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CLARA MOSCHINI

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Airplanes and data. Ana Holdings: 2017-2018 financial year results

Overview, traffic and outlook

Ana Holdings (ANA HD) recently reported its financial results for fiscal year 2017 (April 2017-March 2018).

Overview

Underpinned by robust demand, strong performance in international passenger and cargo services and the revenue from Peach Aviation Limited as a new subsidiary resulted in record high operating income, ordinary income, and net income attributable to owners of the Parent for the third consecutive year.

Japan's economy for the fiscal year (April 1, 2017 - March 31, 2018) has continued to experience growth, with personal consumption generally picking up in accordance with continued improvements in corporate earnings and in the employment environment. With continued moderate progress in domestic and overseas economies, the airline industries have generally seen strong demand due largely to an increase in foreign visitors to Japan.

As a result of the above, consolidated results for the fiscal year show operating revenues of 1,971.7 billion yen (up 11.7% year-on-year) due to an increase in revenues mainly in air transportation, operating income was 164.5 billion yen (up 13.0% year-on-year), ordinary income was 160.6 billion yen (up 14.4% year-on-year). Net income attributable to owners of the Parent was 143.8 billion yen, all hitting record-high.

Air Transportation

1 Domestic Passenger Service

In domestic passenger service, despite the impact of typhoons in October 2017 and the heavy snowfalls in the months of January and February 2018, both the number of passengers and revenues increased year-on-year as a result of steady business demand in addition to the offer of various promotional fares to match demand trends.

In terms of the route network, efforts were made to capture demand by opening a new Chubu-Miyako route in June, operating late night flights (Galaxy Flights) on the Haneda-Okinawa route for a limited period in summer and increasing the number of late night flights on the Haneda-Hiroshima route with the extension of the operating hours of Hiroshima Airport that came into effect from the winter timetable. 

Revenues from domestic passenger service increased by 11.4 billion yen (up 1.7 % year-on-year).

2 International Passenger Service

The international route network brought a year-on-year increase in number of passengers and revenues for international passenger service in appreciation to the strong business demand originating in Japan and the capture of robust inbound travel demand.

The number of flights on the Haneda-Jakarta route has been increased to double daily service since August, and Tokyo-Los Angeles to triple daily from October to capture business demand from the Tokyo Metropolitan Area, as well as demand for connections between local airports in Japan or Asia and North America. ANA has also changed the aircraft type on Tokyo-Honolulu routes to B-787/9 airplane.

Revenues from international passenger service increased by 80.6 billion yen (up 15.6 % year-on-year).

3 Cargo Service

In domestic cargo service, although ANA has been capturing steady demand for cargo connecting to international routes, ANA worked to increase revenues by serving non-scheduled cargo flights on the Okinawa-Haneda route during the period of high demand for flowers from Okinawa.

In international cargo service, automotive parts and electronics bound for North America and Europe showed steady growth. Point of sale overseas, both volume and revenue from Japan increased year-on-year due to cargo from China and other parts of Asia bound for Japan performing well and capturing cargo from China to North America.

Revenues from domestic cargo service decreased by 0.1 billion yen (down 0.5 % year-on-year) while the revenues from international cargo service increased by 24.7 billion yen (up 26.5 % year-on-year).

Outlook for the FY2018 (April 2018-March 2019)

Although there are concerns about a downward swing in overseas economies, foreign trade issues, terrorism and conflict in Europe and in the Middle East, the Japanese economic outlook for next year shows a continued, gradual growth due to improvement in the employment environment, and the effect of various new government policies.

ANA will endeavor to enhance convenience and comfort to its passengers as a full-service carrier.

In international passenger service, the Haneda-Bangkok route will be increased to three flights per day, for a total of five flight per day between Tokyo and Bangkok. Code-share will commence with Alitalia starting from October 2018, and the A-380 will be introduced to the Tokyo-Honolulu route in spring 2019.

As for cargo service, the carrier will work to capture new demand by enhancing basic quality and utilizing belly space of its extensive passenger flight route network.

Vanilla Air and Peach Aviation Limited will integrate by the end of FY2019, and in addition to becoming the driving force in the Japanese LCC market, they will aim to become the "Leading LCC in Asia" in customer satisfaction and in market share.

Regarding the dividends for FY2017, after comprehensively taking into consideration the earnings and financial conditions during the period as well as the business environment going forward, the company intends to pay a dividend of 70 yen per share.

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