ANA slashes full year forecasts
By Ken Hijino in Tokyo
Published: November 22 2001 12:56 | Last Updated: November 22 2001 15:24
All Nippon Airways, Japan's second largest carrier, slashed its earnings forecast for the full year on Thursday after unveiling larger-than-expected losses caused by depressed passenger volumes after the September 11 attacks on the US and withering domestic traffic.
ANA now forecasts a net loss of Y11bn ($88m) for the full year ending March, a reversal from an earlier estimate of Y18bn in net profit. Group revenues are expected to fall by 5.5 per cent to Y1,190bn.
Like all other international carriers, ANA has been hit by a sharp drop-off in international passenger traffic, increased insurance and security costs, as well as by dwindling domestic travel due to the weakness in the broader economy.
"On domestic operations, a continued economic slump is feared to reduce demand for travel, especially amongst business passengers and no near-term solution is in sight for reversing the drastic decline in the number of international passenger traffic," ANA said.
Falling traffic has been further exacerbated by falling cargo volumes - ANA's international and domestic cargo revenues falling 27 per cent for the first half of the year.
To shore up profitability in this harsh environment ANA said it will reduce its workforce by an additional 400 from an earlier decision to cut 680 jobs by the end of March 2002.
The company has also announced a decision to reduce ANA's international operations by 15 per cent to adjust to shrinking demand. This includes a suspension of three routes for the winter season.
Though ANA has seen a firm first half performance in its domestic passenger revenue, which accounts for nearly 80 per cent of its passenger revenue, travel within Japan has now begun to slide. In October, domestic passenger numbers fell 7.7 per cent compared to an year earlier.
Competition in domestic routes is expected to intensify in the coming year after Japan Airlines, the leading international carrier, announced a merger with third-ranking Japan Air System last aimed at better targeting domestic travellers.
ANA's shares fell 0.6 per cent to Y312 on Thursday