All Nippon Airways (ANA) has announced a radical three-year corporate restructuring plan, following the suspension of dividend payments to its shareholders for the first time in 30 years.
The plan includes the consolidation of high-revenue international routes from Tokyo Narita and the suspension or reduction of services on non-profitable routes. The former include increasing the number of flights to Frankfurt and Hong Kong and beginning flights to Chicago, while the latter involves reductions in-flight frequencies on eight routes and suspending flights on a further three routes.
ANA will shift roughly 20% of its 100 domestic routes, mostly from Kansai and Fukuoka, to its subsidiary, Air Nippon (ANK), over the three-year period beginning in fiscal 1999. ANA will focus its own efforts on developing its domestic hub at Tokyo Naneda, and is re-evaluating aircraft size and flight frequencies on domestic routes to boost load factors.
ANA is aiming to save an estimated ´100bn ($826 million) over the three-year period by reducing its investment in aircraft and deferring firm orders. Five new aircraft will be added to its 142-strong fleet, while six will be retired.
The company will probably need to make further reductions in capacity but ANA argues that it needs to keep some excess capacity to take advantage of the new slots available to it at Narita in 2001.
ANA is projecting an operating loss in the 1998/98 fiscal year (ending 31 March) of ´5 billion, on revenues of ´918 billion. This compares with an operating profit of ´647 million last year. However, Naoto Matsumoto, an analyst with Merill Lynch, is more pessimistic, estimating that the 1998 operating loss will be closer to ´12 billion, rising to ´30 billion next year. "The outlook for ANA is so bleak I cannot even project when it might start posting an operating profit again," he says.
Source: Flight International
