ANA Holdings Will Cut 3,500 Jobs & Reduce Their Fleet Of Smaller Planes By Fiscal Year 2022

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The Covid-19 crisis has left Japan with a severe impact on the aviation industry and ANA Holdings, head of ANA All Nippon Airways has decided on reducing the number of employees by 3,500 within the next two years.

ANA will also take a good look at their fleet and plans to reduce the number of smaller, single aisle aircraft in order to improve productivity of the airline overall.

What’s most interesting is that ANA plans to move employees to other large conglomerates in Japan which must be a very unique thing to do anywhere in the world.

As the Japan Times reports ANA will also reduce the fleet by 10% in an effort to slash fixed costs.

ANA Holdings Inc. has decided on a plan to reduce the number of group employees by some 3,500 by fiscal 2022 in an effort to survive the coronavirus crisis, informed sources said Sunday.

The airline group plans to downsize its workforce through compulsory retirement and a freeze on hiring, hoping to cut fixed costs to brace for prolonged pandemic-caused damage to travel demand. …

In the business restructuring program, ANA group also plans to include the reduction of the number of small aircraft it owns in response to a plunge in demand for international flights, the sources said.

The move comes on top of the airline group’s decision to cut its fleet of large planes used for long-distance international flights.

The group will let go of small aircraft that have been used for long periods of time and have been costly in terms of maintenance, as it strives to improve profitability mainly for its domestic businesses.

The number of types of aircraft owned by ANA will also be slashed in order to cut maintenance costs.

Specifically, ANA will let go of some 30 Boeing 777s and other large, long-range aircraft with about 400 seats. Several other aircraft including small-size Boeing 737s with about 120 seats will also be reduced.

The reduction represents about 10% of the fleet of 300 planes currently owned by the entire ANA group. … Although major losses will be booked, the streamlined fleet is expected to allow ANA to save maintenance costs. The fleet reduction plan will be a pillar of ANA’s efforts to slash fixed costs.

It’s no secret that labor cost in Japan is extraordinarily high and of course a fleet of obsolete or inefficient aircraft is a liability as well.

Singapore’s Straits Times has reported that ANA is expecting a full year loss of 530 Billion yen (US$ 5 Billion) which is remarkable.

ANA Holdings Inc will cut about 3,500 jobs by fiscal year 2022, and will seek to temporarily transfer employees to Toyota Motor Corp and other carmakers, Japanese media Yomiuri reported, without saying where it got the information. …

The global airline industry is facing a painfully slow recovery from the ongoing effects of the coronavirus pandemic. ANA is expecting a record full-year loss of about 530 billion yen (S$6.81 billion), Kyodo earlier reported. The company has plans for about US$3.8 billion (S$5.1 billion) in subordinated loans from five lenders.

To put it in perspective, ANA currently has 300 aircraft. Compare this with Lufthansa which is seen as a very large airline has 266 aircraft. Lufthansa has reported a loss of 3.6 Million Euro in the first half of 2020 alone and is likewise undergoing a comprehensive restructuring program including phasing out aircraft (B747 / A380) and letting employees go.

Apparently the Japanese market was able to at least dodge the bullet a little bit, mostly due to still very strong domestic demand for travel.

Conclusion

I haven’t seen any reports for ANA’s competitor Japan Airlines yet but I’d imagine they are in the same situation. JR Japanese Railways have also reported losses which is amazing. Then again what really surprises anymore this year!?

It’s very interesting that ANA can transfer workers to Toyota and other carmakers even if this is a temporary measure. I wonder what kind of tasks those transferred employees are going to perform at the automotives unless it’s a purely administrative position.

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