ANA Holdings Inc. reported Friday a record net loss of 309.58 billion yen ($2.96 billion) in the April to December period, as the major Japanese airline has been reeling from the global coronavirus pandemic that hurt travel demand at home and abroad.
The loss is a reversal from a net profit of 86.45 billion yen in the same period of 2019, underscoring the severity of the hit from the spread of the novel coronavirus to the airline industry. The figure smashes the previous record net loss of 35.20 billion yen in the April-December period of 2009 amid the global financial crisis and economic downturn.
ANA, the parent of All Nippon Airways Co., posted an operating loss of 362.41 billion yen in the nine-month period, as revenue tumbled 66.7 percent to 527.61 billion yen.
For the 12 months through March, the airline is expecting a record net loss of 510 billion yen, maintaining its earlier forecast due to uncertainty over the pandemic. Japan has declared a second state of emergency in Tokyo and some other metropolitan areas.
"We have to carefully watch developments, including whether the emergency declaration will be lifted (in early February as scheduled)," ANA Executive Vice President Ichiro Fukuzawa said during an online press briefing.
"We are neither overly conservative nor optimistic about the outlook" for the current year, he said.
The global coronavirus pandemic has caused travel restrictions, dealing a severe blow to airlines globally.
ANA's revenue from international flights plunged 93.6 percent from a year ago to 32.3 billion yen as the number of passengers saw a 95.9 percent fall to only about 321,000 in the nine-month period as Japan's sweeping entry ban was in place.
Sales from domestic flights were down 71.7 percent to 156.3 billion yen after the number of passengers fell 71.5 percent to 9.91 million.
The Japanese government launched a subsidy program to help struggling local tourism last year but was forced to suspend it in late December due to resurging coronavirus cases. Travel demand normally increases in Japan during the New Year holidays from late December to early January.
The outlook for travel demand remains uncertain as the pandemic and its economic fallout are expected to take more time to be addressed even as vaccinations have begun in some countries including the United States and Britain.
ANA had expected demand for domestic flights to recover to 70 percent and international flights to 50 percent of pre-pandemic levels by March.
Fukuzawa admitted the pace of recovery will be much slower, quelling optimism that had emerged about a gradual recovery in domestic flights after the government lifted the first state of emergency in the spring of 2020.
ANA is seeking to become leaner to overcome the pandemic, cutting costs and reducing its fleet such as B-777s that are suitable for long-distance flights. President and CEO Shinya Katanozaka has promised that the airline will return to profitability in fiscal 2021.
To bolster its financial standing to ride out the pandemic, ANA has secured subordinated loans from major Japanese banks. Part of the loans can count as the company's capital, helping to maintain its credit standing and prevent future borrowing costs from rising.
It has also raised capital by issuing new shares.
Fukuzawa vowed to proceed with restructuring. "As announced in our structural reform plan, we will continue to cut fixed costs," he said.
ANA has planned to cut costs by a total of 250 billion yen in fiscal 2021.
Globally, airlines are bearing the brunt of the pandemic. In the United States, hardest hit by COVID-19, three major airlines -- American Airlines Inc., Delta Air Lines Inc. and United Airlines Inc. -- posted huge losses in 2020.
ANA's domestic rival Japan Airlines Co. is scheduled to announce its April-December earnings on Monday.
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