"We expect demand to return to normal by August," airline spokesman Yuji Fujita said. "Flights to Hawai'i will have recovered by June."

The Tokyo-based airline predicts net income of $179 million for the year to March 31, 2003, as sales pick up 5 percent to

$13.2 billion. The estimate compares with a group loss of $290 million for the year just ended, the carrier's first loss in four years and its fourth-worst ever.

"JAL's basically saying it's going to return to its previous profit levels of fiscal 2000, which isn't such a surprising projection given demand is returning," said Atsushi Osa, a bond investor Sumitomo Marine Asset Management Co.

The airline will become the world's third largest by sales when it merges with Japan Air System Co. this year, and wants to use its market clout at home to help raise domestic profitability. The merger, approved last month, was prompted in part because of weak international demand after the September attacks.

"The environment for domestic flights wasn't so bad in the first place, but it's difficult to see a scenario for a complete recovery this year on international routes," said Masahiro Isono, an analyst at Tsubasa Research Institute Ltd.

For the year to March 31, 2002, Japan Airlines' sales fell 5.6 percent to $12.5 billion from the previous year.

The carrier said the September attacks cost the company $540 million. The revenue loss was partially mitigated by cost cuts and flight cancellations. For the year just ended, the carrier's operating loss totaled $90 million.

The cost to Japan Airlines and Japan Air System of giving up as many as nine landing slots at Tokyo's Haneda airport and fare reductions ­ both conditions for the merger to win regulatory approval ­ will total $54 million this year.