Japan's major airline is escaping its worst period

April 24, 2021 (Saturday) Clear

・Prime Minister Yoshihide Suga on the 23rd announced a state of emergency for Tokyo, Osaka, Kyoto, and Hyogo, covering four prefectures.

The period is 17 days from 4/25 to 5/11.

Requests to close large commercial facilities over 1,000 square meters, excluding venues that serve alcohol and essential goods sections, will be issued.

The focus is on measures to curb crowds during the long holidays.

・Honda <7267> [closing price 3,233.0 yen] on the 23rd announced that by 2040 it will shift all new car sales worldwide to electric vehicles (EVs) and fuel cell vehicles (FCVs).

They will also stop selling new vehicles that emit CO2 while driving, including hybrids (HV).

General Motors (GM) in the U.S. has already announced a similar policy.

In advanced countries, the share of EVs and FCVs is targeted to rise to 40% by 2030 and 80% by 2035.

・The U.S.-hosted Climate Summit will close on the 23rd.

Advanced nations including the U.S. and Japan have announced new targets for reducing greenhouse gases.

The world has re-launched toward achieving the goals and restoration of the Paris Agreement, but questions remain about how to ensure their effectiveness.

・Prime Minister Yoshihide Suga on the night of the 23rd stated at the Prime Minister’s Office that vaccinations for people aged 65 and over will be completed in two doses by the end of July.

・General Electric (GE) obtained the first international certification for a large offshore wind turbine that can withstand typhoons.

They plan to install in Japan and other areas, with proposals in May bid submissions.

The generator is 248 meters tall with a 12,000 kW class output, and obtained the “Class T” certification established by the International Electrotechnical Commission in 2010.

The former top standard, “Class 1,” assumes a 10-minute average wind speed of 50 meters or less; the newly established “Class T” is designed to withstand 57 meters.

・In response to the state of emergency declaration, many department stores and restaurant chains will close or shorten hours in Tokyo and the three prefectures from the 25th.

Local governments are calling for voluntary restraint on movement, and the impact on the tourism industry is significant.

Professional baseball and other sports will continue but without spectators.

With two consecutive Golden Week periods, contracts and deals will be affected, and the economic impact is inevitable.

・The government will raise the share of “decarbonized power” in the new energy mix for fiscal year 2030 to more than half of generation capacity, up from the initial target in the 40s.

Renewables will be increased to the 30% range, and the level for nuclear power will be maintained at the current target.

・The Biden administration in the U.S. is soon to formulate a “U.S. Family Plan” centered on child-rearing support and other measures.

It will become a pillar of economic policy following the “U.S. Jobs Plan” that packages infrastructure investment with corporate tax reforms.

Aiming to reduce inequality through wealth redistribution, it includes higher taxes on capital gains and other measures targeting the wealthy.

・The performance of U.S. airlines is improving from the worst period.

On the 22nd, the combined net loss for American Airlines, United Airlines, and Delta Airlines for the January–March 2021 quarter was $3.784 billion, about 60% of the peak loss.

Returning to profitability hinges on recovery of lucrative international routes and corporate demand.

・ANA Holdings <9202> [closing price 2,369.5 yen] on the 23rd announced that the consolidated net loss for the fiscal year ending March 2021 was 405 billion yen (the previous year a profit of 27.6 billion yen).

Although the loss is the largest ever, cost-cutting measures such as reducing flight operations and downsizing aircraft, and the recognition of deferred tax assets, lifted the shortfall by 1,050 billion yen from the previous forecast (a 510 billion yen loss).

Revenue fell 63% year-on-year to 7,250 billion yen; operating loss was 4,650 billion yen (previous year a profit of 60.8 billion yen).

Previously forecasted losses were 7,400 billion yen and 5,050 billion yen respectively.

・Panasonic <6752> [closing price 1,309.0 yen] decided to acquire U.S. Blue Wave Yonder, a software company for manufacturing and distribution sectors.

By incorporating software knowledge, they aim to grow this into one of the sources of revenue to support corporate digital transformation (DX).

In manufacturing, the battleground is rapidly shifting toward software.

・Mitsubishi Motors <7211> [closing price 289 yen] on the 23rd announced that in May they will reduce production by 16,000 units domestically and abroad.

In addition to the global semiconductor shortage, a fire at Renesas Electronics <6723> in March hindered procurement of semiconductors.

Nissan Motor <7201> [closing price 551.2 yen] is also expanding the production reductions in May, with the impact of Renesas’ fire becoming apparent.

・Worldwide coronavirus infection numbers (daily deaths) as of 4/23 4:00 PM, compiled by Johns Hopkins University: Global total 114,476,000 (13,777 deaths)

USA 31,929,599 (943) India 16,263,695 (2,263) Brazil 14,167,973 (2,027) France 5,469,674 (277) Russia 4,682,573 (391) Turkey 4,501,382 (354)

UK 4,413,834 (20) Italy 3,920,945 (360) Spain 3,458,886 (132) Germany 3,254,609 (265) Argentina 2,796,768 (537) Poland 2,731,256 (695)

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