Japanese carriers All Nippon Airways and Japan Airlines have revealed the extent of the hit they have taken from the financial downturn after JAL disclosed a full-year loss of ¥63 billion ($648 million) for the 12 months ending 31 March and ANA posted its first annual loss for six years.

JAL's ¥63 billion net loss compares to a ¥17 billion net profit for the previous year and the Oneworld carrier is forecasting a similar loss for the coming year because it anticipates the global economic downturn will continue to adversely affect demand. It expects total operating revenues to fall 10% this year to ¥1.75 trillion, but believes its net losses will remain largely unchanged as it aims to cut its operating costs by 10% to ¥1.81 trillion.

"There will be curtailment of a total of ¥100 billion in investments over the period of 2009/10 fiscal year of which ¥80 billion in flight equipment investment will be held back partially due to the payment period for new aircraft," it says. "Twenty billion yen of general ground investments and maintenance components and modifications will be deferred till further notice," it adds.

Other cost saving measures include retiring its Boeing 747-200/300s and replacing its 747-400s on routes with Boeing 777-300ERs.

JAL has also been working on cutting its labour costs. It now aims to shed around 1,200 jobs from 47,500 staff levels by the end of March next year. These cuts include the decision to close its foreign pilot base in Hawaii later this year, which will result in 130 job losses.

JAL is also acknowledging publicly it is speaking to the government's Development Bank of Japan about applying for a ¥200 billion loan.

ANA, meanwhile, posted a net loss of ¥4.2 billion, its first annual loss in six years."We achieved more than ¥18 billion in cost savings but this was outstripped by a fall in revenue," says ANA executive VP, Tomohiro Hidema. The carrier's revenues fell 6% to ¥1.39 trillion for the period.

It too has embarked on a cost-savings drive to offset anticipated reduced revenues for the year ahead. But unlike JAL, ANA believes it can return to a small profit in 2010 as it estimates a ¥42.5 billion fall in revenues this year can be more than offset by cost-savings of ¥73 billion. It has already embarked on a slew of network changes this year to adjust to the reduced demand environment and will also postpone all non-vital investments.

For more on the challenges facing Japanese carriers, click here.

Source: Airline Business