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ANA to cut capital of travel subsidiary to lessen tax burden

JTB and other COVID-hit businesses also downsize to 100 million yen threshold

The capital reduction of ANA Sales will slash its tax burden as it will be regarded as a small to midsize company.

TOKYO -- The coronavirus-hit travel unit of Japanese airline group ANA Holdings will cut its capital 900 million yen ($8.4 million) to 100 million yen in yet another move by a company in the travel sector to downsize for tax purposes.

The decision comes as the industry continues to struggle due to the coronavirus pandemic. The capital reduction of ANA Sales will lessen its tax burden, as it will then be classified as a small or midsize company under Japanese tax law.

Shareholders approved the action on Jan. 12., with the reduction to take effect on March 31.

ANA Holdings has also decided to transfer ANA Sales in April to ANA X, which oversees mileage management, as part of the group's structural reform. The group hopes to strengthen its travel business by utilizing customer data obtained through airline tickets and mileage programs in the hope of spurring online sales of travel services.

Other Japanese travel companies, including JTB, have also decided to reduce their capital.

JTB will cut its capital to 100 million yen from around 2.3 billion yen -- a drastic move that transforms the Japanese industry leader into a small business. Shareholders approved the reduction on Feb. 12, which like ANA's, takes effect on March 31. The freed-up capital will help absorb a large net loss forecast for the current fiscal year.

ANA Sales, an unlisted seller of tour packages, becomes the latest Japanese company to shrink in response to the collapse in travel demand and restaurant dining.

Several coronavirus-hit companies have pursued a similar strategy to reduce taxes. Restaurant operators Kappa Create and Chimney announced capital reductions to 100 million yen while budget carrier Skymark Airlines plans to reduce capital from its current 9 billion yen.

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