ANA Q1 FY2027: Revenue rises 22.6% but fuel costs drag profit down 43.5%

ANA (ANA Holdings) reported consolidated results for the first quarter of FY2027 (April-June 2026). Revenue rose 22.6% to 672,729 million yen, but operating profit fell 43.5% to 20,782 million yen. Ordinary profit declined 37.3% to 22,513 million yen, and net profit attributable to owners of the parent dropped 15.4% to 19,411 million yen, marking revenue growth but profit decline across all profit lines.

The main culprit was a sharp increase in airline costs. Fuel costs jumped, personnel expenses rose, and the consolidation of NCA added to cost of sales, which surged from 456,915 million yen a year earlier to 590,110 million yen. On the positive side, international passenger revenue climbed 20.0% to 247.6 billion yen, international cargo revenue (ANA brand) jumped 37.9% to 58.3 billion yen, and NCA contributed 50.4 billion yen in cargo revenue.

Margins were squeezed, but the top-line growth remained solid, and full-year forecasts were left unchanged from the initial outlook. Operating profit progress at Q1 stood at just 13.9% of the full-year target, leaving a heavy second-half burden to achieve the annual goal.

External customer revenue, operating profit, and profit margin by major segment were as follows:

Airline Operations expanded revenue 25.2% to 610,980 million yen, but operating profit halved, down 48.7% to 18,149 million yen. International passenger traffic grew 14.3% on robust inbound and leisure demand, with a load factor of 85.1%. Domestic passenger numbers rose thanks to time sales and fare revamps, but revenue inched up only modestly. Cargo revenue surged on semiconductor-related shipments, recovering North American demand, and the consolidation of NCA. Yet, higher fuel and labor costs eroded profits, widening the profit decline in airline operations and dragging down the group.

Airline-Related Operations delivered standout results: revenue up 7.4% to 14,580 million yen, operating profit up 54.3% to 4,925 million yen, with a margin soaring to 33.8% — the highest in the group, driven by growth in international express cargo and inflight meal contracts.

Travel Services saw revenue slip 9.3% to 10,896 million yen as mainstay dynamic package products struggled, but tight cost control swung the segment back to an operating profit. Trading Company Operations posted higher revenue on strong duty-free sales, but operating profit fell 19.8% on rising labor costs. Other segments, including real estate and aviation security, were steady.

Total assets at the end of Q1 were 3,923,232 million yen, down 31.9 billion yen from the previous fiscal year-end, mainly due to a decline in securities. However, capex continued, with construction in progress rising to 288,858 million yen, centered on aircraft. Liabilities increased 62.4 billion yen to 2,514,933 million yen, driven by higher borrowings and contract liabilities. Interest-bearing debt (including convertible bonds) stood at 1,193.1 billion yen, up 21.4 billion yen. The equity ratio slid to 35.6% from 37.7% at the end of the prior fiscal year.

Cash flows were robust: operating cash flow was an inflow of 89.2 billion yen, investing cash flow a 175.0 billion yen inflow thanks to securities redemption, yielding free cash flow of 264.3 billion yen. Financing cash flow was an outflow of 63.5 billion yen for dividends and loan repayments. Cash and deposits ended the quarter up 202.8 billion yen to 939.1 billion yen, providing ample liquidity.

On shareholder returns, the full-year common dividend forecast was held at 60.00 yen per share (prior year: 65.00 yen). The annual dividend forecast for subordinated bonds (hybrid financing) was maintained at 175.00 yen. These instruments become redeemable for cash after five years from issuance, giving the company flexibility in future capital management.

In its quarterly report, ANA noted that while the economic environment is expected to recover gradually, geopolitical risks, particularly in the Middle East, warrant close attention. Passenger and cargo demand continue to expand, but several risks cloud the earnings outlook:

• Fuel price surges: Operating profit is highly sensitive to fuel cost swings, threatening the full-year forecast.
• Geopolitical risks: Deterioration in Ukraine or the Middle East could disrupt demand and operations.
• Currency fluctuations: A weaker yen boosts revenue but raises foreign-currency costs and fuel prices, potentially squeezing profit on balance.
• Rising labor costs: Intensifying competition for aviation and airport staff is pushing up fixed expenses.
• Higher capex: Investment in new aircraft and SAF (sustainable aviation fuel) compliance adds medium- to long-term financial burden that may affect future cash generation.

ANA left its consolidated full-year FY2027 forecasts unchanged from the initial announcement (April 30, 2026): revenue 2,770,000 million yen (+9.1% year on year), operating profit 150,000 million yen (-31.0%), ordinary profit 137,000 million yen (-37.6%), and net profit attributable to owners of the parent 96,000 million yen (-43.2%).

At just 13.9% of the annual operating profit target, Q1 progress was low, meaning a sharp rebound is required in the second half. The company expects demand recovery to drive higher profit from Q2 onward, but fuel prices and geopolitical developments pose material downside risks.

ANA Group announced plans to merge its three cargo entities — ANA Cargo, NCA, and NCA Japan — on April 1, 2027. The group has already begun coordinating cargo space management and consolidating overseas sales, aiming for network optimization and cost efficiency after the merger. With logistics demand expanding, the integration is a strategic move to operate cargo operations as a unified entity and strengthen international competitiveness.

On the environmental front, ANA launched a SAF (sustainable aviation fuel) program for individual passengers, the "SAF Flight Initiative." In 2026, it will start introducing the new business-class product "THE Room FX" on Boeing 787-9 aircraft to bolster long-haul competitiveness. Balancing growth investment with environmental measures will be a key theme going forward.