ANA Domestic Travel Demand Crimped as Omicron Spreads in Japan

(Bloomberg) -- Omicron's spread in Japan is making ANA Holdings Inc.'s domestic recovery more difficult, forcing the airline to hold its outlook stable as infections surge and hospital bed occupancy climbs.

ANA, which reported third-quarter operating income that beat analyst estimates Tuesday and a net loss of 4 billion yen ($35 million), had predicted domestic demand to recover to 80% of pre-Covid levels in the fourth quarter but that will be difficult with omicron, Senior Executive Ichiro Fukuzawa said.

“Without omicron, we would've upgraded our outlook, but now we'll have to give that a harder look,” he said.

Japan's largest carrier reported operating income of 190 million yen for the three months through Dec. 31, compared with analysts' average estimate for a 24.4 billion yen loss. For the fiscal year through March, ANA kept its forecast for an operating loss of 125 billion yen steady.

With Japan all but banning the entry of non-resident foreigners into the country because of the pandemic, ANA has largely had to rely on its domestic network. It said Tuesday that domestic demand is around 50% of pre-Covid levels.

ANA also amended its planned purchase of Airbus SE A320neo planes, saying it will now buy 15 of the jets at a catalog price of around 177 billion yen instead of 16 aircraft for around 188 billion yen. There wasn't any change to the planes' scheduled delivery of fiscal 2022-2025.

The continuing bright spot was cargo, particularly as shipping snarls remain and companies switch to air freight. Cargo demand is expected to be robust in the first half of 2022 with port congestions working in ANA's favor and pushing up rates, Fukuzawa said.