The FINANCIAL — ANA Group on January 31 reported its improved consolidated financial results for the first nine months (April – December inclusive) of fiscal year 2010.
Demand has remained firm with revenues increasing substantially, especially in the air transportation business, in comparison to the same period the previous year, when air travel was affected by the impact of the global economic recession. However, the economic climate remains challenging with steep rises in crude oil prices, concerns over the outlook for growth in overseas economies, and exchange rate fluctuations among the factors giving rise to uncertainty.
While costs rose in tandem with the company’s route expansion, steady progress was achieved with cost restructuring based on the FY2010-11 ANA Group Corporate Strategy and further progress was made in reducing operating expenses.
These factors have resulted in much improved consolidated business results for the current period with operating revenues up by 12.5% to ¥1,039.1 billion, operating income increased to ¥77.7 billion from a loss of ¥37.8 billion, recurring profit ¥115.9 billion higher at ¥58.3 billion and net income of ¥37.5 billion recovering from a loss of ¥35.1 billion.
Domestic Passenger Services
Both business and leisure demand remained firm on domestic routes and the number of passengers exceeded the previous year’s level.
ANA also worked to improve service by opening new facilities, including airport lounges, as part of the expansion of Domestic Terminal 2 at Tokyo’s Haneda Airport.
Furthermore, the group ensured that capacity was sufficient to meet peaks in passenger demand by adding seasonal flights and using larger aircraft in busy seasons such as year-end vacation periods.
This resulted in 4.7% growth in passenger revenues on domestic routes over the previous year to ¥503.0 billion.
International Passenger Services
While ANA strove to improve service by expanding its international network from Haneda Airport starting last October, it also succeeded in attracting passengers not only from the Tokyo metropolitan area but also from regional cities across Japan.
The company also worked to improve the competitiveness of its services by introducing new products and aircraft, for example, the new Boeing 777-300ER on the Narita-London route from October, marking the third route after its Narita-New York and Narita-Frankfurt route, as well as improving its online booking functions in China, Asia and Europe.
The territorial dispute over the Senkaku Islands resulted in a decline in tourism demand on routes to China after November, however its route expansion at Haneda and a strong rebound in business travel boosted overall passengers on international routes compared with the previous year.
This resulted in passenger revenue on international routes increasing by ¥58.4 billion to ¥215.0 billion compared to the previous year; a revenue increase of 37.3%.
Cargo Services
Freight tonnage on international routes was boosted over its level the previous year owing to high shipments of liquid crystal and semiconductor components on routes within the Asian region as well as strong trade on North American routes departing from Japan, mainly in automotive components.
On domestic routes, cargo connections to international routes grew contributing to an increase in the base level of freight carried, but freight tonnage fell below that of the previous year due in part to the downsizing of aircraft used.
Consequently, international cargo revenues increased 66.7% compared to the previous year; a rise of ¥26.0 billion, while revenues on domestic routes remained level with the previous year.
Outlook for FY2010 (April 1, 2010 – March 31, 2011)
Despite a gradual rebound in the Japanese economy, growth is flat and concerns over the steep rise in crude oil prices, a downturn in overseas economies and fluctuation in exchange rates also result in an uncertain outlook.
"Competition with other airlines and the Shinkansen bullet train will intensify during the fourth quarter and beyond, but ANA will work to improve competitiveness and stimulate demand while continuing to adapt our capacity to meet demand. We will also continue to make steady progress on reforming our cost structure to curb expenses through our FY2010-11 ANA Group Corporate Strategy which we have been working on since the beginning of the fiscal year," ANA says.
In this environment, the company will not reset the consolidated forecast, and a dividend payment is expected, in line with the initial plan of ¥1 per share for the year.
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