Japan Airlines' management is saying that Asia's top airline by sales doesn't need government aid, but analysts are skeptical.On Friday, Japan Airlines (other-otc: JALSY - news - people ) forecast a net loss of 34 billion yen ($373.9 million) for the year ending in March, amid a steep drop in travel demand that is likely to worsen.

The carrier also continues to weather industrywide fuel hedging losses after the wild swings in the price of crude last year. The country's airline industry group told Tokyo this week that carriers will need aid to stay afloat.

Japan Airlines has denied that the carrier is seeking a bailout and emphasized its focus on a cost reduction program, including negotiating lower land usage fees, more labor cuts and lower commissions, said BAS-ML analyst Yasuhito Tsuchiya. The company's goal of cutting costs by a reported 50 billion yen ($550.4 million) will be a "tough target" to hit, as the carrier has already made many of the cuts it can, he said. So investors continue to worry about equity financing risks, despite management reassurance.

The airline's loss may narrow next year, though. For the fiscal year ending in March 2010, Japan Airlines' operating loss is expected to be 10 billion yen ($110.1 million) to 20 billion yen ($220.2 million), according to one analyst estimate. The carrier has already hedged 70% of its fuel needs at prices that are about $5 a barrel higher than current trading prices, but fuel costs will decline on the 30% of its needs that aren't locked in.

Japan Airlines said its international passenger travel plunged 18.2% in December, the biggest fall since the 2003 SARS panic. Domestic-oriented All Nippon Airways said overseas travel plummeted 17.5% that month.Japan Airlines' outlook.

Is worse than All Nippon Airways (other-otc: ALNPY - news - people ), which has warned of a full-year loss of 9 billion yen ($99.1 million), but, nonetheless, is is in a stronger financial position than Japan Airlines and looks less likely to seek public aid, analysts say. ANA said it will cut 9% of overseas flights as well as managers' pay next fiscal year starting April.