Flight suspensions amid pandemic drag Japan's ANA to $1 bil quarterly loss

Tokyo — Plummeting domestic and international flights amid the coronavirus pandemic led to Japan's top airline ANA Holdings posting July 29 a record quarterly net loss of Yen 108.82 billion ($1.04 billion) in the April-June period, compared with a Yen 11.42 billion net profit for the same months last year.

"Passenger demand for both international and domestic flights declined significantly, due to worldwide government travel restrictions and the Declaration of the State of Emergency from the Japanese government," ANA Holdings Executive Vice President and Chief Financial Officer Ichiro Fukuzawa said in a statement.

"While we aggressively worked to offset lost revenue by catering to the increased demand for international cargo transportation by arranging many non-scheduled flights and utilizing large freighter aircraft, we were unable to offset the unprecedented impact of COVID-19 and ended with a large quarterly loss."

ANA's April-June jet fuel costs fell 81.3% year on year to Yen 15.3 billion as a result of reduced flight services.

ANA, which had almost the same size of revenues for international and domestic passenger flight services in the year ago period, posted a 94.2% year-on-year decline in its April-June international passenger revenue to Yen 9.5 billion. Its revenue for domestic passenger services plunged 86.5% to Yen 22.4 billion.

ANA's April-June international passenger flight operations dropped 86.2% year on year, while its domestic passenger operations fell 73.3%. Amid ongoing global immigration restrictions, ANA's domestic demand for passenger operations is gradually improving after the lifting of the state of emergency on May 25.

Its domestic passenger flight operations will recover to 72.4% of the same period last year in August after improving to 43.3% for July and 25.2% in June.

Hit hardest

The Asian jet fuel sector saw underwhelming demand in the second quarter of 2020 amid the widespread and resurgence of the deadly coronavirus disease, which has infected over 16.76 million people and claimed more than 660,000 lives globally, the latest research by Johns Hopkins University July 29 showed.

The aviation sector was hit the hardest amid strict border controls and rigid travel requirements put in place by various nations in a bid to curb the soaring infection rate, and air travel demand took a plunge as a result.

The outlook on the aviation sector as a whole remains bleak at best amid a slower-than-expected recovery in global passenger traffic. On July 28, the International Air Transport Association reported that this will not return to pre-COVID-19 levels until 2024, a year later than previous projections due to slow virus containment, reduced corporate travels and weak consumer confidence.

Capped price

The resurgence of the deadly viral disease has also kept a lid on the FOB Singapore jet fuel front-month August/September timespread, which remained in a contango structure of minus 59 cents/b at the 0830 GMT Asian close July 29. The FOB Singapore cash differential has also fallen in tandem, and was assessed at a discount of 45 cents/b to the Mean of Platts Singapore jet fuel/kerosene assessment on July 29, down 82 cents/b since the beginning of the year.

Meanwhile, the outright FOB Singapore jet fuel/kerosene price registered at $44.36/b at the Asian close, down $35.92/b, or 44.74%, since the beginning of the year, S&P Global Platts data showed.

"There is simply no demand for jet fuel now, refiners are just minimizing whatever jet fuel output they can or blending jet fuel with gasoil now...there's no other way," a Singapore-based refining source said July 29.