ANA Holdings Inc., whose earnings have been deteriorating drastically due to the spread of the coronavirus, plans to launch business structure reforms centering on cuts to fixed costs from this summer.
The reform plan calls for reexamining the operation of unprofitable flight routes and cabin services, aiming to switch to a business structure whereby ANA will be able to post profits even if the coronavirus impact is protracted.
The structural reform envisions a plan that would secure profits for the next two years. By reviewing the flight routes, ANA plans to cut aircraft costs and airport fees. In another effort to reduce expenses, the airline plans to trim cabin services, including in-flight meals, by considering passengers' needs. ANA will seek to curb personnel expenses by curtailing renumeration for its executives but will maintain employment.
Due to the sharp drop in air travel, ANA Holdings suffered a deficit to its bottom line of 58.7 billion yen in its consolidated financial statement for the January-March quarter this year, making it the company's worst-ever quarter.
As for flight operations for June, domestic and international flights have been cut by about 70% and 90%, respectively, from what was originally planned. The airline plans to rein in such expenses as fuel costs and airport fees but cannot trim fixed costs that account for about 60% of total expenses, making a monthly spend of about 60 billion yen inevitable.
To increase the funds on hand, ANA Holdings has determined that it may be possible to procure a total of 950 billion yen, including loans from government-affiliated financial institutions and private banks. In anticipation of funds being required to promote structural reform, ANA Holdings will study measures to procure additional resources.
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