On Wednesday, ANA reported its financial results for the three months ending June 30th, 2020. As one could have expected, it makes for pretty grim reading. The carrier has recorded over $1 billion in net losses, despite having lowered costs by nearly twice that amount. While international operations will remain subdued for some time, the airline hopes to scale up domestic flights significantly in the second quarter.
On the way back from “rock bottom” demand
In its first-quarter results published Wednesday, Japanese carrier All Nippon Airways, ANA, announced net losses of 108.8 billion yen ($1.037 billion). The airline said that while passenger demand hit “rock bottom” in the months between April and June 2020, trends of recovery were beginning to appear in the Japanese domestic market.
“Passenger demand for both international and domestic flights declined
significantly, due to worldwide government travel restrictions and the Declaration of the State of Emergency from the Japanese government,” said Ichiro Fukuzawa, Executive Vice President and Chief Financial Officer of the company in the statement seen by Simple Flying.
“Against this backdrop, we raised our efforts to minimize both variable and fixed expenses by scaling down our operations and personnel costs,” Mr Kukuzawa continued. Indeed, ANA managed to reduce operating costs with over 200 billion yen ($1.907 billion), and yet, it was not enough to offset the heavy losses.
International revenue down 94.2%
International flights were mostly suspended due to travel restrictions. However, 13.8% of operations were maintained compared to the same period last year to meet the demand of people returning to their home countries. International passenger revenue was down 94.2% year-on-year.
Domestic operations decreased to 14.8% in May due to the declared State of Emergency in Japan. Meanwhile, the market is showing tentative signs of recovery, and flights in June were back to 25.2%. Furthermore, ANA expects the scale of operations to recover to 72.4% of the same period last year for August. Domestic passenger service revenue was down 86.5% year-on-year.
FY2020 remains uncertain
The airline acknowledges that the future remains uncertain due to the ongoing global health crisis. As such, it is unable to provide any forecasts for the remainder of the year. A spokesperson shared the following statement with Simple Flying,
“We expect the current decline in passenger demand to continue, due to the uncertainty caused by COVID-19 and the unknown duration of various government travel restrictions. Given the unprecedented situation, we are not able to provide financial guidance for FY2020.”
