HA! ANA is feeling the pain too


All Nippon Airways has announced its fiscal year 2010-2011 corporate strategy and revised its earning forecast today. This can be summarized in one sentence: ANA's loss has widened due to increased competitions and they will restructure and downsize too! Looks like Japan Airlines' recent promotions are seeing some positive effects (from JAL's point of view of course, this is a JAL blog LOL)!

ANA is expected to loss 65 billion yen in this fiscal year. They have previously expected to loss 28 billion yen, that's a 37 billion more than the previous forecast! ANA blames this on slow traffic recovery and increased competitions.

According to The Wall Street Journal,

"The recovery in domestic passenger traffic was not as strong as hoped," which kept a lid on growth in ticket prices per passenger, ANA said. Competition to improve market share has also pressured its bottom line, the airline added.

In addition, the company said demand for cheaper air tickets among international travellers led to a weaker-than-expected revenue forecast from its international services.

JAL has rolled out a bunch of promotions since it filed for bankruptcy protection on January 19 2010. The birthday promotion and new sale fares have further driven down the domestic fares. ANA has been whining about that since JAL received the first bailout last year. But they also previously admitted that JAL's promotions have not reached the point of price destructions yet.

Under their corporate plan, ANA will focus more on international network and aim to set that as their core business. ANA will try to return back to profit in fiscal year 2010 and stabilize it in fiscal year 2011. They will achieve this through cost cutting (e.g. streamlining operation, back office job cuts, early retirement, reduce sales commission, etc) and expand their revenue sources. But the JAL Mileage Project 2010 has left ANA with no choice but to launch the counter campaigns. Otherwise they will lose even more customers to JAL. And that will increase ANA's (and JAL's) liability in the next fiscal year. All those double miles and bonus miles will come back to haunt them later. So can these cost cutting offsets the increase? Probably. I once heard the miles don't cost the airlines that much (they are only expensive to us, the consumers or the miles addicts) :P

One interesting point in their strategy press release is that ANA will no longer group flights into "international" and "domestic" flights. Instead, they will be grouped as "long-haul" and "short-haul". So does this mean food/drink for sale on short-haul flights are coming soon? I can't wait for this to happen.

ANA, here's an idea. Cut more in-flight services on your short-haul flights to further reduce costs :P You can read ANA's corporate plan here and their revised earning forecast here.

Now I feel bad for those who people who will lose their jobs. The two biggest airlines in Japan are cutting jobs left and right. Where can they find another job? Skymark? Fuji Dream Air?



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