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JAL, ANA flying high on healthy travel demand
[TOKYO] All Nippon Airways (ANA) and Japan Airlines (JAL) announced robust annual profits on Thursday, thanks to healthy demand on China and other international routes as well as falling fuel costs.
Japan's top carriers benefitted from a record number of foreigners visiting Japan with mainland Chinese being among the most conspicuous as they flock to Japan for shopping and entertainment, International terror attacks in Paris and Brussels, however, slowed demand on routes to those cities, but overall international operations remained strong, ANA said.
"Japan's airline industry cruised steadily thanks to the growing number of foreign visitors to Japan and a drop in fuel costs in the wake of slumped oil prices," said Hiroshi Hasegawa, an analyst at SMBC Nikko Securities.
"The positive trend is likely to continue for the current fiscal year," he told AFP.
ANA said its net profit for the year to March rose 99.2 per cent to 78.2 billion yen (S$962 million) while its operating profit came to 136.5 billion yen, up 49.1 per cent.
Sales rose 4.5 per cent to 1.79 trillion yen, the company said.
"ANA is focused on capturing the increasing demand for travel to Japan," the company said in a statement.
Demand slumped after the terrorist attacks in Paris and in Brussels. But business travel remained solid, including on routes to Europe, ANA said.
JAL, meanwhile, said net profit jumped 17.1 per cent to 174.5 billion yen while operating profit rose 16.4 per cent to 209.2 billion yen.
Sales fell 0.6 per cent to 1.3 trillion yen.
Strong corporate and inbound demand on North American, Chinese and Southeast Asian routes boosted international passenger services, JAL said.
ANA and JAL also enjoyed tailwinds from a strengthening yen, which lowers dollar-denominated fuel costs.
But going forward the trend of a stronger currency is risky as it could eventually discourage foreign visitors from coming to or spending more money in Japan, said Hasegawa, the analyst.
A recent series of deadly earthquakes in Japan's southwest could also discourage prospective tourists, particularly those from China, he said.
The direction for aviation demand in China as its economy slows is a another factor to watch, he added.
For the year to March 2017, ANA forecast continued growth, with net profit projected at 80 billion yen, operating profit at 145 billion yen and sales of 1.81 trillion yen.
JAL, meanwhile, expects its annual net profit to rise 10 per cent to 192 billion yen but sees operating profit falling 3.9 per cent to 201 billion yen. Sales are projected to grow by 0.5 per cent to 1.3 trillion yen.