ANA announces merger plan for Peach, Vanilla LCC units

March 23, 2018

Tokyo- ANA Holdings Inc. said Thursday that it will merge its budget airline units Peach Aviation and Vanilla Air by the end of fiscal 2019, to create a low-cost carrier with the largest sales in Japan.

The combined sales of Peach, based in Tajiri in the western Japan prefecture of Osaka, and Vanilla, based in Narita in Chiba Prefecture, east of Tokyo, stand at some 76 billion yen, exceeding sales of Jetstar Japan, the current leading LCC in the country.

The aim of the merger is to expand the ANA Holdings group's budget flight service network to meet Japan trip demand in other parts of Asia that is expected to grow further toward the 2020 Tokyo Olympic and Paralympic Games.

ANA Holdings, which also has major carrier All Nippon Airways under its wing, hopes that the merged company, which will use the Peach brand, can achieve sales of 150 billion yen and operating profit of 15 billion yen in fiscal 2020 by taking advantage of the management consolidation expanding the business scale and cutting costs.

As for international flights, Peach and Vanilla mainly cover short-distance routes, such as those between Japan and Taiwan.

The new company will beef up its revenue base and add medium-distance routes reaching Southeast Asia and India, ANA Holdings officials said.

"We'll bring together the two companies' strengths and manpower and aim to firmly maintain safe operations and maximize revenues across the group," ANA Holdings President Shinya Katanozaka told a press conference in Tokyo.

Peach and Vanilla operate a total of 42 routes, with only three overlaps including one between Narita International Airport in Chiba and Kansai International Airport in Osaka.

As both carriers use the Airbus A320, ANA Holdings expects that the new company can easily utilize their pilots, who need separate licenses for each airplane model, and also reduce maintenance costs. Jiji Press