All Nippon Raises Profit Estimate 35% on Higher Sales (Update2)

March 29 (Bloomberg) -- All Nippon Airways Co., Japan's second-largest airline, raised its annual profit forecast 35 percent after it attracted more customers at home and overseas.

Net income may total 23 billion yen ($195 million) for the year ending March 31, compared with Tokyo-based All Nippon's previous estimate of 17 billion yen, it said in a release today. The airline also raised its sales forecast by 1.2 percent to 1.37 trillion yen.

It's the second time for All Nippon to raise its annual profit goal for the 12-month period as the company is winning over some travelers after safety lapses at bigger rival Japan Airlines Corp. Higher domestic traffic and business travelers flying to North America and Europe helped the company exceed its forecast.

The airline expects to post 64 billion yen in current profit, or pretax profit from operations, for the year ending March 31. Operating profit, or sales minus the cost of goods sold and selling, general and administrative expenses, may total 86 billion yen, up 9.6 percent from its previous estimate.

All Nippon's profit may fall for the 12 months ending March 31, because of the absence of a gain from buying aircraft, the company said in May last year. The carrier said it would stop using an accounting technique that allows airlines to post discounts on plane purchases as profit, in a move to boost transparency.

The company earned net income of 27 billion yen on sales of 1.29 trillion yen for the year-earlier period through March 2005.

Japan Airlines has been reprimanded by the government twice for failing to improve safety. Four of 15 air incidents that were classified in 2005 as ``serious incidents'' by the nation's transport ministry involved in Japan Airlines. In the previous year, the airline was involved in one out of 14 air incidents.

All Nippon shares were unchanged at 420 yen at the 3 p.m. close in Tokyo before the company revised its earnings estimates.

To contact the reporter on this story: Naoko Fujimura in Tokyo at nfujimura@bloomberg.net