ANA sees record loss, plans cost cuts

ANA sees record loss, plans cost cuts

The logo of All Nippon Airways (ANA) is seen on its counter at a terminal of Haneda Airport. (Reuters photo)
The logo of All Nippon Airways (ANA) is seen on its counter at a terminal of Haneda Airport. (Reuters photo)

TOKYO: All Nippon Airways said on Tuesday that it would retire more than a tenth of its mostly Boeing fleet and delay two aircraft orders to help rein in costs and survive a collapse in air travel caused by coronavirus travel restrictions.

Forecasting a record operating loss of 505 billion yen ($4.82 billion) for the year to March 31, Japan's biggest airline said it would also temporarily transfer more than 400 workers to other companies and ask those remaining to accept pay cuts or unpaid leave.

ANA, like other airlines, is burning through cash to keep jets flying albeit with too few passengers.

Though demand for domestic flights has recovered to about half of last year's level, helped by government-subsidised travel, it is flying only a fraction of its usual international schedule.

After initially halting nearly all entry to prevent the spread of the novel coronavirus, Japan recently began allowing in business travellers and foreign residents on condition they agree to quarantine for two weeks. Most overseas tourists are still banned.

As a result, ANA said it would retire 35 planes, 28 of them early, including 22 Boeing 777 widebodies and delay delivery of one 777 and one Airbus A380 superjumbo. That will reduce its fleet by a net 33 aircraft to 276 planes.

To ensure it has enough cash to survive the downturn, the airline also confirmed that it had secured $3.8 billion in subordinated loans from state-backed and private lenders.

Its cost-cutting response to the pandemic follows job cuts and early aircraft retirements at other large Asian carriers including Singapore Airlines, Cathay Pacific Airways and Qantas Airways -- all suffering from border restrictions that have curbed travel.

ANA expects the downturn in domestic travel, which normally accounts for just over half its revenue, to last for about two years, with international routes unlikely to recover until 2024.

When it does rebound, however, the Japanese carrier expects international demand to be mostly from tourists rather than more lucrative business travellers.

"That demand will likely not fully return to previous levels due to changes to the nature of work," ANA said in its business plan.

To adapt to that long-term market shift, ANA said it would launch a low-cost airline brand in 2022 that would ply routes to Southeast Asia and Oceania using Boeing 787 Dreamliners with more than 300 seats.

At home, in addition to the taxpayer-funded domestic tourism campaign, ANA and Japan Airlines are also benefiting from landing fee waivers by a government that sees air routes as essential to connecting the 3,000-kilometre Japanese archipelago stretching along the edge of East Asia.

The government, however, has so far preferred a piecemeal approach of public help and airlines' own efforts to secure funding and cut costs, rather than offering large bailouts.

ANA also said it swung to an operating loss of 280.95 billion for the six months ended Sept 30 and a net loss of 188.49 billion yen.

Still, persident Shinya Katanozaka said his airline had enough money and a business plan that would see it through the industry crisis.

He denied an earlier media report that his airline planned to raise additional money through a new share offer.

Do you like the content of this article?
COMMENT

Govt urges end to HIV testing at workplaces

The Labour Ministry is asking businesses to avoid testing job seekers for HIV/Aids as a part of its bid to end discriminatory practices in the workplace, according to the Department of Labour Protection and Welfare (DPLW).

1 Dec 2020

THAI reveals new flights from Xmas

Thai Airways will resume domestic flights between Bangkok and Chiang Mai and Bangkok and Phuket from Dec 25 after suspending them for almost nine months because of Covid-19.

1 Dec 2020

Diesel discounts on offer to cut PM2.5s

Environment minister Varawut Silpa-archa on Tuesday reached an agreement with the Federation of Thai Industries to give discounts for diesel engine maintenance services, the government's latest effort to bring down PM2.5 levels.

1 Dec 2020