News
All Nippon Airways posts US$ 1 billion quarterly net loss
July 31st 2020
ANA HOLDINGS INC., the parent company of All Nippon Airways (ANA), said this week the airline would reduce in size in the period ahead to "get over COVID-19" after sliding into a quarterly loss in excess of 100 billion yen. Read More »
The company reported a net loss of 108.8 billion yen (US$1 billion) for the three months to June 30, compared with a net profit of 11.4 billion yen in the same months last year.
The parent company said international passenger demand slowed significantly due to COVID-19 while the domestic market was impacted by the Japanese government's State of Emergency in April.
In response, the company cut capacity, implemented temporary leave schemes for staff and reduced capital expenditures "significantly" by postponing planned new aircraft deliveries and deferring in-flight product changes, among other measures.
It also boosted liquidity during the quarter with secure bank loans of 535 billion yen and boosted lines of credit to 500 billion yen. And there was ongoing work to secure liquidity.
Looking ahead, the airline group’s president and CEO, Shinya Katanozaka, said in a slide presentation accompanying the financial results there would be significant changes in the demand structure of the airline market due to the coronavirus pandemic.
In the short term, ANA would "reduce business scale to get over COVID-19" amid a gradual recovery on domestic routes.
Management resources at ANA would be concentrated on high-profit routes, with a revaluation of products and services to meet a new normal.
This strategy would involve reducing the number of aircraft in the fleet, leveraging smaller aircraft and pursuing higher capacity rates to lower fixed costs.
It was reported in May ANA had pushed back deliveries of 13 aircraft, including the one remaining A380 it had on order as well as a number of 787 family aircraft. At June 30, ANA had 268 aircraft in its fleet.
In the medium term post-COVID-19, the company was hoping to "re-expand business scope towards a growth trajectory".
The recovery was tipped to occur at a modest pace on international routes. The leisure segment was likely to grow, particularly for inbound travellers to Japan, while ongoing weakness was expected in the business segment.
ANA carried 95,000 international passengers in the first quarter of its fiscal 2021 year, down 96.3% from 2.5 million in the three months to June 30, 2019. Domestic passengers carried declined 88.2% to 1.3 million.
“Passenger demand for both international and domestic flights declined significantly, due to worldwide government travel restrictions and the declaration of the state of emergency from the Japanese government,” ANA HOLDINGS INC. executive vice president and chief financial officer, Ichiro Fukuzawa, said in a statement.
“Against this backdrop, we raised our efforts to minimise both variable and fixed expenses by scaling down our operations and personnel costs.
"While we aggressively worked to offset lost revenue by catering to the increased demand for international cargo transportation by arranging many non-scheduled flights and utilising large freighter aircrafts, we were unable to offset the unprecedented impact of COVID- 19 and ended with a large quarterly loss.”
The company cited the climate of global economic uncertainty as the reason it was not releasing an earnings forecast for the fiscal year.
In other Japanese news, the ministry of foreign affairs said this week foreign nationals who have residency status would be able to apply to re-enter Japan from August 5, if they had left Japan before their country was added to the list of banned countries.
They would have to apply for a re-entry confirmation letter at a Japanese embassy or consulate and present evidence of a negative COVID-19 test result conducted within 72 hours of the flight's departure.
Separately, the ministry said foreign nationals with permanent residency, long-term residents and those who were the spouse or child of a Japanese national or permanent resident, would be required to have a re-entry confirmation letter and negative COVID-19 test to re-enter Japan from September 1.
Written by Jordan Chong
