Japan's ANA profit soars on cheaper fuel, strong yen

[TOKYO] Japan's All Nippon Airways (ANA) on Friday said net profit jumped in the nine months to December thanks to falling fuel prices, a pick-up in the yen and cost-cutting measures.

The positive result marked a further recovery in the fortunes of the airline, which took a hit last year on worries over terror attacks in Europe and earthquakes at home.

ANA Holdings, the carrier's parent, posted s net profit of 86.6 billion yen (S$1.067 billion), up 18 per cent from 73.3 billion yen the year before, it said in a statement. Revenue, however, edged down 2.7 per cent to 1.33 trillion yen.

The firm's bottom line was supported by the fall in oil prices last year that was caused by a global supply glut and overproduction. Fuel is often an airline's single-biggest expense.

ANA also said it benefitted from strength in the Japanese yen over the prior year, which helped reduce costs. Jet fuel prices are denominated in US dollars so a stronger Japanese currency would make them cheaper.

However, the airline said it sees the policies of new US President Donald Trump as a risk factor, with many economists fearing his protectionist slant could hurt the global economy or even spark a trade war.

"We have to consider the effect on logistics and movements if trade frictions arise as in the past, Yuji Hirako, an executive vice president at ANA, said at a news conference, Bloomberg New reported.

"The possibility of a slowdown in global growth is emerging," he said.

"We need to spend time observing Trump's government and policies."

ANA said the number of international passengers jumped 11.5 per cent for the nine months, while that for domestic passengers edged up 0.3 per cent.

"ANA continues enjoying steady income from its international flights as it has been expanding global routes," said Hiroshi Hasegawa, an analyst at SMBC Nikko Securities in Tokyo.

"Its effort to cut costs is also contributing to profit," Mr Hasegawa told AFP before the results were released.

ANA's statement cited "efforts to curb expenses through steady cost management", though it did not elaborate.

"A steady stream of foreign visitors to Japan will remain a key factor sustaining earnings of Japanese airline companies ahead of the 2020 Tokyo Olympics," he said.

Mr Hasegawa also noted that legislation allowing casinos to open in Japan will likely be a positive factor over the long term.

Last month Japan passed a long-awaited bill to legalise casinos, opening up a market seen as a potential global gaming powerhouse rivalling Macau.

Rival carrier Japan Airlines is scheduled to release third quarter results next week.

AFP