The operator of Japan’s All Nippon Airways (ANA) on Wednesday slashed its full-year profit forecast as its earnings nosedived on higher fuel costs and the delayed delivery of a modified Dreamliner.
ANA also blamed lukewarm passenger numbers and poor results for its budget carrier arm AirAsia Japan, as it warned that it now expects a net profit of 15 billion yen for the year to March 2014, down from the 45 billion yen it had projected in April.
Net profit in the six months to September plunged 45.7% to 20.07 billion yen, said ANA Holdings, which owns the airline and other related interests.
“Passenger unit cost and numbers fell short of initial targets and there were delays in receiving new aircraft that caused delays in establishing new international routes and adding flights,” the company said in a statement.
While the carrier did not name the glitch-plagued Dreamliner, for which it is the world’s biggest customer, ANA was hit hard by the grounding of the high-tech aircraft earlier this year.
ANA and domestic rival Japan Airlines, which also reports its quarterly results this week, were sideswiped by the grounding of Boeing’s new aircraft that began in January. After a long-running probe the planes were allowed to fly again in June.
The carriers at the time operated about half the Dreamliners in service and had to cancel hundreds of flights in the wake of the crisis, which was caused by problems with the plane’s lithium battery.
A jump in demand for international freight helped offset a slump in cargo services at home, ANA said, adding that overseas travel revenue was up 9.3% despite lower passenger numbers.
ANA has also struggled in its home market’s fledgling budget sector, where AirAsia Japan “did not perform as well as expected”.
The joint venture with Malaysia-based AirAsia is due to end services under the name by Thursday in a dispute over business practices.
ANA has rebranded the carrier as Vanilla Air, which is to begin flights in December.
The airline said it would remain under pressure as the sharply weaker yen pushes up the cost of fuel—usually an airline’s biggest single expense.
“The yen continued to weaken in the first six months, which increased costs for fuel and other dollar-denominated outlays, causing expenditures to exceed initial estimates,” it said.
“ANA has no choice but to assume that the yen will continue to weaken further in the second half, and must also assume that fuel costs will increase.”
It also cited a “sluggish recovery in leisure traffic to China from Japan”.
Japanese firms were hit after a Tokyo-Beijing territorial row erupted again last year, sparking a consumer boycott of Japanese brands in China and weighing on travel between the Asian giants.
(c) 2013 AFP