Fighting the headwinds

Having bucked market trends by posting record earnings for the first half of the year, All Nippon Airways (ANA) now aims to sustain its solid profit growth despite the clouded operating outlook in its home market in Japan.

To maintain the momentum despite the challenging conditions caused by a stagnating domestic economy, the firm has expanded to the low-cost carrier market and is mulling taking advantage of the growing Asian market through acquisitions.

In its results for the first half to September, ANA reported that domestic passenger revenue rose only 4.6 per cent year on year to 343 billion yen (HK$29.81 billion), but the international segment jumped 12.6 per cent to 179.7 billion yen.

After raising 170 billion yen from issuing new shares in Japan in July, it has joined the small band of airlines around the world that are seeking to expand through acquisitions, such as the cash-rich Gulf carriers, Turkish Airlines and China's HNA Group.

ANA would now pursue investments in airlines in the Association of the Southeast Asian Nations (Asean) to cash in on the robust traffic growth in Asia, said president and chief executive Shinichiro Ito.

Coming at a time when its home market was stagnant, the bold expansion plan seemed to be something of an "Armageddon Day" strategy, said Will Horton, an analyst with market intelligence group Centre for Aviation. But Asian airlines were generally stronger and more financially secure than their European counterparts, he said.

In an interview with the South China Morning Post, Ito said ANA was bidding to make its first overseas investment in more than 20 years.