Japan Airlines reported a hefty quarterly loss on Monday as increased fuel costs wiped out boosts from surcharges and restructuring of international routes.

It stuck to a full-year profit forecast that is nearly double market expectations but said it may raise fuel surcharges, sell assets or reduce more routes to realize the target.

JAL is still struggling to regain customers after a series of safety problems and management infighting spurred many to opt for ANA, especially on domestic routes.

"The biggest problem is our own. It is a fact that customers shifted to our rivals because of the various troubles since last year. Unless we fix this, our recovery won't come," Senior Vice President Tetsuya Takenaka told a news conference.

"Oil prices rise and fall in any situation. I wouldn't say this is not a tough issue, but we should be able to control this, and we will take measures for it. But regaining customer trust is our top issue," he said.

JAL posted a group operating loss of JPY31.9 billion yen (USD$277.3 million) for the three months ended June 30, little changed from a loss of JPY32 billion (USD$278.1 million) in the same period last year.

Fuel costs rose 11.6 percent in the first quarter, canceling out an 11 percent increase in per-customer spending on international routes from fuel surcharges and termination of some unprofitable routes.

Despite soaring fuel prices, JAL's domestic rival ANA is better positioned with a younger, more efficient fleet. Helped also by cost cuts, ANA said last month its quarterly operating profit jumped 66 percent to JPY19.5 billion (USD$169.5 million).

JAL is reorganizing its services to offer less leisure routes and more profitable business routes, while it is using smaller planes, increasing fuel efficiency. It also reduced personnel costs by some 2 percent in the first quarter, helped by a wage cut.

"Business conditions are definitely getting better," Aoyama said. "With the economy improving, demand for both domestic and international flights as well as for both pleasure and business purposes is strong. This means it is easier to raise fares and increase sales.

"Its cost reduction covers broad fields," he added. "It's a positive, to some extent, that JAL's loss wasn't bigger and that sales rose when it offered fewer seats."

The airline reported a smaller quarterly net loss at JPY26.8 billion (USD$232.9 million) on sales of JPY522.2 billion (USD$4.54 billion), up 3.7 percent from a year earlier.