New ANA group strategy targets doubling in net profits

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ANA Holdings plans to grow its revenues by 20% and double net profit over the next three years, according to its latest mid-term corporate strategy report.

The Japanese airline group released a six-page document stating plans to aggressively expand its international operations, reduce costs and double its net profit to Y60 billion ($589 million) by FY2016.

"ANA Holdings' objective is to continue to maximise group profitability, whilst ensuring tight management of costs. The company will also work to optimise its business portfolio, taking advantage of the expansion of international slots at Haneda Airport to broaden growth across Japan and Asia," says the firm.

Plans for its full-service carrier All Nippon Airways (ANA) include increasing capacity on international routes by about 45% by FY2016, such that for the first time in the airline’s history, its non-domestic operations will be equivalent to the capacity of its domestic network.

Besides taking advantage of its position at Haneda airport to secure high yield business passengers from and to Tokyo, it also plans to grow at Narita airport once more slots there are made available from 2015. The aim is to capture more of the demand between Asia and North America through its Star Alliance and joint venture partners. It is also considering additional “bilateral relationships” with other airlines.

To stand strong against exchange rate fluctuations, the carrier says it will strengthen its overseas marketing to expand its international sales. It also has plans to actively pursue "promising" services to new destinations not yet served by Japanese carriers.

Fleet wise, it hopes to improve profitability as it takes delivery of its first Boeing 787-9s at the end of financial year 2014. It will also complete the installation of full-flat seats in business class for all long haul services, and improve cabin service on medium haul routes.

For its domestic operations, its priority is to retain profitability by responding to increased competition from the country’s bullet train service and low-cost carriers. This will involve having a more flexible fare structure to respond to cost pressures. The airline will also work to better optimise capcaity to match demand.

That will result in ANA increasing the utilisation of mid and small aircraft, while ANA Holdings will accelerate the transfer of smaller aircraft operations from ANA to ANA Wings. Two Boeing 787-9 will also be added to its domestic fleet in the first half of FY2014.

The carrier also has plans to add more freighters to its fleet and make the cargo business profitable by expanding its network, improving aircraft utilisation and reducing handling costs.

ANA Holdings also has a low-cost strategy to capitalise on demand in the East Asian budget market through the use of Vanilla Air and Peach to bring both carriers into profit. That will see Vanilla Air increase its fleet to 10 Airbus A320s by the end of FY2015 and expand its network of international leisure destinations, while Peach will build on its success in the Kansai region.