Japan’s ANA Holdings (ALNPY) has downgraded its revenue and profit forecasts for the 2022 fiscal year after COVID-19 outbreaks resulted in a slower than expected recovery in demand for flights.

The owner of All Nippon Airways (ANA) and Peach Aviation said it now expects operating revenues of JPY1,060 billion ($9.3 billion) in the 12 months to March 31, 2022, down from a previous forecast for JPY1,380 billion ($12.1 billion).

The lower revenue means earnings will also be affected. ANA is now predicting a loss of JPY125 billion ($1.1 billion), compared to its previous hope for a profit of JPY28 billion ($246 million). 

While international cargo demand was strong, reduced passenger demand continued globally during the first half of the fiscal year due to a resurgence of COVID-19 cases and the spread of new variants,” the airline group said in a first-half earnings press statement released on October 29, 2021. 

It does expect to return to profitability in the fourth quarter of 2021, but this will not make up for the slow start to the year.

“While domestic passenger demand has now started to show signs of recovery in correlation with the decline in reported COVID-19 cases, full-fledged recovery of demand is delayed compared to initial expectations,” ANA Holdings (ALNPY) continued. 

For the first six months of its fiscal year, ANA Holdings (ALNPY) reported an operating loss of JPY116 billion ($1.02 billion) compared with a loss of JPY281 billion ($2.5 billion) one year ago. Revenues increased 48%. 

A state of emergency was in place for much of the period in Tokyo, ANA Holdings (ALNPY) highlighted. 

The continuing closure of borders in many Asian countries is hampering recovery at various airlines. Air France-KLM said on October 29, 2021 that it could not provide capacity plans for 2022 due to the uncertainty over Asia travel, while Finnair has said it expects losses to continue while Asian markets remain closed. 

ANA Holdings (ALNPY) also said it would step up cost cutting efforts, including maintenance and outsourcing costs. 

In one example of streamlining efforts, it said that the dry ice used to keep in-flight meals cool will be replaced with reusable ice packs. This will keep costs down and reduce CO2 emissions by approximately 1,700 tons per year, the airline said. 

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All Nippon Airways takes delivery of the orange Flying Honu, which is its third and final Airbus A380.