Japanese airlines could see ¥1 tril earnings fall on virus pandemic
28 March, 2020
The global coronavirus pandemic could cause a 1 trillion yen ($9.3 billion) fall in combined revenue for the Japanese airline industry in the next 12 months, according to an estimate by a domestic aviation organization.
The Scheduled Airlines Association of Japan forecasts domestic carriers such as for example Japan Airlines and All Nippon Airways will eventually lose over 400 billion yen in earnings in just four months through May, much worse than the about 300 billion yen in gross annual revenue decline before the 2008 global financial meltdown.
The quantity of airline passengers has been sharply decreasing around the world, with a tally by Johns Hopkins University researchers showing that around 600,000 persons have already been infected with the pneumonia-causing virus.
"We often see flights with passengers in the single digits," the official of the aviation body said, in what some call an "unprecedented crisis" for the industry.
The association has requested that the federal government exempt airlines from paying airport charges and aircraft fuel tax.
The lack of demand for domestic flights has hit aviation companies far greater compared to the 2003 extreme acute respiratory syndrome, or SARS, epidemic, which didn't directly affect Japan.
Two Japanese flag carriers, JAL and ANA, are determined to lessen domestic flights in the summertime by about 20 percent after many events in the country were canceled or postponed.
"We've never seen such a sharp fall in demand for domestic flights, a source of stable income for Japanese airlines," said the official in the aviation industry.
Travel restrictions issued by authorities in lots of countries have forced major Japanese aviation firms to drastically reduce international flights.
ANA proposed to a labor union that 5,000 full-time flight attendants take partially paid leave for a couple days starting April due to flight cancellations so that it could continue to employ them, the company said.
Some airlines moved to safe enough cash amid the rapidly changing business environment.
ANA plans to get financing of 100 billion yen from financial institutions, while JAL made a decision to issue corporate bonds worth a total of 20 billion yen. Star Flyer Inc., beneath the wing of ANA, will borrow 4.1 billion yen from banks.
Source: japantoday.com