Challenging spirit and teamwork keep ANA flying high

How a company survives a crisis affects its future resilience. For All Nippon Airways, its biggest crisis came from the global pandemic. Due to the unprecedented threat, the tourism and hospitality industries all but shut down. ANA’s business suffered like others, but what made it different was that then-CEO Shinya Katanozaka declared that it would not lay off staff members.

“It was probably the most serious crisis in our history,” Chikako Miyata, executive vice president and chief sustainability officer for ANA Holdings Inc., said in a recent interview, part of a monthly series by Naonori Kimura, a partner for the consulting firm Industrial Growth Platform Inc. “As an airline group, the staff has always been the major source of our corporate strength. On top of that, since our staff held on during the pandemic, we once again felt the preciousness of our human resources when we recovered.”

The pandemic broke out in early 2020 and immediately hit services that gather people together — airlines, hotels, restaurants and cafes. ANA announced its sales had plunged to almost one-third from the previous year and it logged a group net loss of ¥404.62 billion ($2.6 billion) for the business year to March 2021, sharply reversing the ¥27.66 billion net profit for the previous year.

The company decided, however, not to resort to massive layoffs, unlike many other aviation companies. Instead, it took cost-cutting measures such as reducing personnel costs by lowering management salaries, suspending bonuses and asking other companies to take temporary transfers so that those people could come back later. As a result, more than 2,000 employees were reportedly sent to other companies, including the high-end supermarket chain Seijo Ishii and the home appliance retailer Nojima Corp. Most of them later returned to ANA, letting it avoid being short-staffed during the post-pandemic recovery.

Miyata said the pandemic reminded the airliner of its history and how it had been founded — “the challenging spirit at the time of our foundation and our history of returning to the Japanese skies as a private aviation company” in the postwar era.

The company started out in 1952 as Japan Helicopter and Aeroplane Transports Co., founded as the country’s first private aviation company after World War II disrupted air transportation. It began with two helicopters and initial capital of ¥150 million.

ANA gives human-related issues, including human capital, DEI (diversity, equity and inclusion) and human rights, priority because it believes that individual power and teamwork together create corporate values.

In addition to its original challenging spirit, ANA has created an organizational structure that encourages workers to try new ventures. Part of this system is to encourage progressive leaders, mainly in their 30s and 40s to propose reforms and enhance worker engagement. “We are on the way to creating a new system where we cultivate leadership that tries things different from traditional ways,” Miyata said.

Another part of the system is recruitment within the company. Staff members have the opportunity to apply to posts in other departments. For example, Miyata herself entered the company as a cabin attendant and later shifted to work on the ground and climbed the corporate ladder.

In the area of sustainability, the aviation industry is often mentioned as a hard-to-abate sector, but one measure that can reduce carbon emissions is using sustainable aviation fuel (SAF). This low-carbon alternative to fossil-based jet fuel is mainly made from feedstock including vegetable oil and waste cooking oil. “Unlike automobiles, aircraft and ships encounter difficulties in terms of electrification, making reliance on fuels indispensable,” Miyata continued. “The key is how much SAF we can use.”

Miyata said the biggest issue for SAF is the cost — two to 10 times higher than conventional jet fuels. To bring that down, it is necessary to promote the advantages of SAF and stimulate demand while encouraging companies to create supply chains that can produce the fuel domestically.

In October 2021, ANA launched a new program, SAF Flight Initiative: For the Next Generation, aiming to reduce carbon emissions in air transportation by using SAF. ANA says that companies contracting with it for airfreight or business trips can receive carbon-reduction certificates approved by a third-party organization when they pay part of the SAF costs through the program. This effort contributes to carbon reduction throughout the companies’ value chains.

Also in 2022, ANA set up an alliance, Act for Sky, with industrial builder JGC Holdings Corp., energy company Revo International Inc. — both of which produce SAF — and Japan Airlines. They aim to commercialize and expand the use of domestically produced SAF.

While promoting the benefits from SAF and urging the government to support its domestic production, ANA also is reducing carbon emissions through switching to energy-saving aircraft. According to Miyata, about 80% of its airliners have already been replaced by such craft and it aims to raise that above 90% in 2030. ANA pilots also try to manage their flight paths and engine operations in ways that reduce carbon emissions, she said.

At the end of the interview, Miyata pointed out that what is key in sustainability management is being able to handle short- and long-term strategies at the same time. “For sustainability, we need to think about our policy for the next several decades. But we will make business strategies for the next several years. The most important thing is to manage the different time spans at the same time,” she said.