All Nippon Airways' parent company saw its first-half operating profit decline 25% to Y78.8 billion ($724 million) as slower revenue growth and the costs associated with expansion at Tokyo's two metropolitan airports took a toll.
Group revenue at ANA Holdings for the six months ended 30 September was up 1.4% at a record high of Y1.06 trillion, driven by strong demand for both domestic and international services.
However, operating expenses were up 4.7% at Y977 billion, and net profit fell 23% to Y56.7 billion.
"Operating [profit] decreased year-on-year due to increases in personnel expenses, aircraft expenses, and maintenance expenses to further improve the safety, quality and service in preparation for the capacity expansion of the Tokyo metropolitan airports for 2020," says ANA.
Revenue from international passenger services rose 2.3% to Y339 billion, while the domestic figure showed much stronger growth, of 4.7%, to nearly Y369 billion.
For the low-cost segment, revenue declined 4.6% to Y46.1 billion. ANA Holdings attributes this to a "temporary decline" in the number of flights operated due to the merger between Peach and Vanilla Air.
Cargo service was the worst-performing segment: revenue contracted 19% to Y63.7 billion. ANA says both cargo volume and revenue declined as a result of a reduction in demand originating from Japan and overseas, as a result of a slowdown in the global economy.
Cash and cash equivalents as of 30 September amounted to Y240 billion, down from the Y268 billion it had on the same date in 2018.
In its outlook for the full year, ANA Holdings has reduced the forecast of operating profit to Y140 billion from Y165 billion, of group revenue to Y2.09 trillion from Y2.15 trillion, and of net profit to Y94 billion from Y108 billion.
ANA Holdings is expecting international passenger demand to slow, and cargo to decline primarily because of the US-China trade dispute. Competition in the low-cost segment is also likely to intensify.