Weak H1 showing forces ANA to cut full-year profit forecast

Singapore
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All Nippon Airways’ parent company ANA Holdings has cut its forecast net profit for the financial year ending 31 March 2014 by 67% to Y15 billion ($153 million).

The downgrade comes as ANA announced a 46% fall in net income to Y20 billion for the six months to 30 September, despite an increase of 5.9% in its operating revenue to Y798 billion.

It cited weakness in the yen, which caused its fuel and other US dollar denominated cost items during the first half for the fall in profit. The carrier also noted that revenue over the six-month period failed to meet its growth forecast.

It pointed out that delays in the delivery of new aircraft “caused delays in establishing new international routes and adding flights”, which affected its revenue over the first half of the fiscal year. It also pointed out that now-defunct joint venture low-cost carrier Japan AirAsia “did not perform as well expected”.

“While ANA plans to take urgent measures to increase revenues and reduce costs, by optimizing for supply and demand conditions to reduce flight operating costs and by exercising cost discipline, it nevertheless believes that both operating profit and recurring profit will be about Y50 billion less than initial projections,” the company says.

It adds that it expects revenue over the second half of the financial year to come in Y30 billion lower than previously projected, as domestic airfares and the yen are expected to continue falling.

ANA is in the process of restructuring Japan AirAsia, which operated its final service on 26 October. The carrier, which is now a wholly owned subsidiary of ANA, is planning to relaunch services on 20 December under the new brand Vanilla Air.

ANA Holdings recently announced the acquisition of US-based company Pan Am International Flight Academy and also took a 49% stake in Myanmar-based Asian Wings Airways.