Japanese airline group ANA Holdings plans a wholesale revamp after warning that business travel is unlikely to return to pre-Covid levels.
The “transformative” measures were outlined as the company reported a plunge into the red to the tune of almost 269 billion yen (£2 billion) in the half year to September 30.
The year-on-year loss came in the face of a dramatic decrease in customer demand due to immigration restrictions and stay-at-home requests, the group said.
International passenger service revenue fell 94.2% or almost 319 billion yen year-on-year in the first six months as carryings collapsed to 193,000 from 5.1 million.
Operating revenues for the 12 months to March 31, 2021 are projected to be down by about 60% despite a gradual recovery in demand.
“Although passenger demand for domestic routes has recovered steadily since the emergency travel restrictions were lifted in May, demand for international routes remains greatly diminished,” ANA added.
A new business model under the transformation plan will see ANA maintained as a full service carrier, while budget offshoot Peach Aviation will run short-haul services.
An unnamed new low cost carrier is to be launched in 2022 to target Asian growth markets using Boeing 787 Dreamliners carrying more than 300 passengers in a two-class configuration.
Digital technology will be embraced to promote integrated services with the creation of a data platform to make the best use of customer information accumulated across the group’s apps, website and other digital touchpoints.
Cost cuts of around 150 billion yen are to be imposed in the current financial year and 250 billion year in the following 12 months.
ANA is retiring 35 aircraft this year in addition to 28 from an original plan of seven, including 22 long-range Boeing 777s.
Employee costs will be curbed through reduced wages, bonuses and the extension of unpaid leave and other unspecified measures.
Outlining the changes, ANA Holdings said: “Demand from business travel will decrease and likely not fully return to previous levels due to changes to the nature of work, such as the widespread popularity of online conferences and meetings.
“Demand for leisure and visiting friends and relatives (VFR) will likely continue to remain robust, with potential growth from nee segments including new working environments and multiple residency.”
New potential demand is expected from “untapped markets with preference for greater hygiene during travel” including the adoption of contactless and automated options and “simplistic services”.
ANA Holdings president and chief executive Shinya Katanozaka said: “ANA is embarking on an ambitious transformation that will strengthen operations and position it for long-term growth and success in a market still reeling from Covid-19.
“As we work to fully account for the current situation, we will introduce a new business structure based on two major strategies.
“This comprehensive transformation initiative is not simply about cutting costs, instead it will address how travel has changed so that ANA has a framework for an entirely new, future-oriented operational strategy.”