Japan airline ANA forecasts record $6.5 billion loss for pandemic-blighted year

TOKYO (REUTERS) – ANA Holdings, Japan’s biggest airline, on Tuesday (Oct 27) forecast a record operating loss of 505 billion yen (S$6.5 billion) for the year to March, after coronavirus-related travel restrictions forced it to cancel flights and ground aircraft.

The figure compared with an average loss forecast of 365 billion yen based on 10 analyst estimates compiled by Refinitiv.

ANA reported an operating loss of 280.95 billion yen for the six months ended Sept 30 compared with a 78.8 billion yen profit in the same period a year earlier.

Japan Airlines (JAL) is likely to post a record net loss of about 230 billion yen for the same business year, the Nikkei business daily reported on Tuesday.

That is roughly in line with the 226.8 billion yen net loss expected by nine analysts, according to Refinitiv SmartEstimate data, and compares with a net profit of 53.41 billion yen posted in the year ended March 31.

Japan’s second-biggest carrier has not provided guidance for the current year. A JAL spokesman said the reported forecast was not something the company announced, declining to comment. It is due to announce its first-half results on Friday.

ANA, like other airlines, is burning through cash to keep jets flying albeit with too few passengers. Though demand for domestic flights has recovered to about half of last year’s level, helped by government-subsidised travel, it is flying only a fraction of its usual international schedule.

After initially halting nearly all entry to prevent the spread of the novel coronavirus, Japan recently began allowing in business travellers and foreign residents on condition they agree to quarantine for two weeks. Most overseas tourists are still banned.

On Tuesday, ANA said it would retire 35 planes, 28 of them early, including 22 Boeing Co 777 widebodies and delay delivery of one 777 and one Airbus SE A380 superjumbo.

To ensure it has enough cash to survive the downturn, the airline has secured $3.8 billion in subordinated loans from state-backed and private lenders.

It is also plans to seek voluntary redundancies and wants to transfer some employees to other companies until air travel recovers, sources previously told Reuters.

ANA expects the downturn in domestic travel, which normally accounts for just over half its revenue, to last for about two years, with international routes unlikely to recover until 2024.

Its response to the pandemic follows job cuts and early aircraft retirements at other large Asian carriers including Singapore Airlines, Cathay Pacific Airways and Qantas Airways – all suffering from border restrictions that have curbed international travel.