Japan’s largest airline, All Nippon Airways (ANA), has said it will retire more than a tenth of its fleet and cut over 3,500 jobs, as it attempts to rein in its cash burn amid the ongoing COVID-19 pandemic.
Yet the carrier still intends to cash in on changing travel preferences by launching a new budget carrier targeted at the south-east Asian and Pacific markets in 2022, manned with Boeing 787 Dreamliners.
It comes as the airline has forecast a record operating loss of over US$4.8 billion for the fiscal year to 31 March.
ANA has said it would temporarily transfer more than 400 workers to other companies, while asking the remaining staff to accept cuts to pay, or take extended unpaid leave.
The airline has also said it will need to cut over 3,500 jobs over the next three years, as it navigates this period of subdued demand for international travel.
ANA announced it would retire 35 aircraft in total, with 28 of these unplanned early retirements, including 22 Boeing 777 wide-bodied jets.
The carrier will also delay the delivery of one additional 777, as well as one Airbus A380 superjumbo.
The move will see the airline reduce its fleet by a net 33 aircraft, to a new total of 276 planes.
The airline has also confirmed it has secured US$3.8 billion in subordinated loans from both state-backed and private lenders to survive the rest of the travel downturn.
JP Morgan analyst Ryota Himeno said that while ANA’s current recovery plan is heavily reliant on a rebound in international travel, that is in no way guaranteed.
“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.
ANA is working on the basis that domestic travel, which normally accounts for just over half of its revenue, will remain subdued for about two years, while international routes will not see a meaningful bounce back until 2024.
The airline is also expecting that tourism travel will outweigh business travel when the rebound does occur.
ANA said that business travel is unlikely to return to pre-COVID levels, “due to changes to the nature of work”, after the global pandemic.
In light of this market shift, ANA has confirmed its intentions to launch a low-cost airline brand offshoot in 2022 that would cater mainly to south-east Asia and Oceania, utilising Boeing 787 Dreamliners, and seating over 300 passengers.
To adapt to that market shift, ANA said it will launch a low-cost airline brand in 2022 that would fly routes to south-east Asia and Oceania using Boeing 787 Dreamliners seating more than 300 passengers.
