Surviving the pandemic: raising cash to outlast zero demand (2020)

When cash on hand, not cost-cutting, decides survival

The crux of this decision was that, with demand simply gone, the question was not how to cut costs but how much cash could be put on the balance sheet before it ran out. COVID erased international and domestic passengers almost overnight: revenue fell 63% in the year ended March 2021 and ANA booked an operating loss of $4.2B (¥465bn), doubling its interest-bearing debt. President Shinya Katanozaka chose survival over pride — a $3.7B (¥400bn) subordinated loan and up to $3.1B (¥332bn) in new equity, some $9.4B (¥1tn) in all with bank lending, alongside about 3,500 job cuts and pay reductions. It was a wager that a passenger airline lives or dies, in a demand shock, on the depth of its cash rather than the thinness of its costs.

The episode exposes the liability side of ANA’s character. The same appetite for fleet and reach that let a #2 catch the leader had built a heavy, fixed-cost base with thin buffers — so that when demand evaporated, the losses ran as outsized as the growth had. That the raise was later absorbed quickly, debt pulled back below pre-COVID levels and equity restored by 2025, vindicated the choice to prioritise liquidity; but it also pushed ANA to answer the exposure structurally, with a third, mid-service brand in AirJapan and the 2025 re-acquisition of the cargo carrier NCA it had sold in 2005 — moving back from a passenger-only base toward a portfolio less easily emptied by a single shock.