ANA aims to secure additional ¥100bn in savings

Singapore
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Japan's All Nippon Airways has unveiled new plans to save an additional ¥100 billon ($1.1 billion) after projecting that it will make a loss this fiscal year.

The Star Alliance carrier announced a slew of measures earlier in 2009, aiming to cut costs by ¥73 billion and increase revenues by ¥30 billion amid the economic downturn. The "prolonged decline in demand, orientation toward low prices, intensification in competition with other transportation facilities [and] liberalisation in aviation", has resulted in a more "severe" operating environment, requiring additional measures, says the airline.

This comes as ANA reported that its net profit fell by 11.5% to ¥3.8 billion for the three months to 30 September. It also changed its full year forecast to a net loss of ¥28 billion instead of a profit of ¥3 billion.

The five-part plan that will provide a new "basis for growth" hinges on two aims. The first is to return to profitability in the 2010/11 fiscal year, and giving rise to stable revenues in 2011/2012. The second is to build on the opportunities provided by the expansion of Tokyo's Haneda airport, and grow international routes to achieve the new management vision of "stepping up on a more global stage".

The first part of the plan is to develop a business strategy around Haneda's expansion to enhance ANA's network, and develop markets outside Tokyo. It also aims to "deepen strategic partnerships" with foreign airlines through Japan's open skies agreements in order to increase revenues. It also hopes to better match demand with supply across its network, and develop the Okinawa hub to build the cargo business.

A new marketing strategy, says ANA, will increase "yield and efficiency in sales" by focusing on the leisure market and reducing the dependence on business travellers. It also aims to strengthen its revenue management system and introduce new freight rates. It will also emphasis internet sales, review the existing uniform service system and expand fee-based services

The number of airlines in the ANA Group will go down from seven to four in the first half of the 2010/11 fiscal year, and to three by the end of the 2011/12 fiscal year. It also aims to reduce the headcount among the "indirect business staff" by 20%, or around 1,000 people, and increase the productivity of each staff member by 10%.

To reform its cost structure, ANA will wet-lease some large cargo equipment, promote efficient route networks including the consolidation of internal Hokkaido routes at Chitose Airport, reconsider the agency sales commissions for domestic routes, and cut marketing-related expenses.

It also wants to cut manageable expenses by 15%, reduce officer compensation and management salaries even further, and introduce a temporary early retirement system from this year. It will also reform its management scheme and reduce staff numbers by the end of the 2011/12 fiscal year.

Embarking on this plan will help produce "an improvement of about ¥100 billion in income and expenditures" by the 2010/11 fiscal year, says ANA.