ANA Holdings Inc. is expected to report a record ordinary loss for the nine months ended Dec. 31 due to the impact of the coronavirus pandemic, informed sources said on Tuesday.
The Japanese airline is believed to have swung to a consolidated ordinary loss of over ¥300 billion in the April-December period from a profit of ¥122.5 billion a year before.
The All Nippon Airways parent is scheduled to post its April-December results on Jan. 29.
The number of passengers on ANA’s international flights in the October-December quarter fell over 90% from a year earlier due to pandemic-related travel restrictions.
For domestic flights, the number of passengers recovered in November to some 50% of the year-before level thanks to the Japanese government’s Go To Travel tourism promotion initiative. But the figure fell to some 40% toward the end of the year due to the suspension of the program following a resurgence of the virus.
The company has been struggling with high aircraft maintenance and personnel costs.
Its financial estimates released in October called for an ordinary loss of ¥500 billion and a net loss of ¥510 billion for the full year ending in March.
The government’s declaration of a coronavirus state of emergency earlier this month is expected to drastically dampen passenger demand in the January-March quarter.
But ANA may not lower its earnings forecasts given its freight business’ stronger-than-expected performance thanks to transportation of smartphones and expensive electronics equipment, the sources said.
The company plans to slash costs by ¥400 billion by the end of March 2022 through structural reform efforts, including sending personnel on loan to firms outside the group, cutting the average annual income of All Nippon Airways employees by 30% and reducing the number of its aircraft.
ANA said Tuesday it will further reduce domestic operational costs in the next business year starting April by reviewing its fleet management, drastically cutting its use of large jets and relying more on smaller ones.
Under its domestic operations plan for the new business year, ANA will also suspend some services, including between Narita Airport and Osaka, due largely to reduced demand amid the coronavirus pandemic.
Compared with its initial domestic flight plan for the current business year, released in January 2020, the use of large jets will be cut by half while that of small aircraft will be raised by 30%, it said.
It will review its flight plan on a monthly basis depending on travel demand, the company added.
Compared with its initial plan for the current business year, the plan for the year starting April 1 represents a 15% decline in service capacity in terms of available seat kilometers.
Japan Airlines Co. said the same day it will increase flight capacity on routes seeing a faster recovery in demand during the next business year from April, including flights from Haneda Airport to remote southern islands in Okinawa Prefecture.
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