ANA to change corporate structure; operate under holding company

Singapore
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Japan's All Nippon Airways (ANA) is proposing a restructuring move to operate all its different brands under a holding company.

The move, scheduled for 1 April 2013, must first be approved by its shareholders this June and the relevant authorities, said the airline in its two-year management strategy released today.

A major reason for the proposed shift, is for the legacy carrier to differentiate its brand from its low-cost operations - AirAsia Japan and Peach Aviation.

"The group will consider shifting to a holding company structure, which may be the optimal organisation structure for building a multi-brand strategy between the existing ANA brand and the new low-cost carrier (LCC) brand," said the statement.

It added that the airline industry in Japan is undergoing major transition where there is an expansion of airport capacity in Tokyo, further moves towards deregulation and also with the entry of a wave of LCCs.

With operations under a holding company, the group hopes to seprate management policy decision-making from business execution, where the holding company will then be able to focus on corporate policy decisions for the group.

Where each brand is given authority and responsibity, it will also have a better understanding of customers' needs to drive down costs and improve quality, said ANA.

Back office operations will also be streamlined across the group through a shared service center.

Last year, ANA ventured into the LCC business with joint ventures to set up AirAsia Japan and Peach Aviation.It also became the launch operator of the Boeing 787 and began preparations for a merger with Air Nippon Co.

With the new structure, the holding company will be the umbrella group for ANA operating company, ANA Wings, Air Japan, AirAsia Japan and other companies including subsidiary Peach Aviation.

In the strategy, the airline also wants to increase its international available seat kilometres by 22% by fiscal year 2013 through focusing on long-haul routes and connections.

A main drive will be the expansion of its international network through operating its Boeing 787s, of which half of its fleet of 27 will be in service by the end of 2013, on long-haul routes. This will begin with the Narita-Seattle and Narita-San Jose services.

ANA is also looking at strengthening its global network through joint ventures on routes between Asia and the United States and Europe.

For its domestic operations, the airline also wants to increase efficiency and beat competition by deploying its 787s. AirAsia Japan will also be launched in August and there will be quick expansion of its routes and frequencies.

Cargo business will also be expanded through the development of the Okinawa cargo hub, said the airline.

The aim though eventually, is to increase its operating income to yen (Y) 110 billion ($1.4 billion) in fiscal year 2012 and to Y130 billion the year after. The efficiency brought about by the changes is also expected to reduce costs by Y100 billion.