ANA Releases Financial Results for the First Half of FY2019, Lowers Forecast for the Year

Today, ANA Holdings released its financial results for the first half of fiscal year 2019, i.e. for the period between April 1, 2019, and September 30, 2019.

While the company recorded an increase in revenues compared to the first half of last fiscal year, it saw a considerable drop in operating income. The airline also made a downward adjustment to its forecast of the expected full year performance.

ANA Holdings H1 FY2019 Financial Performance
ANA’s financial performance did not hit its forecast.

ANA Holdings H1 FY2019 Financial Results

In the first half of this fiscal year, ANA Holdings recorded 1,055.9 billion yen (1 US dollar = about 108 yen) in revenues. While that represents a 1.7% increase compared to the first half of the year, its operating income of 78.8 billion yen is 25% lower than that of H1 FY2018.

The vast majority of the revenues and operating income was, naturally, generated by ANA Holdings’ air transportation-related activities.

ANA’s international passenger flights saw a 2.3% YoY growth in revenues without any notable increase in passenger numbers. Domestic passenger flights, on the other hand, recorded a 3.4% increase in traffic resulting in a 4.7% increase in revenues.

The company’s low-cost segment consisting of Peach Aviation and the now-defunct Vanilla Air recorded a 1.8% decrease in the number of passengers and a 4.6% decrease in revenues. That is largely due to the integration of Peach and Vanilla Air taking place.

Vanilla Air Integration into Peach
ANA Holdings recorded lower revenues and profits in its low-cost airline segment due to going through the integration of Peach and Vanilla Air.

ANA’s cargo division took a hit as well, carrying 10.5% less freight and generating 20.4% less revenues than in the first half of FY2018.

As for the overall decline in operating income, ANA attributes it to:

…increases in personnel expenses, aircraft expenses, and maintenance expenses to further improve the safety, quality and service in preparation for the capacity expansion of the Tokyo metropolitan airports for 2020.

ANA’s Revised Forecast for FY2019

While ANA recorded an increase in revenues compared to last year, they still did not hit the forecasts the airline had made previously.

As such, the airline has decided to lower its forecast for the full fiscal year performance citing the following reasons:

  • The trade war between the U.S. and China resulting in lower demand for freight
  • Sluggish growth in certain areas of international business travel
  • Increasing competition in the low-cost airline business
ANA Cargo Performance
ANA Cargo recorded a significant YoY decrease in revenues and profits.

ANA now expects to record revenues of 2,090 billion yen and operating profit of 140 billion yen in FY2019. That is 60 billion yen (2.8%) and 25 billion yen (15.2%) lower than initially forecasted.

When presenting the results, Ichiro Fukuzawa, CFO, Executive Vice President of ANA Holdings, commented that:

…ANA HD will be adjusting its consolidated financial forecast due to the global economic uncertainty. However, as we anticipate the capacity expansion of the Tokyo metropolitan airports next year, we will pursue business opportunities for the years ahead.

Summary

Last week, I wrote about the traffic results of some of the major Japanese airports including Narita, Kansai, and Centrair. In line with those, ANA has recorded a growth in its passenger traffic and a decrease in cargo volume.

The airline has also recorded an overall increase in revenues compared to the first half of FY2018. However, it did not hit its forecast, and its operating profit decreased for a number of reasons including increased staff and aircraft expenses.

Because of that, as well as the overall uncertainty about the global economy, ANA also decided to lower its forecast for its full year results.

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