/

Flush ANA looking to make deals in South Asia

Bloomberg

All Nippon Airways Co., Japan’s largest airline by sales, is looking for acquisitions and partnerships abroad, with an eye particularly on India and Thailand, after raising $1.8 billion in a share sale last year to expand.

“We’re considering various options, including acquisitions or collaboration with a partner if we find one,” said Osamu Shinobe, who will become president of ANAe on April 1, when the carrier becomes part of a holding company. “Our main focus is Southeast Asia. We haven’t made any decisions yet.”

ANA will be following other carriers, including AirAsia Bhd. and Etihad Airways PJSC, looking to expand in Asia. Etihad has said it is in talks with Jet Airways (India) Ltd. for an investment, while AirAsia won approval this month in India to form a joint venture and acquired a stake in Philippine rival Zest Airways Inc.

ANA, which in January grounded its Boeing Co. 787s after battery problems, is targeting countries where the carrier already flies, including Myanmar, to expand, Shinobe said. The airline, set to become part of ANA Holdings Inc. next month, started flights with two low-cost carriers last year, one in partnership with a Hong Kong investor and another with AirAsia.

“The strategy we decide on will vary depending on whether we team up with an airline, or whether it’s with an investor,” Shinobe said in Tokyo last week. “New investments will be decided by the holding company.”

ANA, which started a venture with United Continental Holdings Inc. in 2011, predicts the sales gain from the collaboration will more than double in the year ending in March as new services and improved connections lure fliers. The venture allows the carriers to coordinate schedules and share revenue and costs.

The Japanese carrier is looking for ways to increase cooperation with United to boost sales, said Shinobe. United plans to start a new service between Denver and Tokyo this year and ANA will monitor the popularity of the route to see if there is demand to add service of its own, he said.

“Aligning our Pacific flights with United’s domestic network is the best way to get passengers,” Shinobe said.

ANA is also considering adding flights to Istanbul, where fellow Star Alliance member Turkish Airlines has its hub, Shinobe said. A final decision is yet to be made, he said.

The Japanese carrier is looking overseas as domestic competition increases. It raised ¥174 billion ($1.8 billion) through selling shares last year, which it plans to use to buy planes and acquire stakes in other companies, said Ryosei Nomura, a spokesman at the airline.

The carrier jointly founded two domestic low-cost carriers, Peach Aviation Ltd. and AirAsia Japan Co., which started operations last year. It is also competing against a third. Jetstar Japan Co., part-owned by Japan Airlines Co. and Qantas Airways Ltd., also started flying in 2012.

“We have to resign ourselves to a certain amount of cannibalization,” Shinobe said. “What’s important is how the business model develops.”

ANA’s sales in January were cut by ¥1.4 billion after the carrier canceled all flights on its fleet of 787s while investigators probe what caused a fire on a Japan Airlines 787 parked at Boston airport and another lithium-ion battery on an ANA Dreamliner to emit smoke, prompting an emergency landing.