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MarketScreener Homepage  >  Equities  >  Tokyo Stock Exchange  >  Japan Airlines Co., Ltd.    9201   JP3705200008

JAPAN AIRLINES CO., LTD.

(9201)
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Japan's ANA to shrink fleet as it skids toward record $4.8 bln loss

10/27/2020 | 01:29am EST

* Forecasts FY op loss of Y505 bln vs Y365 bln analyst view

* Books H1 op loss of Y280.95 bln vs Y78.8 bln profit year prior

* To retire 28 planes early, push back delivery of two

TOKYO, Oct 27 (Reuters) - Japan's ANA Holdings Inc on Tuesday said it will retire more than a tenth of its mostly Boeing Co fleet and delay two aircraft orders to help rein in costs and survive a collapse in air travel caused by coronavirus travel restrictions.

Forecasting a record operating loss of 505 billion yen ($4.82 billion) for the year to March 31, Japan's biggest airline said it will also temporarily transfer more than 400 workers to other companies and ask those remaining to accept pay cuts or unpaid leave.

ANA, like other airlines, is burning through cash to keep jets flying albeit with too few passengers. Though demand for domestic flights has recovered to about half of last year's level, helped by government-subsidised travel, it is flying only a fraction of its usual international schedule.

After initially halting nearly all entry to prevent the spread of the novel coronavirus, Japan recently began allowing in business travellers and foreign residents on condition they agree to quarantine for two weeks. Most overseas tourists are still banned.

As a result, ANA said it would retire 35 planes, 28 of them early, including 22 Boeing 777 widebodies and delay delivery of one 777 and one Airbus SE A380 superjumbo. That will reduce its fleet by a net 33 aircraft to 276 planes.

To ensure it has enough cash to survive the downturn, the airline on Tuesday also confirmed it had secured $3.8 billion in subordinated loans from state-backed and private lenders.

Its cost-cutting response follows job cuts and early aircraft retirements at other large Asian carriers including Singapore Airlines Ltd, Cathay Pacific Airways Ltd and Qantas Airways Ltd - all suffering from border restrictions that have curbed travel.

ANA deserves praise for trimming costs, but its recovery plan also relies on a rebound in travel demand, including on international routes, that may not materialize, said Ryota Himeno, an analyst at JP Morgan Securities Japan.

"While praying for demand to return it must work on deepening cost cuts laying out a business strategy for when it doesn't," he said.

LONGTERM CHALLENGE

ANA expects the downturn in domestic travel, which normally accounts for just over half its revenue, to last for about two years, with international routes unlikely to recover until 2024.

When it does rebound, however, it expects international demand to be mostly from tourists rather than more lucrative business travellers.

That demand is unlikely to return to previous levels "due to changes to the nature of work," the airline said in its business plan.

To adapt to that market shift, ANA said it will launch a low-cost airline brand in 2022 that would ply routes to Southeast Asia and Oceania using Boeing 787 Dreamliners seating more than 300 passengers.

At home, in addition to the taxpayer-funded tourism campaign, ANA and Japan Airlines Co Ltd (JAL) are also benefiting from landing fee waivers by a government that sees air routes as essential to connecting the 3,000-kilometre long Japanese archipelago at the edge of East Asia.

The government, however, has so far preferred a piecemeal approach of public help and airlines' own efforts to secure funding and cut costs, rather than offering bailouts.

ANA also said it swung to an operating loss of 280.95 billion for the six months ended Sept. 30 and a net loss of 188.49 billion yen. Still, Chief Executive Shinya Katanozaka said his airline has enough money to see it through the industry crisis.

He denied earlier media reports ANA planned to raise additional money through a share offer.

Rival JAL, which announces its latest earnings on Friday, is likely to post a full-year record 230 billion yen net loss, the Nikkei business daily reported on Tuesday.

($1 = 104.7000 yen) (Reporting by Tim Kelly, additional reporting by Ritsuko Shimizu; Editing by Christopher Cushing)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AIRBUS SE 2.15% 91.32 Real-time Quote.-30.01%
ANA HOLDINGS INC. 0.28% 2489 End-of-day quote.-31.66%
CATHAY PACIFIC AIRWAYS LIMITED 0.27% 7.45 End-of-day quote.-35.33%
JAPAN AIRLINES CO., LTD. -0.30% 2000 End-of-day quote.-41.12%
NIKKEI 225 0.05% 26800.98 Real-time Quote.13.23%
QANTAS AIRWAYS LIMITED 1.46% 5.55 End-of-day quote.-21.94%
SINGAPORE AIRLINES LIMITED -0.68% 4.35 End-of-day quote.-51.88%
THE BOEING COMPANY 5.09% 223.85 Delayed Quote.-34.61%
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Financials
Sales 2021 562 B 5 378 M 5 378 M
Net income 2021 -248 383 M -2 377 M -2 377 M
Net Debt 2021 152 B 1 451 M 1 451 M
P/E ratio 2021 -3,17x
Yield 2021 -
Capitalization 856 B 8 185 M 8 188 M
EV / Sales 2021 1,79x
EV / Sales 2022 0,97x
Nbr of Employees 35 653
Free-Float 95,5%
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Technical analysis trends JAPAN AIRLINES CO., LTD.
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Income Statement Evolution
Consensus
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Mean consensus OUTPERFORM
Number of Analysts 10
Average target price 2 335,00 JPY
Last Close Price 2 000,00 JPY
Spread / Highest target 40,0%
Spread / Average Target 16,8%
Spread / Lowest Target -5,00%
EPS Revisions
Managers
NameTitle
Yuji Akasaka Executive President & Representative Director
Yoshiharu Ueki Chairman
Takahiro Abe Executive Officer & General Manager-Operations
Toshiki Oka Executive Officer & GM-IT Planning
Hideki Kikuyama Representative Director
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