UPDATE 1-ANA counts cost of grounded 787, may impact future strategy
TOKYO, Jan 31 (Reuters) - All Nippon Airways Co, Asia's top airline by revenue, said the grounding of Boeing Co's 787 Dreamliner jet, with undiagnosed battery problems, would cost it around $15.4 million in lost revenue from cancelled flights this month.
ANA, the Dreamliner's launch airline, said it remained unclear as to when the sophisticated new plane would resume commercial flights, making it harder to predict the longer-term financial impact of having the plane idle.
The carrier said it didn't plan to change, for now, its growth strategy, which has the technologically advanced 787 at its core. But it conceded that a prolonged grounding of the plane would impact its strategy.
The Dreamliner, 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 - a battery fire on a Japan Airlines Co 787 at a U.S. airport and an emergency landing by another plane on a domestic ANA flight after battery problems triggered a smoke alarm.
The grounding of the global Dreamliner fleet - ANA operates 17 of the lightweight, carbon-composite planes - has forced airlines to cancel flights and reschedule passengers on to alternative planes. ANA has cancelled close to 850 flights until Feb. 18, affecting over 82,000 passengers.
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 percent since before the emergency landing of one of its planes on Jan. 16 - shrinking its market value by around $200 million, the list price of a single Dreamliner.
Only two analysts have revised the carrier's full-year earnings outlook, and the cost of insuring ANA's debt against default for 5 years has halved since November.
Q3 PROFIT FALLS
"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, CEO of airline industry consultancy SimpliFlying ahead of ANA's third-quarter results on Thursday.
October-December operating profit fell by more than a fifth from last year, to 32.2 billion yen ($353.6 million) on revenue that nudged nearly 4 percent higher to 379 billion yen.
The Dreamliner makes up around 7 percent of ANA's fleet, and the airline normally operates around 1,000 flights a day and carries 3.7 million passengers each month.
Neither ANA nor JAL, which has seven 787s, have said they have considered changing orders for 87 more of the Dreamliners.
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 one 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 CEO Jim McNerney said on Wednesday the airplane maker stood by the troubled lithium-ion battery technology that has halted deliveries of new Dreamliners, which are still being made.
"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.