TOKYO (AFP) – Japan’s two biggest airlines on Friday projected smooth full-year earnings, with All Nippon Airways (ANA) placing a $2.2 billion order for Boeing and Airbus planes, while rival Japan Airlines (JAL) raised its full-year profit forecast.
ANA said its April-December net profit soared 57.2 per cent to 52.36 billion yen ($443 million) from a year ago, as an expansion at Tokyo’s downtown Haneda airport increased landing slots for international flights.
Sales in the latest period rose 9.1 per cent to 1.3 trillion yen, while ANA left unchanged its annual net profit forecast of 35 billion yen for the fiscal year to March.
The company “moved to strengthen its overseas networks by taking advantage of the increase in takeoff and landing slots for international routes at Haneda Airport”, it said in a statement.
Revenue from international passenger flights jumped 19.1 per cent on-year, while revenue in its domestic passenger flight business inched up 1.0 per cent.
ANA added seven new routes at the airport with flights bound for London, Paris, Munich, Hanoi, Jakarta, Manila and Vancouver.
Also Friday, the carrier said it has placed a $2.2 billion order for a total of 15 planes from Boeing and Airbus.
The deal would see it acquire eight planes from US-based Boeing and seven from European planemaker Airbus, with delivery from later this year until 2022. The deal’s size is based on list prices, but manufacturers usually give airlines a discount from that rate.
Despite a fall in nine-month profit, JAL raised its full-year earnings forecast owing to falling fuel costs and stronger revenue in its cargo business.
A drop in oil prices – rates have fallen by about half since the summer – is good news for airlines, which often count fuel as their single-biggest expense, particularly after a sharp drop in the yen had sent those costs soaring.
“The impact of low oil prices is significant enough to offset all the other negative factors,” said Masayuki Kubota, chief strategist at Rakuten Securities.
While the weak yen increases fuel costs, it also tends to boost the number of foreign visitors coming to Japan, he added.
But Kubota warned that severe price competition from emerging budget carriers may put additional pressure on Japan’s major airlines.
“Also, geopolitics is always a potential risk amid growing concerns over terrorism around the world,” he added.
JAL said April-December net profit slipped 3.1 per cent to 119.6 billion yen on revenue of 1.02 trillion yen, up 3.3 per cent from the same period a year ago.
The company revised up its earnings forecast for the year to March to a net profit of 139 billion yen – against a previous projection of 135 billion yen – due to falling fuel costs and better sales in its cargo business.
Despite the upbeat outlook for the sector, fortunes have waned for Japan’s third largest carrier, Skymark Airlines, a no-frills carrier born out of deregulation measures in the 1990s that were aimed at challenging ANA and JAL’s control of the market.