OREANDA-NEWS. November 06, 2012. ANA Group, Japan's largest airline group, today reports its consolidated financial results for the first half (April - September) of fiscal year 2012.

Consolidated operating results of the six months included operating revenues of USD 9.7 billion (753.2 billion yen) and operating income of USD 970 million (75.3 billion yen) which was the highest level on record. Recurring profit of USD 817 million (63.4 billion yen) for the period was also a record. Net income for the period was USD 476 million (36.9 billion yen).

During the second quarter, the Japanese economy showed underlying strength due to continued expectation of reconstruction demand. Meanwhile, the global economy slowed and conditions remain uncertain due to the external economic environment in Europe and China.

Despite such challenging economic conditions, ANA steadily captured solid business and leisure demand during the first half, resulting in a significant increase in revenue compared to the same period last year. The Group also made good progress implementing the cost structure reforms advocated under the ANA Group FY2012-2013 Corporate Strategy during the period. Efforts toward both increase in revenue and reduction in costs raised the Group's operation income to record levels.

While responding to significant changes in the competitive environment within the Japanese airline industry, such as the expansion of capacity of Haneda and Narita, the deregulation of the airline industry and the launch of low-cost carriers, ANA Group enhanced its network by balancing the pursuit of “strength” and “efficiency” as a network carrier.
Domestic Passenger Services
 Domestic passenger revenue rose by USD 196 million (15.2 billion yen) to USD 4.4 billion (343.0 billion yen), an increase of 4.6% compared to a year earlier. Demand was stimulated by the affordable new Tabiwari 55 fares, and the Experience JAPAN Fare which is aimed at increasing non-Japanese international visitor demand.

ANA increased its competitiveness in the domestic market by introducing the Boeing 787 aircraft to routes such as Haneda-Fukuoka, Haneda-Kagoshima and Haneda-Kumamoto and by increasing the frequency of flights on the high-demand Itami-Fukuoka/Niigata/Oita and Fukuoka-Niigata routes.

Furthermore a new ANA Lounge was opened at Okayama Airport, whilst the lounges at Kumamoto Airport, Kansai Airport and Itami Airport were refurbished to enhance the level of service offered to ANA customers.

International Passenger Services
 International passenger revenue rose by USD 259 million (20.1 billion yen) to USD 2.3 billion (179.7 billion yen), an increase of 12.6% compared to a year earlier, with the number of passengers exceeding that of the same period last year.

Demand from business and leisure customers remained steady. After the Great East Japan Earthquake impacted sales last year, demand rebounded in the first half, supported by the “IS JAPAN COOL?” campaign which was designed to attract visitors to Japan.

In addition to improving the international network by opening the Narita-Seattle route on July 25, ANA introduced Boeing 787 aircraft for all flights on the Haneda-Frankfurt route. New Premium Economy seats were also introduced on flights to Europe and North America from August 29 to offer greater comfort.

Furthermore, daily flights were introduced on China routes such as Narita-Hangzhou and Kansai-Hangzhou. Demand on routes between Japan and China rapidly declined due to the impact of the anti-Japanese demonstrations that occurred in China from mid-September.

Cargo Services
 Domestic cargo revenue declined by USD 7.7 million (0.6 billion yen) to USD 204 million (15.8 billion yen), a decrease of 3.8% compared to a year earlier. International cargo revenue declined by USD 48 million (3.7 billion yen) to USD 534 million (41.4 billion yen), a decrease of 8.3% compared to a year earlier.

Despite domestic cargo demand being bolstered by the solid performance of fresh cargo to and from Okinawa along with home delivery parcel services, the recoil from increased demand immediately following the earthquake and cancelled flights due to extreme weather conditions, led to cargo volume and revenue to both fall below the levels of the same period last year. In addition, a decline in demand between Japan and China was evident due to the impact of the ongoing European financial crisis and slowing of growth in the Chinese economy.

Despite freight carried increasing from the same period last year as a result of actively engaging in third country transportation such as cargo from Europe bound for Asia and China, cargo from Asia and China bound for Europe, and cargo transported within Asia, revenue fell below that of the same period last year.

Other Services
 Revenue from other services in the air transportation business increased due to additional handling service contracts with other airlines and the service launch of ANA Group's low-cost carrier. Revenue rose by 12.4% to USD 1.1 billion (88.3 billion yen) in the first half, compared to a year earlier.

AirAsia Japan launched the Narita-Sapporo and Narita-Fukuoka routes on August 1 and the Narita-Okinawa route on August 3. ANA is pleased with initial performance, as AirAsia carried 96,607 passengers over 140 million available seat-km and 107 million revenue passenger-km and with a passenger load factor of 76.6% during the second quarter (August 1 - September 30).

Outlook for FY2012 (April 1, 2012 - March 31, 2013)
 It is widely expected that the Japanese economy will continue to be supported by reconstruction demand. However, there is a risk the Japanese economy will be subjected to downward pressure due to the growing sense of a slowdown in the global economy impacted by the continued challenging economic environment particularly in Europe and China, rising oil prices, volatile exchange rates and anti-Japanese demonstrations in China.

Performance in the first six months fell below initial targets in terms of both passenger revenue and cargo revenue, and this trend is expected to continue in the latter half of the year. Considering the impact of the anti-Japanese demonstrations in China on international passenger revenue, operating revenue is expected to be approximately USD 387 million (30.0 billion yen) less than operating revenue stated in the consolidated earnings forecast announced on April 27 this year.

ANA Group expects to reduce operating expenses in line with the anticipated decrease in revenue. The Group aims to achieve this through continuing its cost reduction plan, which is currently delivering results ahead of expectations. As a result, forecasts for operating income, recurring profit and net income remain unchanged from the initial announcement.