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Japan’s ANA HOLDINGS to report US$4.9 billion annual loss
October 30th 2020
All Nippon Airways' (ANA) parent company, ANA HOLDINGS INC, this week flagged a full-year loss in excess of half a billion yen as a result of a significant passenger demand decline from the coronavirus pandemic. Read More »
The earnings guidance said the business had been severely affected by worldwide government travel restrictions and the voluntary restraints on movement within Japan.
Despite recent encouraging signs, the parent company forecast a net loss of 510 billion yen (US$4.9 billion) for the 12 months to March 31 2021, compared with a net profit of 27.6 billion yen for the latest fiscal year.
"Demand is gradually recovering in the second half, but it is not expected to return to the level of the previous year," ANA HOLDINGS said in a filing to the Tokyo Stock Exchange (TSE).
"Operating revenues have suffered a significant downturn and profits for the year are significantly lower than those for the year ended March 31, 2020. [This is] “despite efforts to cut variable costs by curtailing flights and make savings on fixed costs such as personnel and aircraft expenses."
The airline group reported a net loss of 188.4 billion yen for the six months to September 30, compared with a net profit of 56.7 billion yen in the previous corresponding half.
ANA HOLDINGS chief financial officer, Ichiro Fukuzawa, said there had been a significant improvement in the second quarter, "which proves we have already bottomed out and are seeing a dramatic recovery”.
The company's interim financial report, to September 30, outlined plans to accelerate retirement of older aircraft, establish a third airline brand, undertake reforms to reflect market trends and build resilience into the business.
ANA will retire 35 aircraft, including 22 777 family aircraft, by March next year and aircraft deliveries will be cut by three to 13 airplanes.
At September 30, ANA had 54 777s in its fleet: 35 777-300/300ERs and 19 777-200/200ERs with 41 owned and 13 leased. ANA HOLDINGS LCC, Peach Aviation, will reduce its fleet by two planes. The company said it would book a 73 billion yen impairment charge due to the accelerated retirement of aircraft.
International available seat kilometres (ASK) will decline by 69.3% in the second half of the financial year and domestic ASKs would be 38.4% lower than the same period a year earlier, the airline group said. Encouragingly, both measures were up 92% and 48%, respectively, compared with the first half of 2020.
ANA will focus on resuming international operations on "highly profitable routes", with priority for services from Tokyo Haneda Airport. International flights out of Tokyo Narita, which it described as an "important connection hub", would be restored gradually.
ANA intends to maintain a network centred on highly profitable routes but with capacity reduced by operating smaller aircraft.
Peach’s focus domestically will be expansion out Osaka Kansai and Tokyo Narita and establishment of a Nagoya Chubu base. The LCC will resume international operations as demand determines.
In 2021, a third airline will be established to "capture the low-unit price demand not covered by ANA and Peach". The unnamed carrier will use the Air Japan entity as its foundation and target "Asian growth markets", including destinations in Southeast Asia and Oceania, with 787s configured to carry more than 300 passengers in a two-class layout.
The parent company will launch a data platform business "based on point-of-contact with all of our customers with which we engage in the airline business, travel business and business from our ANA branded credit cards to increase profits from our non-airline operations".
"ANA HD is embarking on an ambitious transformation that will strengthen operations and position it for long-term growth and success in a market still reeling from COVID-19," CEO Shinya Katanozaka said.
