Japan's biggest airlines foresee smooth annual earnings

Im sure Skymark would agree.

Of COURSE they do! Fuel prices are WAY down, but they're only going to reduce the surcharge on certain, one-way flights, and even then not by a whole lot in relation to how much the airlines will profit from the decrease in fuel costs. On top of keeping the surcharge in place they can jack up ticket prices and say it's justified because fuel costs are down (despite not lowering the surcharge that much if at all). It's going to be a BIG year for them indeed, save perhaps, as wildwest mentioned, for Skymark. Guess the mini-skirt gimmick didn't work.

They will loose market share unless they drop the fuel surcharge. It is only a matter of time. Last week I could fly round trip to Japan from the US for $600 or $2000 for Business class while the lowest fare for JAL or ANA was $1200 and $5000. But they aren't the only carriers that are uncompetitive for now.

So people get an understanding of the politics of the profit.

ANA's employee bonus scheme kicks in, when ANA's profit goes past the 50 billion yen profit ceiling. Up until 2 years ago, the ceiling used to be 5 billion yen.

If you deduct the costs of the new planes, then there is only 36 million yen to share among the 11000 full time staff for the summer bonus

Add to this, Abenomics aside, ANA has not raised base salary for the last 10 years, it has actually reduced it for new entrants, over the last 10 years.

In this news report you have all the ailments of the Japanese economy and why Abenomics won't work. ANA is hoarding cash now because it well knows that at present it is riding a Dankai wave of monolingual, but well-off Japanese. However this wave will crash, over the next ten years, as more and more of the retirees become housebound, due to age and ailments. Their place will not be replaced by a more cash strapped younger generation and ANA cannot compete on the international stage with the budget airlines and many international carriers who offer more leg space than ANA and better in flight services.

There's nothing economically optimistic about this news story for Japan, It's like celebrating the tour de france by praising Armstrong winning his 8 yellow jerseys drugged up.

The ANA fuel surcharge should disappear when the aviation fuel price drops below $60 per barrel. Unlike some other airlines there is a correlation between the fuel surcharge and the fuel price. I don't expect fares to change much, but I've got lots of miles ready to book some free flights.

Gary, the planes are scheduled to be delivered in 2022. They do not pay for them up front. Thus, the Cap Ex spending will not come out of this year's fiscal budget.

As for the sustainability of Japanese airlines. I agree that the fewer and poorer Japanese will not be able to sustain it. Though, like other industries, the airlines can differentiate themselves with service. I hate flying on US based airlines, as the service is terrible.

Also, your railing against Abenomics is rather silly. The airlines almost went bankrupt in 08-09, which led to salary reductions. The airlines can not be expected to raise salaries immediately. Abenomics is not as terrible as this site makes you think. I think most people who dislike it, are the ones who came here 5-7 years ago, with the incredibly strong yen. Now that is over, people are just mad.

elkarlo wrote.

Gary, the planes are scheduled to be delivered in 2022. They do not pay for them up front. Thus, the Cap Ex spending will not come out of this year's fiscal budget.

ANA is paying $2.2 billion this year for the present Dreamliners in their fleet. ANA juggle their finances so their corporate tax bill can write off present investment against future investment and for that to happen they try never to announce future investment as being higher than the present payments for past investment.

elkarlo wrote.

Also, your railing against Abenomics is rather silly. The airlines almost went bankrupt in 08-09, which led to salary reductions. The airlines can not be expected to raise salaries immediately. Abenomics is not as terrible as this site makes you think.

Nope the Japanese airlines are symptomatic of everything that is economically wrong with Abenomics. The present rosy picture is short term, where the underlining long term problems still remain there for all Japan.

And by the way, ANA HAS NEVER REMOTELY NEARED BANRUPTCY. Don't mix ANA with JAL, whose bankruptcy was largely due to real estate investments that went heads up. ANA was wise enough to divest itself of all its property investments in1999 - 2002 period.

Thanks to Chinese and other Asian tourists.