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ANA Expects Second Year of Net Loss, Plans To Cut Workforce
A number of months back in May 2021, ANA Holdings Inc. said that it was initially predicted to see a net profit for the year lasting through March 2022.
The earlier prediction came as Japan was hosting the Summer 2020 Tokyo Olympics and also as vaccinations rates were rolling relatively well worldwide, citing as signs of recovery in the aviation industry that would lead to a gradual increase in demand.
Unfortunately for Japan’s biggest airline and Japan in general, the Tokyo Olympics and Paralympics were unable to draw in any foreign tourism as foreign spectators were not allowed, causing the overall tourism and many companies to suffer even further.
And as the gradual increase did not happen soon enough, ANA had to retract its earlier prediction and instead announced that it was expecting to report a loss for what would be a second consecutive year.
Remaining In The Red
Despite the slight positivity happening in the aviation industry as of late, ANA has not been able to join in the good times as it has reported yet another quarter loss of 116 billion yen (US$1.02 billion) for the month ending September 30.
A possible reason could have been Japan’s recurring state of emergency that affected international borders for the country, and although domestic tourism was turning a corner, it was still not enough without the boost from international tourism.
Even as of currently, the country still remains under stricter regulations as compared to others in the East Asia region.
And thus for the 12 months ended March 2022, the Tokyo-based carrier is expecting to report an operating loss of 125 billion yen ($1.09 billion), which is a drastic change from its earlier expectations for an operating profit of 32 billion yen ($28.1 billion).
“The revised forecast reflects the findings that projected second-half revenue will not be sufficient to cover lack of revenue during the first half of the fiscal year,” the airline said in a press release.
Through the early stages of the Covid-19 pandemic, many airlines had to slash their workforce numbers by a truckload as flights were grounded and borders closed. Situations started turning the tables, however, as news of workforce slashing eventually became the news of hiring and re-calling for those furloughed, especially as airlines worldwide were ramping up flight operations and expanding networks.
This might not be the case for ANA, unfortunately, as in an attempt to further lower fixed costs, the Star Alliance member has additionally announced that it was considering the possibility of having to reduce its current employee numbers by up to 20 percent all the way through till 2025.
This would roughly account for at most 9,000 jobs within the airline, such as flight attendants and ground staff and would be done through retirement and the curbing of any new hiring.
In regards to the loss, ANA President and CEO, Shinya Kataznozaka said: “A full-fledged recovery has been delayed to a great extent, the loss in the first half is too big, and we do not expect to achieve (profitability) even if we try to make up for it in the second half.”
Hopefully, as the next fiscal year comes along, and as the strong cargo demand continues trending upwards, ANA may start to reel in its recovery sooner rather than any later.
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