ANA Group anticipates larger losses in the current year, consolidating airline units

ANA Group announced (19-Mar-2010) details of its "ANA Group FY2010-2011 Corporate Strategies", designed with the recognition that it is "necessary for ANA Group to rebuild its business base to accommodate the global economic downturn, as well as the drastically changing business environment". Details include:

• Financial objectives: ANA plans to be "stabilising in the black in FY2011", but stated that it is anticipating larger-than-expected losses in the 12 months to Mar-2010 (FY2009), on a slower recovery in travel demand and deepening erosion of yields. However, the carrier expects to return to profitability in FY2011, on cost-cutting efforts and anticipated growth in international operations. The carrier provided the following financial forecasts for FY2009, FY2010 and FY2011:
  • Operating revenues: JPY1,200 billion in FY2009 (compared to previous forecast of JPY1,260 billion), JPY1,360 billion in FY2010 and JPY1,477 billion in FY2011;
  • Operating profit: Loss of JPY61.0 billion in FY2009 (compared to previous forecast of a JPY20 billion loss), a JPY42.0 billion profit in FY2010 and JPY104 billion in FY2011;
  • Recurring profit: Loss of JPY95 billion in FY2009, a profit of USD13 billion in FY2010 and JPY61 billion FY2011;
  • Net loss of JPY65 billion in FY2009 (compared to a previous forecast of a JPY28 billion loss), with a net profit of JPY5 billion in FY2010 and JPY37 billion in FY2011;
  • Equipment investment: JPY228 billion in FY2009, JPY226 billion in FY2010 and JPY240 billion in FY2011;
  • Productivity (international ASK growth): -4.5% year-on-year in FY2009, 12% growth in FY2010 and 21.2% growth in FY2011;
  • Productivity (freight tonnes): -3.8% in FY2009, -1.0% in FY2010 and +1.2% in FY2011;
  • Productivity (domestic ASK): -18% in FY2009, +18.3% in FY2010 and +1.2% in FY2011;
• Opportunities: ANA recognises the capacity increase of the airports in the Tokyo metropolitan area, the acceleration of Open Skies and the introduction of B787 equipment as a "big business chance" in FY2010. This will enable the carrier to expand its international operations;
• Goal: To "build up our growth in a more global stage to reach our goal as becoming No.1 in Asia". The carrier also has the following aims for the FY2010-2011 period;
  • To set international operation as the core business of ANA Group;
  • To re-strengthen the marketing function and cost structural organisation in order to build its business structure that is resilient against volatility;
  • To build corporate culture "flexible enough for approaching big restructure";
• Key strategies for 2010 and 2011:
  • Expanding "network" business, based on Haneda expansion and Narita-Haneda Dual Hub Model": Also includes expanding market share through alliances with partner airlines and codeshare operations;
  • Expansion of Global Marketing with further penetration into new global markets;
  • Stabilisation of Okinawa cargo hub and strengthening the sales structure;
  • Materialisation of the New Cost Structure and the Productivity: The carrier will implement measures to improve productivity, will expand its cost structure and conduct further cost/transaction review, as part of attempts to reduce costs by JPY86 billion. The carrier also plans to implement revenue-enhancing measures, for additional revenues of JPY32 billion;
  • Materialisation of the Group Reform: As part of this, the carrier plans to accelerate its job reduction programmes, reducing the number of employees in indirect operations by approximately 20%, or approximately 1,000 employees, during FY2010. The carrier will also combine Air Japan and NAA & JP Express by Jul-2010, and combine Air Nippon Network, Air Next and Air Central by Oct-2010, as part of plans to eventually consolidate the Group airlines into a three company system by the end of FY2011. [more]