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ANA halves quarterly loss on cost cuts and cargo demand

Full recovery remains distant for Japan carriers focused on international travel

ANA Holdings appears headed for its smallest operating loss since January-March 2020, when the coronavirus began to spread globally.   © Reuters

TOKYO -- ANA Holdings likely cut its operating loss by half for the April-June period to about 75 billion yen ($680 million), Nikkei has learned, as cost-cutting efforts and strong demand for airfreight begin to lift the group out of a coronavirus-induced downturn.

The Japanese airline group, which operates All Nippon Airways, faces a sixth straight quarter of losses. But the April-June figure would be the smallest since January-March 2020 when the coronavirus first spread worldwide, signaling that the worst of ANA's troubles may be over.

Fewer flights, smaller planes and the loaning of workers to outside companies let ANA Holdings cut costs. The company also retired larger planes ahead of schedule last fiscal year, which decreased depreciation expenses.

Revenue is expected to have jumped 60% on the year to about 200 billion yen. The figure is smaller than in October-December, when the government's Go To Travel campaign boosted travel-related businesses in Japan, but the operating loss also has declined since.

Demand for travel shows signs of recovery. Passenger numbers for ANA Holdings in the April-May period rose 290% on the year to 2.23 million for domestic flights as well as 35% to 80,000 for international trips, despite Japan facing its third coronavirus state of emergency at the time.

Meanwhile, the decrease in passenger flights during the pandemic has lifted airfreight prices, in a boon to carriers. ANA Holdings tapped demand by stationing a cargo plane in the Chinese city of Hangzhou during June.

Yet the Japanese group's recovery has been limited compared with U.S. carriers like Delta Air Lines and American Airlines, which in April-June booked their first net profit since the beginning of the pandemic. ANA Holdings' passenger traffic was still down 70% domestically and 95% internationally in April-May compared with the same period in 2019, before the coronavirus outbreak.

ANA Holdings has been hampered by Japan's slow vaccine rollout and a smaller domestic market. The company earned half of its passenger revenue from international flights before the pandemic.

In contrast, Delta and American earned about 70% of their passenger revenue at home, meaning a recovery in domestic travel gives them more of a boost. A full recovery among Japanese carriers hinges on whether vaccine passports and other efforts to ease border restrictions revive demand for international travel.

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