boosted income by 3%.

JAL hopes to turn the corner after recent financial losses, the effects of higher fuel costs, and safety problems.

'More to do'

Temporary cuts to staff bonuses have helped with the latest quarterly earnings.

But much of this business year's planned reductions in personnel costs is expected to come later.

"Cuts to retirement payouts and an early retirement plan this business year have yet to be negotiated," said Credit Suisse analyst Osuke Itazaki.

"Revenue has improved somewhat but really they have only cleared the first hurdle."

JAL introduced a restructuring plan in February, designed to renew its fleet with smaller planes to improve fuel efficiency.

It also envisaged reducing jobs, revamping the company pension system and selling non-core assets.

In June JAL said it would scrap 4,300 jobs at the firm a year earlier than planned, to speed up its revival.

The airline forecasts an operating profit of 35bn yen and a net profit of 7bn yen for the year to the end of March.