All Nippon Airways, the launch airline for Boeing’s 787 Dreamliner, said it lost more than $15m in revenue from having to cancel flights this month.
ANA said it was unclear as to when the 787 would resume commercial flights, making it harder to predict the longer-term financial impact of having the plane idle.
According to a Reuters report, ANA said it had not yet decided whether to claim compensation from Boeing, and it had no plans, for now, to change a growth strategy that has the technologically advanced 787 at its core. But it conceded that a prolonged grounding of the plane would impact that strategy.
“We have not decided on our right to demand damages, but naturally going ahead, if a damage amount is decided for the incident, we will negotiate,” Chief Financial Officer Kiyoshi Tonomoto said at a briefing on ANA’s quarterly results.
The 787, which Boeing says uses a fifth less fuel than traditional planes, opens up new international routes that ANA’s existing fleet can’t handle.
All 50 of the 787s Boeing has delivered to airlines to date are out of action as investigators in Japan and the United States try to find the cause of two recent incidents with the 787’s lithium-ion batteries.
The grounding of the global 787 fleet — ANA operates 17 of them — has forced airlines to cancel flights and reschedule passengers on to alternative planes.
ANA has cancelled close to 850 flights until February 18, affecting over 82,000 passengers. The 787 makes up around seven per cent of ANA’s fleet, and the airline normally operates around 1,000 flights a day and carries 3.7 million passengers each month.
Despite the plane’s battery problems, which follow years of development and production delays, investors have kept faith with ANA. Shares in the airline are down just 3.2 per cent since before the emergency landing of one of its planes on January 16 — shrinking its market value by around $200m, the list price of a single 787.
Few analysts have revised down the carrier’s full-year earnings outlook, and the cost of insuring ANA’s debt against default for five years has halved since November.
“When you’re the launch customer there’s going to be problems, and when you add the previous Dreamliner delays into the mix, the reaction from ANA investors is just ‘Here we go again’,” said Shashank Nigam, chief executive of industry consultancy SimpliFlying ahead of the earnings report on Thursday.
ANA’s October-December operating profit fell by more than a fifth from last year, to JPY¥32.2bn ($353.6m) on revenue that nudged nearly four per cent higher to JPY¥379bn.
Neither ANA nor JAL, which has seven 787s, have said they have considered changing orders for 87 more of them.
For now, ANA has around 150 trained 787 pilots staying at home. As flights are rescheduled, the carrier’s Boeing 777 pilots are having to take the strain, with the extra workload.
“Obviously (the grounding) is a cost increase, but it’s not a massive change of fleets,” said a foreign hedge fund manager.
Nicholas Cunningham, an analyst at Macquarie Capital Securities in Tokyo, said ANA needs to replace its Boeing 767s, a medium-size aircraft with 200-300 seats. “The 787 is ideal for that. It has better fuel economy and as a medium-body aircraft offers flexibility for domestic and international routes,” he said.
Boeing chief executive Jim McNerney said on Wednesday the company stood by the troubled lithium-ion battery technology.
“We feel good about the battery technology and its fit for the airplane. We have just got to get to the root cause of these incidents and we will take a look at the data as it evolves, but there is nothing that we have learned that causes us to question it at this stage,” he said as Boeing reported market-beating fourth-quarter profits.
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