ANA reports improved financial conditions

ANA's 2nd Boeing 787-9 to be powered with GE engines (GEnx)

ANA Holdings Inc.  today reported its financial results for the nine months ended December 31, 2021.

Overview
In the first nine months of fiscal year 2021 (April 1, 2021 – December 31, 2021; hereinafter the “nine months ended December 31, 2021”), the Japanese economy has slowly recovered, demonstrating signs of recovery in corporate production activities. While the airline industry continues to face difficulties due to the spread of the Omicron variant and continued restrictions on entry and travel in many countries, there are signs of recovery in the increased demand for domestic flights in the United States and other countries.

 Under these economic conditions, the increase in demand for travel in Japan contributed to an operating revenue of 738.0 billion yen for the nine months ended December 31, 2021. This marks an improvement from the same time period for the previous year. The continued impact of COVID-19 resulted in an operating loss of 115.8 billion yen, an ordinary loss of 118.3 billion yen, and a net loss attributable to owners of the parent of 102.8 billion yen. However, ANA HD achieved a positive operating income in the third quarter (October-December), returning to black for the first time in eight quarters.

“Though the entire airline industry has faced continued challenges, I am proud of how ANA Group employees have persevered to help the company continue to meet passenger and cargo needs and maintain global connections at this vital time,” said Ichiro Fukuzawa, Executive Vice President and Chief Financial Officer of ANA HOLDINGS INC. “We have adjusted our practices, but our commitment to offering unparalleled service and convenience remains unchanged. As the recovery continues, the ANA Group will continue seeking opportunities for growth and expansion with increased profitability.”

Air Transportation
Despite being significantly impacted by the COVID-19 pandemic, passenger demand increased from the previous year, and due to proactive efforts to capture the strong cargo demand which resulted in record high revenue, operating revenue exceeded the amount recorded during the same period of the previous year. While ANA HD still recorded an operating loss, reductions in fixed costs (such as personnel costs as well as depreciation, amortization and maintenance costs which were achieved through the execution of structural business reforms) have helped curtail losses and improve profits year-on-year.

  • 1. International Passenger Service (ANA)

    • ・International passenger services continued to see reduced demand for travel across all regions due to the resurgence of COVID-19 cases, the spread of new variants and continued government travel restrictions. However, revenue and the number of passengers increased year-on-year due to a gradual recovery in business demand, primarily for expatriates traveling between Japan and overseas, as well as demand for connecting flights from Asia to North America and demand for flights home during the New Year holiday. Revenue and number of passengers remained at approximately 10% of pre-COVID levels.
    • ・ANA began transferring the operation of several North America routes from Tokyo Haneda to Tokyo Narita airport starting in July to optimize connections from Asia, an example of ANA closely monitoring demand to determine which routes to operate, as well as to offer temporary routes to destinations with seasonal demand and urgent travel needs.
  • 2. Domestic Passenger Service (ANA)

    • ・The number of passengers served and revenue both increased compared to the same period during the previous year. While a State of Emergency was repeatedly declared due to a surge in COVID-19 cases during the first half of the fiscal year, a recovery in demand was visible since the declaration was lifted at the end of September and the number of COVID-19 cases remained at a low level. As a result, the number of passengers and revenue in the third quarter (October-December) was the highest on a quarterly basis since the pandemic began and recovered to approximately 50% of pre-COVID levels.
    • ・Detailed adjustments to the route network capacity were made in response to fluctuations in demand. In addition, ANA offered additional flights on weekends and holidays from October in order to proactively capture the recovering demand.
  • 3. Cargo Service (ANA)

    • ・The continued strong performance in international cargo services can be attributed to robust demand and a shift to air transport as a result of congestion in marine transport. ANA fully utilized freighter aircraft, introducing the Boeing 777F freighter on the Tokyo Narita – Hong Kong and Tokyo Narita – Taipei route in October, as well as on the Tokyo – Qingdao route in November. ANA also actively responded to strong demand by deploying passenger aircraft to fly cargo-dedicated flights and by capturing demand for the transportation of goods such as automotive parts, semiconductors, electronic equipment and vaccines. In the third quarter (October-December), cargo volume greatly exceeded the amount transported during the same period in the previous year, leading to record high in quarterly revenue for the fifth consecutive quarter.
  • 4. LCC (Peach Aviation)

    • ・Passenger numbers and revenue increased compared to the same period during the previous year, when demand was more significantly impacted. Domestic passenger volume and revenue for the third quarter (October-December) exceeded pre-COVID levels behind strong demand after the State of Emergency was lifted at the end of September, and another contributing factor was Peach Aviation’s expanded scale of operations.
    • ・Peach introduced new routes, Osaka Kansai – Memanbetsu in July, and Fukuoka – Ishigaki in October. Peach will continue to closely monitor signs of recovery in demand to further expand the network. All international routes are currently suspended due to continued immigration restrictions in a number of countries.
  • 5. Others

    • ・Other revenue from the Air Transportation business was 96.6 billion yen (down 9.8% year-on-year from 107.1 billion yen). This includes revenue from the mileage program, in-flight sales revenue, revenue from maintenance contracts and other sources.

Airline Related, Travel Services, Trade and Retail, and Others

  • 1. Airline Related

    • ・Operating revenue: 149.8 billion yen, down 10.1% year-on-year
    • ・Operating income: 2.6 billion yen, up 30.1% year-on-year
    • ・Although operating revenue decreased year-on-year as a result of lower handling volumes for systems development due to reduced investment within the ANA Group owing to COVID-19, profit improved as a result of reduction in personnel and outsourcing costs, mainly for ground handling services such as passenger check-in and baggage handling.
    • ・In November, the product line-up was expanded to include the popular online in-flight meal sales with the introduction of ANA international business class in-flight meals.
  • 2. Travel Services

    • ・Operating revenue: 34.5 billion yen, down 4.4% year-on-year
    • ・Operating loss: 0.2 billion yen (operating loss of 4.7 billion yen during the same period a year ago)
    • ・For travel services, all overseas tours operated by the ANA Group remain suspended due to the effects of COVID-19 and domestic travel volume decreased compared to the previous year when the “Go To Travel” promotion was in effect. ANA X Inc.’s contract revenue increased as a result of the transferred digital marketing business and other functions within the ANA Group and contributed to the increase in operating revenue and reduced operating losses.
    • ・Working to create a “world where people can live on miles,” the ANA Group launched a mobile application service called “ANA Pocket” in December, which allows users to earn points not only for air travel, but also for walking and travel on train as well as other vehicles within Japan that can be converted into ANA miles and other perks.
  • 3. Trade and Retail

    • ・Operating revenue: 61.4 billion yen, up 0.7% year-on-year
    • ・Operating income: 0.6 billion yen (operating loss of 3.0 billion yen during the same period a year ago)
    • ・As aviation demand gradually recovered, sales increased at ANA FESTA shops in airports and the handling volume of semiconductors for electronics businesses increased. Due to the change in accounting standards, the increase in operating revenue was minimal compared to the same period during the previous year.
  • 4. Others

    • ・Operating revenue: 27.6 billion yen, up 0.8% year-on-year
    • ・Operating income: 1.1 billion yen, up 125.1% year-on-year
    • ・While demand for buildings and facilities maintenance decreased due to the impact of COVID-19, increased transactions for the real estate business lead to improved revenue.

Outlook for FY2021 (April 2021 – March 2022)
ANA HD maintains its consolidated financial forecast for FY2021, initially presented on October 29, 2021.

  • *ANA HD has started to apply the “Accounting Standard for Revenue Recognition” (ASBJ Statement No. 29, March 31, 2020),” and other accounting standards beginning this fiscal year. Values for the nine months ended December 31, 2021 reflect these new accounting standards. For details, please refer to “ANA HOLDINGS INC. Consolidated Financial Results for the Nine Months Ended December 31, 2021” on the ANA Group Investor Relations website

Top Copyright Photo: ANA (All Nippon Airways) Boeing 787-9 Dreamliner JA937A (msn 66524) (Inspiration of Japan) ITM (Akira Uekawa). Image: 956496.

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