Mixed signals: All Nippon Airways upgrades forecast, Air France-KLM reports a difficult year

ONLY in March did the International Air Transport Association (Iata) cut its 2012 profit projection for the airline industry from US$3.5 billion to US$3 billion. Iata director-general Tony Tyler cited high oil prices as the main bugbear as the European crisis showed signs of averting, warning that the industry would plunge into the red if the situation did not improve.

Many airlines have been reporting reeling from the high fuel costs or suffering losses if not reduced profits as a consequence. Among the latest reports is that posted by Air France-KLM, which incurred first-quarter net loss of 368 million euros (US$483 million) even as revenue increased by 6 per cent to 5.6 billion euros. This was attributed to higher fuel and staff costs.

But there is good news in the East as All Nippon Airways (ANA) upgrades its forecast, and higher workforce, expecting consolidated net income of 28 billion yen (US$349 million) in fiscal 2011, compared to earlier forecast of 20 billion yen (US$249 million). The revised figure is also an improvement of 20.6 per cent compared to 23.3 billion yen the year before, thus turning an expected reduced quarter profitability into an improved one.

According to ANA, the optimism was boosted by strong demand in tourism, gradual recovery of the Japanese economy following the earthquake and tsunami in March last year, and cost improvement measures – this, in spite of the global concern about rising fuel costs. Looking ahead, the airline expects further improvement, banking on its strength as a network carrier and the launch of low-cost airline operations (Peach Aviation and AirAsia Japan) to improve overall group performance.

So it is not bad news all round. The winner will be one who is able to spot opportunities in adversity, maintains a discipline of dealing with the hard times and not losing sight of its vision, and takes timely action to be ready to pick the fruits when they are ready for the plucking. ANA appears to have mapped its future with some measure of success, bucking the general global trend.


About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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