Japan’s two largest carriers reported a drop in profit for the April-June quarter, despite seeing an increase in revenues.
Releasing their first-quarter results, ANA Holdings (the parent company of All Nippon Airways) and Japan Airlines group both blamed a sharp rise in expenses – on the back of fuel and manpower costs – for the decrease in profitability.
Still, they maintained that operating profits were on track to meet annual targets, and even surpass pre-pandemic levels.
ANA Holdings saw a 31% decline in operating profit to Y30.3 billion ($201 million), with revenue up 56% year on year to Y517 billion – the group’s highest-ever profit for the April-June period.
ANA Holdings’ airline businesses – spanning full-service, low-cost and cargo operations – saw the highest increase in revenues.
Mainline operator ANA continued to see strong inbound international demand into Japan, while outbound business and leisure segments continue to recover. The Star Alliance member is due to expand its European network with the addition of flights to Stockholm, Milan and Istanbul, bringing its European capacity 30% higher than pre-pandemic levels.
However, rising costs outpaced revenue growth: ANA Holdings saw a 69% spike in operating expenses, led by a rise in personnel and maintenance costs. The group notes that the rise was in line with expectations.
As for JAL, it recorded a 29.5% decrease in quarterly profit to Y22.1 billion. This was despite revenue up 11% year on year to Y424 billion, with the highest increases seen in its low-cost and international full-service businesses.
JAL’s low-cost units Spring Japan and ZipAir also managed to turn a profit for the first time, helped by strong inbound travel demand in the leisure segment, and boosted by a recovery from the Mainland Chinese market.
JAL saw expenses rise 15% year on year to Y406 billion, as a result of higher fuel costs and increased labour costs.
Both airline groups maintained their earnings forecast for the year to 31 March 2025, which they first released in May. Both ANA Holdings and JAL expect a full-year operating profit of Y170 billion.
