Air Freight News

Airline gives surprise profit outlook even as planes remain grounded

ANA Holdings Inc. issued a surprise profit outlook for the fiscal year, even as international air travel to and from Japan remains limited and countries across the globe recover from the pandemic at different speeds.

Operating profit for the year through March 2022 will be 28 billion yen ($257 million), Japan’s No. 1 carrier said in a statement Friday, seeking to deliver on last year’s pledge to return to profit despite the spread of Covid-19. That compares with analysts’ average projection for a 93.6 billion yen loss, according to data compiled by Bloomberg.

The aviation industry has been pummeled as countries closed their borders and international travel dried up, and the recovery will likely be slow. Airlines are expected to lose a combined $48 billion in 2021, the International Air Transport Association has said.

Still, ANA Chief Executive Officer Shinya Katanozaka said the company will turn cash-flow positive around July, with current spending sustainable for another three years.

ANA’s operating loss for the year through March was 465 billion yen, in line with a narrower forecast issued last week. Revenue fell 63% to 729 billion yen.

“It’ll be hard for ANA to achieve the forecast without cutting a lot of costs,” said Yasuo Hashimoto, principal consultant at Japan Aviation Management Research. “The second quarter, including summer holidays, will be an important source of income as it’s a high season.”

The airline has been lowering costs by retiring large aircraft including Boeing Co. 777s, and dispatching employees to other companies instead of shedding jobs. It has also reduced office space as more staff work from home.

ANA and Japan Airlines Co. may find themselves lagging their peers, especially in the U.S., where Southwest Airlines Co. reported an operating profit of $199 million for the first three months of the year. United Airlines Holdings Inc. said earlier this month that it would start hiring pilots again.

Complicating the Japanese carriers’ recovery prospects, the country declared a third state of emergency last week to combat rising infections in major cities including Osaka and Tokyo. Japan’s vaccination rollout has been relatively slow compared with the U.S., U.K. and some other countries in Asia.

ANA and Japan Airlines aren’t likely to get much of a boost from the Tokyo Olympics in July either, which will be held without overseas spectators. Even so, domestic demand is seen rising from later this summer, according to Hashimoto. The airline industry’s domestic markets could potentially recover to 96% of pre-Covid levels in the second half of 2021, according to IATA.

ANA shares rose 1.1% before the results. ANA is up about 10% this year, following a 37% slump in 2020.

While cost cuts are going faster than anticipated, “I don’t think the worst is over yet,” CEO Katanozaka said at an earnings briefing.

Bloomberg
Bloomberg

{afn_job_title}

© Bloomberg
The author’s opinion are not necessarily the opinions of the American Journal of Transportation (AJOT).

Similar Stories

Thai Airways creditors set to vote on debt restructuring plan

Thai Airways International Pcl faces a key hurdle Wednesday as the national flag carrier navigates the devastation wreaked on the global travel industry by the pandemic.

View Article
Delta seeks volunteers to fill vacancies at airport lounges

Delta Air Lines Inc. is looking for employees to take shifts cleaning tables and restocking the buffet at Atlanta airport loyalty lounges after its normal contractor for the jobs couldn’t…

View Article
Duty-free giants are handing out free flights to lure customers

Last month, Hyun Jung-a boarded a flight from South Korea’s Incheon Airport. Around two hours later, she was back in the same airport and loading up on duty-free shopping, despite…

View Article
https://www.ajot.com/images/uploads/article/md_2544443.jpg
Swiss WorldCargo resuming flights to Boston on May 21st
View Article
https://www.ajot.com/images/uploads/article/vcsPRAsset_3683362_194597_adcc9a23-4e9e-4cfc-ace2-598753fe08ad_0.jpg
Turkish Airlines Cargo opens new cargo connection from Munich to Istanbul
View Article
Airbus readies suppliers for next step in A320 ramp up

Airbus SE has told suppliers to be ready for a ramp up in production of its best-selling A320 narrow-body jet series to as many as 53 a month by the…

View Article