A N A H O L D I N G S I N C . A n n u a l R e p o r t 2 0 2 2 Annual Report 2022 Fiscal 2021 (Year ended March 2022) Growth through the Power of Our People, the Power of the Group Let’s Create a New Future 03 Management Message 64 Foundations for Sustainable Corporate Value Enhancement 12 The ANA Group Value Creation Process 12 14 16 18 The ANA Group DNA Inherited from Our Founder The Source of Value Creation: Living Our Code of Conduct and Maximizing Our Strengths The Value Creation Process Value Creation Approach: ESG Management 20 Business Strategy 22 30 36 Overview of Business Structure Reform Progress and Fiscal 2022 Plan Overview by Business Special Feature: Enhancing Cargo Business Profitability 40 Medium- to Long-Term Value Creation 42 ANA Group ESG Management 46 Material Issues 66 70 76 78 80 92 96 Safety Human Resources Risk Management Compliance Corporate Governance Trust Building with Stakeholders Message from the Independent Outside Directors 100 Responsible Dialogue with Stakeholders 102 Financial / Data Section Contents of This Report The ANA Group (ANA HOLDINGS INC. and its consolidated subsidiaries) strives to create social value and economic value, leveraging the strengths we have cultivated based on the spirit of our founders. In so doing, we expect to generate sustainable growth in corporate value.This report presents an overall picture of the philosophy and value creation handed down over generations. We also address our business strategies for overcoming crises and returning to growth, as well as medium- to long-term sustainability initiatives and the manage- ment foundation that supports these corporate activities. Editorial Policy The ANA Group emphasizes proactive communication with stakeholders in all of our business activities. In Annual Report 2022, we aim to encourage a deeper comprehensive understand- ing of the social value and economic value created by the ANA Group through our manage- ment strategies, our business, and our environmental, social, and governance (ESG) activities. Further, we have published information on the activities we selected as being of particular importance to the ANA Group and society in general. For more details, please visit the ANA Group corporate website in conjunction with this report. Scope of This Report • This report covers business activities undertaken from April 1, 2021 to March 31, 2022 (including some activities in and after April 2022). • In this report, “the ANA Group” and “the group” refer to ANA HOLDINGS INC. and its consolidated subsidiaries. • “The Company” in the text refers to ANA HOLDINGS INC. • Any use of “ANA” alone in the text refers to ALL NIPPON AIRWAYS CO., LTD. 1 Mission Statement Built on a foundation of security and trust, “the wings within ourselves” help to fulfill the hopes and dreams of an interconnected world. ANA Group Safety Principles Safety is our promise to the public and is the foundation of our business. Safety is assured by an integrated management system and mutual respect. Safety is enhanced through individual performance and dedication. Management Vision It is our goal to be the world’s leading airline group in customer satisfaction and value creation. ANA’s Way To live up to our motto of “Anshin, Attaka, Akaruku-genki!” (Trustworthy, Heartwarming, Energetic!), we work with: 1. Safety We always hold safety as our utmost priority, because it is the foundation of our business. 2. Customer Orientation We create the highest possible value for our customers by viewing our actions from their perspective. 3. Social Responsibility We are committed to contributing to a better, more sustainable society with honesty and integrity. 4. Team Spirit We respect the diversity of our colleagues and come together as one team by engaging in direct, sincere and honest dialogue. 5. Endeavor We endeavor to take on any challenge in the global market through bold initiative and innovative spirit. Management Message KATANOZAKA Shinya Chairman of the Board of Directors SHIBATA Koji President & Chief Executive Officer To Our Stakeholders In December of this year, our group will celebrate the historic milestone of the 70th anniversary of our founding. Although the effects of the COVID-19 pandemic continue, we intend to pursue our group mission statement by looking back to our founding principles and overcoming this crisis and returning to a growth trajectory as soon as possible. A willingness to endeavor in taking on any challenge is part of the ANA Group DNA, which has helped us overcome many difficulties in the past. We aim to become an airline group needed by the people of the world, while we hand our DNA onward to the next generation. 2 3 Management Message SHIBATA Koji President & Chief Executive Officer I am committed to leading the ANA Group to profitability for the first time in three years, returning to growth in the medium term. My name is SHIBATA Koji, and I assumed the position of president & chief executive officer on April 1, 2022. First, I want to thank you, our stakeholders, for your support of the ANA Group. Safety is the foundation of ANA Group management. As we remain focused on safety, we aim to become the airline group of choice by customers around the world, based on our record of security and reliability. During the seven years that my predecessor, Mr. Katanozaka, served as president, my role was to pursue group growth through alliances with overseas airlines and through the execution of corporate strategies. During the first four years, we achieved record-high operating income for four consecutive fiscal years by expanding our interna- tional network, attracting visitors to Japan, and merging our LCC business. During the latter three years, and in the face of the COVID-19 pandemic, we implemented decisive and unprecedented reforms, even while protecting employee jobs. In fiscal 2022, I believe my mission is to implement Business Structure Reform in a consistent manner to return the Group to profitability for the first time in three fiscal years. At the same time, we will chart a growth trajectory in the post-COVID-19 era. I am committed to leading the ANA Group to a new stage, responding swiftly to change in an ever-changing business environment. Fiscal 2021 in Review Fiscal 2021 was the second year of the COVID-19 pandemic, fiscal 2019, passenger volume was only 50% for domestic and infections of the Delta and Omicron variants continued flights and 10% for international flights. Even so, the fact to increase. States of emergency were declared and priority that we returned to profitability in terms of operating income preventative measures undertaken in Japan to prevent the gave our employees great confidence. I think this was the greater spread of disease. At the same time, governments moment we saw a glimpse of light at the end of the long imposed severe restrictions on the movement of people to tunnel of the COVID-19 pandemic. and from foreign countries, including much tighter border Demand for domestic flights slumped again in the begin- measures and travel restrictions. While many employees ning of 2022, mainly due to the expansion of Omicron were anxious about the ongoing slump in business perfor- variant infections. We recorded an operating loss for the mance, we engaged in self-help efforts and an appropriate second consecutive fiscal year, but thanks to various shared sense of urgency about the company’s situation and measures we implemented, we reduced the deficit to about hope for the future. one-third of the result in fiscal 2020. This was a year in For example, we made decisions regarding whether to which we realized that ANA Group resilience to the risk of suspend or reduce flights on domestic flights by projecting declining demand improved steadily through a series of passenger demand several months into the future based on actions, including Business Structure Reform. vaccination rates and COVID-19 cases in Japan. Our pro- In terms of finances, we issued ¥150.0 billion in convert- jections led to greater precision in controlling supply and ible bonds in December 2021 to provide funds for growth to greater control of variable costs while seeking a recovery in accelerate Business Structure Reform, as well as to secure sales. We reduced costs by roughly 30% compared to fiscal funds early for future debt redemptions and repayments. 2019 through cost structure reform. These reforms were For the time being, we intend to continue solid financial mainly a reduction in depreciation and maintenance costs management to prepare against unforeseen circumstances through early retirement of aircraft, particularly wide-body during COVID-19. But we will review the level of liquidity on models, as well as by reducing labor costs with the coop- hand once we see a firm recovery in passenger demand, eration of our employees. including demand for international flights. At that point, we In the process of these efforts, we returned to operating will shrink our balance sheet to improve asset efficiency. profitability in the third quarter of the year for the first time in eight quarters. Compared to the pre-COVID-19 results of 4 5 Management Message A Return to Full-Year Profit for the First Time in Three Fiscal Years in Fiscal 2022 Taking Over from the Previous President During fiscal 2022, we intend to confront the risks in our has the advantage of having maintained employment con- The responsibility of a president is to pass the business to improve customer satisfaction by pursuing quality with a external environment, while leveraging a recovery in sistently. Now, we will be able to expand capacity in line down to the next generation. It is also important to identify sense of urgency. At the same time, we will streamline our demand as an opportunity to grow top-line revenues in our with the pace of demand recovery. what should be inherited, what should be transformed, and business operations through labor savings, particularly at aim to return to profitability. Many risk factors remain, Further, we began to place the domestic specification what should be created anew in response to the changing airport counters. We are solidifying our foundations by including the Russia-Ukraine situation, soaring crude oil Boeing 777 aircraft into service in late June. These aircraft times. One must also keep in mind that inheriting without recruiting and training digital human resources and by prices, depreciation of the yen, higher prices for goods, the had been suspended for 16 months due to technical prob- creativity is just form without substance. At the same time, strengthening digital governance. At the same time, we are Zero-COVID policy of the Chinese government, etc. We lems with engines. These resources will help us capture creativity that ignores past precedent is a poor form of pursuing business process reforms that go beyond mere IT must be agile and flexible in responding to and assessing increasing passenger demand in the summer season. Going management. At this point, I want to explain my thoughts implementations. the impact of changes in the operating environment on our forward, we will pursue a recovery in top-line revenues to about inheritance and creation. group businesses. move to the value creation stage. There are three main initiatives that I inherited from former The third point is to strengthen employee engagement. Meanwhile, the with-COVID-19 lifestyle is becoming more The ANA Group cost structure, solidified through President Katanozaka that I intend to continue working on. We consistently protected employee jobs throughout the widely accepted in Japan. Restrictions on behavior by the Business Structure Reform, now supports a lower break- COVID-19. But in response to the rapid deterioration in government and local authorities are being eased, and exter- even point in the Air Transportation Business; much lower The first is to pursue Business Structure Reform, formu- business performance, we were forced to reduce monthly nal restrictions on airline groups are being phased out. With when compared with our pre-COVID-19 performance. We lated at the end of October 2020, in a consistent and wages and bonuses drastically, with the understanding of Japan easing border measures beginning in March 2022, intend to do everything possible to translate the recovery in steady manner. The three major pillars of this reform were the labor unions. It was extremely painful to think of the passenger demand on international flights has finally started revenues to profits, achieving our goals of posting bottom- put together when I was in charge of formulating manage- impact on our employees and their families. But we over- to increase. Summer demand for domestic flights has recov- line profit for the first time in three fiscal years and of secur- ment strategies as a means to lead us out of the COVID-19 came this difficult period by communicating our hopes for ered to between 70% and 80% of the pre-COVID-19 levels ing free cash flow. tunnel and back to growth. The short-term target of the future, including approximately 2,700 town meetings, for ANA and Peach combined passenger volume. We regret to announce that, given our priority on rebuild- resource reduction is already completed. We are now at the which provided an opportunity for management to talk While other countries have resumed normal travel activi- ing the financial platform damaged so severely by the stage of showing the results of reforms in the pursuit of the directly with employees. As soon as we were able to fore- ties ahead of Japan, many overseas airlines are facing the pandemic, we do not intend to pay a fiscal 2022 dividend to group airline model and the establishment of non-air busi- cast profits under the fiscal 2022 budget, we decided to challenge of recovering capacity to match demand due to shareholders. However, we aim to create stable profits as nesses looking ahead to the post-COVID-19 world. We will return monthly wages to original levels beginning April labor shortages. It takes considerable time and effort to quickly as possible to allow payments of dividends in the proceed with a sense of speed and link this momentum to 2022. We also resumed the payment of summer bonuses. recall employees who were laid off during the pandemic and future. And we are committed to achieving our medium- the next medium-term corporate strategy. We believe that the increase in expenses associated with get them back to work in the field after training and other term financial targets of ¥2 trillion in operating revenues, ( P.22: Business Strategy) processes. Regaining employee trust once lost is another ¥200 billion in operating income, and 10% in operating challenge not easy to overcome. In contrast, the ANA Group income margin. these measures is not at odds with measures to improve business performance. Rather, these expenses are neces- The second point is to continue with cost management. sary investments for returning to profitability in fiscal 2022 During the two years of the pandemic, we reduced fixed and for returning to growth in the fiscal years beyond. The costs substantially by retiring wide-body aircraft and by reason we decided against paying a dividend under the curbing personnel expenses. The next stage will be to once fiscal 2022 plan, which we announced at the end of April, again expand the scale of our business. But we plan to is because we wanted to prioritize compensation for our reduce unit cost (cost of available-seat kilometer) by keep- employees first. But it is not just the compensation factor ing the rate of increase in expenses below the rate of that motivates our employees. During Golden Week and the growth of capacity. Digital technology will be the key to summer holiday travel season this year, airport staff were achieving this goal. While our people will always play the busy at work for the first time in quite a while. At the same leading role in supporting the Air Transportation Business, time, they were relieved to see customers return and were we must harness the power of rapidly evolving technology happy to see the airport back to its former vibrant state. We to respond to changing customer needs for contactless believe that when employees feel satisfaction in their work, services. These and other applications will be how we sur- understand their contribution to the company and society, vive fierce competition in the post-COVID-19 world. ANA and find meaning in their own existence, the result is cus- Smart Travel is a new service model that we are expanding. tomer satisfaction and increased corporate value. This model encourages self-service and remote services Therefore, we want to enhance employee satisfaction from through the use of digital technology, expanding the number multiple angles, including the creation of comfortable work of tasks, such as online check-in, that customers can environments and career enrichment. handle themselves without airport staff. This will allow the ANA Group to focus on services best provided by people, which will enhance customer experience value. We intend 6 7 Management Message Management Message Creation and Transformation in the Post-COVID-19 World Next, I want to address three new areas that I intend to create establish a group airline model to adapt to the post-COVID-19 and transform as president, with an eye toward a return to world with a determination to capture every bit of recovering growth over the medium term. demand. We intend to pursue an optimal portfolio via three brands: ANA as a full service carrier, Peach Aviation, which has The first is the revitalization of the international business within accumulated nearly 10 years of experience as an LCC, and the our Air Transportation Business. new AirJapan brand, which we announced in April. In this way, I was born and raised on Kakeroma Island in the Amami we plan to expand top-line revenues while meeting all passenger Islands, about 450 kilometers from Kagoshima City. There was needs. ANA and Peach have already begun to produce results a large, quiet bay in front of the village where my house was. through joint business planning and marketing efforts. The new I often fished in that bay as a child. As I watched the many large AirJapan is in preparations to launch service in the second half cargo ships and passenger boats sailing offshore, I began to of fiscal 2023, with plans to cover the growth markets of dream of someday visiting a new world and having a career Southeast Asia and Oceania as a new brand. where I could travel overseas freely. During university, I took two Even in the post-COVID-19 world, international business will years off to work as a dispatcher at the Japanese Embassy in remain a pillar of group growth. Targeting the world’s potential Beijing. At that time, I saw ANA crew members on an interna- customer base of 8 billion people, we will become more com- tional charter flight at Beijing Airport, and I began to think that petitive, supported by the strengths of our network and alli- Japanese airlines would have to expand their international flight ances, mobilizing all the international business knowledge and networks if Japan were to become a more influential presence expertise we have accumulated to expand our global in the world. Subsequently, I applied to ANA for employment. In market share. 1986, about four years after I joined ANA, the company began to operate regularly scheduled international flights. I had been The second point is to monetize our non-air businesses. regularly involved in operations to solidify the foundation of This year marks the 10th year since our group shifted to a our international flights, including establishing branches in holding company structure in April 2013. During this period, we Washington, D.C. and Beijing. My work also involved building have achieved results in terms of awareness reform through the alliances with overseas carriers and formulating route networks, independent management of each group company and rapid so when the international business generated a profit for the management through the delegation of authority. Meanwhile, first time in fiscal 2004, I felt that my many years of hard work since fiscal 2014, we have prioritized the allocation of resources had paid off. to the Air Transportation Business, as the external environment With the subsequent internationalization of Haneda Airport, continued to be a tailwind for the international business. Positive the expansion of slots at airports in the Tokyo metropolitan area, developments included the expansion of international slots at and an increase in the number of inbound travelers to Japan in Haneda Airport and the increase in inbound passengers to connection with relaxed visa requirements, the international Japan. As a result, the ANA Group profit structure became business became a pillar of growth for the ANA Group. The dependent on the Air Transportation Business for the majority of number of visitors to Japan, which had increased to 31.88 consolidated profits. When faced with the COVID-19 pandemic, million in 2019, declined sharply due to the COVID-19. But the we saw passenger revenues decline, and we became acutely number of passengers on international flights reached a low aware of the risks of operating an airline business with a point in March of this year and began to recover. And although single focus. the number of passengers in the first quarter was still about Moving forward, we will place the highest priority on rebuild- 30% of the pre-COVID-19 levels, I am confident that demand ing the Air Transportation Business as quickly as possible. At for international flights will recover and expand again in the the same time, however, we intend to build a business portfolio medium term. That is because I believe face-to-face interac- that will ensure an unshakable management foundation, even if tions among people around the world and travel to new, similar risks arise in the future. The customer data we have unknown places are essential for the development of the global accumulated over the years through the Air Transportation economy and for people to lead more abundant lives. Business is a valuable management resource unique to our Looking back over history, we see several cases of global company. We believe that a system for utilizing this data on a pandemic that threatened humanity. But in each crisis, people single platform will be effective in growing the earnings of our have overcome the challenges by combining their wisdom and non-air businesses. We will release Super App in the near technologies. COVID-19 may never disappear completely, but it future, which customers can use in their everyday lives. This will subside eventually. In anticipation, the ANA Group will app will leverage reward miles as a hook to encourage the use of various products and services within the ANA Group. This centralized point of contact with customers will encourage customers to use ANA Group services, which will, in turn, expand the ANA economic zone. The ANA Group continues to take on the challenge of creat- ing new value in avatars, metaverse, drones, flying cars, and other diverse business areas related to aviation, mobility, and travel. The metaverse business has been attracting a great deal for our network coordinated closely to maximize marginal profit of attention worldwide. Here, ANA NEO plans to launch the per flight. They did so by forecasting revenues by the day and ANA GranWhale service by the end of fiscal 2022. This service by the flight, while carefully selecting aircraft type and sched- will allow customers to experience travel and shopping in the ules, in addition to reorganizing routes in a flexible manner. In virtual world. This service is intended particularly for use by our cargo business, which performed well during the year, the overseas customers, and we expect to see an increase in the director responsible for aircraft maintenance embraced the value and recognition of the ANA brand globally. We also catchphrase, “Don’t stop the cargo (freighters)!” emulating the believe ANA GranWhale will stimulate real air travel demand by movie, “Don’t Stop the Camera!” to squeeze every last bit of motivating customers to visit Japan in person. time out of our freighters. The group came together as one to We have sown the seeds of many businesses: We intend to modify maintenance plans and shorten turnaround times, monetize these businesses as quickly as possible through the contributing to the maximization of cargo business revenues. appropriate allocation of management resources. At the same When we decided to avoid the airspace over Russia due to the time, we will seek the wider acceptance of non-air businesses conflict in Ukraine, our flight operation department immediately to create synergies that expand the base of customers who use put a crisis management system into effect. Every department ANA Group aircraft and accelerate profit expansion in the Air affected responded in unison, and arrangements that normally Transportation Business. would have taken several months were completed in just a few At the General Meeting of Shareholders held in June, we days. The result was an operational structure that prioritized welcomed MINEGISHI Masumi, chairman of Recruit Holdings safety by rerouting flights. Co., Ltd., as an outside director. We intend to leverage Mr. In the end, the source of ANA Group comprehensive capabili- Minegishi’s wealth of expertise and experience in the creation of ties lies in our people and their individual commitment to new businesses and engage in deeper internal discussions. In Anshin, Attaka, Akaruku-genki! (Trustworthy, Heartwarming, this way and others, we will bolster resilience using non-air busi- Energetic!), as well as the organizational structure we have nesses as another pillar of earnings, aiming to create an ANA nurtured over time. Since fiscal 2020, the system for submitting Group that is resistant to risk. new service proposals by the sales division has given shape to employee suggestions leading to new revenue. Suggestions The third area is to maximize the power of our people. have included sightseeing flights on Airbus A380s, in-flight Through the course of various initiatives during the COVID-19 weddings, the Wings Restaurant (in-flight meals on parked pandemic, I have become convinced that the strength of the aircraft), and more. We expanded the system to the entire group ANA Group is the power of our people, and that comprehensive in fiscal 2021, receiving many ideas from employees represent- capabilities of our group unites us across organizations. The Air ing a wide cross section of jobs and age groups. Many of these Transportation Business is built on pilots, flight attendants, suggestions became the seeds for new plans, including a wed- airport personnel, mechanics, and numerous other employees, ding photo plan and a photography tour using maintenance all of whom must demonstrate a high level of expertise and training aircraft. Despite adversity, every member of the ANA skills in their respective positions. Close cooperation among Group continues to practice ANA’s Way, consisting of Safety, different job categories is indispensable in offering high quality Customer Orientation, Social Responsibility, Team Spirit, and and services in terms of safety, on-time operations, comfort, Endeavor. This spirit is our unique strength that cannot be etc. The ANA Group emphasizes the spirit of Wakyo (harmony expressed in a financial statement, but is special to ANA and is and cooperation) handed down to us from the time of our undoubtedly the greatest driving force in our pushing through founding. This spirit encourages free and open-minded com- the pandemic. munications as we foster an organizational culture of discus- We expanded secondments outside the group as a measure sions and cooperation that transcend the boundaries of job to protect employee jobs. As of July 1, more than 2,200 group description, department, or company. employees are currently or were formerly engaged in work at The comprehensive capabilities of the ANA Group have led outside companies and organizations. To respect the wishes of directly to earnings growth under COVID-19. For example, in the employees themselves, we have implemented an open our international business, the revenue management teams of recruitment system and set shorter secondment periods than both passenger and cargo as well as departments responsible usual when possible. But we are very happy to hear reports of 8 9 Management Message In Closing Since our very first days, the ANA Group has faced numer- of our businesses, holding dialogues with employees about ous challenges. Looking back at our history, we have over- the kind of corporate group we should aim to become. come many risk events, including the Tiananmen Square During these discussions, I heard each employee’s vision of incident in China in 1989, the 9/11 terrorist attacks in the the ANA Group. We exchanged opinions in a frank and United States, the Iraq War and SARS in 2003, the Lehman open manner regarding what to change and what to protect Shock in 2008, and the Great East Japan Earthquake in to achieve this ideal. The next ANA Group medium-term 2011. But it has always been in times of crisis that we have corporate strategy will reflect the collective thoughts of pulled together to overcome every crisis and challenge. The 42,000 group employees. And as we define concrete mea- driving force behind our success has been an indomitable sures to reach this vision, we will also present to our stake- spirit and passionate belief that we can create a new era. holders a roadmap for a return to growth. Under this This spirit is embodied in the phrase, Hardship Now, Yet strategy, we will not only pursue profits but also pursue Hope for the Future, which has been passed down to us ESG management that considers non-financial factors such since the company’s founding. Finding solutions through as the global environment and social issues. We will aim to wisdom and ingenuity in times of hardship is a part of our grow as we create both social value and economic value. DNA, inherited over our 70-year history. We of the current As the top manager of the group, I will stand at the forefront generation keep in mind the unceasing efforts of our prede- and pave the way to the future, making the ANA Group an cessors who have created the history of the ANA Group, a indispensable presence for all stakeholders. We will connect group that is resilient in the face of adversity. And now, we innumerable people, goods, and services, exercising the strive with hope and pride to add another footprint to our wings within ourselves as espoused in our Mission history, that of overcoming the COVID-19 pandemic. Statement. One of my core principles is Goson, which means mutual I ask for your continued support and encouragement of respect. I trace this feeling back to my childhood experi- the ANA Group. ence of living on an island, where residents had to live together in close proximity. I try to always keep in mind that as the top manager, I must never forget to respect the opin- ions and thoughts of each employee. Immediately after assuming the position of president, I visited the front lines August 2022 SHIBATA Koji President & Chief Executive Officer the skills and expertise cultivated within the ANA Group being ANA due to compensation or other considerations a path back used to stimulate and influence employees and organizations to the group where they can contribute the skills and knowledge outside the group in a positive way. It goes without saying that they have acquired elsewhere. we have kept personnel expenses down thanks to the coopera- Without question, our employees are the most important tion of the companies and organizations that host our seconded management resource of the ANA Group. Personnel expenses employees. And we are even more pleased to hear that are not just another cost, but an investment to achieve sustain- employees who have completed their secondment apply the able growth. The degree to which a company is able to utilize experience they gained outside the group to their work after its people determines its competitiveness to a great extent. The returning home to ANA. These new experiences and values ANA Group pursues human resources strategy closely linked to have had a significant secondary effect in revitalizing our own our corporate strategy. And we will step up our investments in organization. We are considering a “comeback system” for people to maximize the individual and teamwork capabilities of fiscal 2022 to welcome former ANA Group employees as mid- each employee as we practice the three elements of diversity, career hires in a bid to utilize new human resources. In this equity (fairness and equity), and inclusion (acceptance and program we will offer opportunities for professionals who left coexistence). Our Vision over the Next 10 Years The ANA Group began operations in 1952 with two helicopters. issues as a fundamental part of our long-term business This December will mark the 70th anniversary of our founding. operations. We already set decarbonization targets for We plan to take this opportunity to redefine the significance of 2050, and we will engage in backcasting and other mea- the ANA Group (our purpose) in the post-COVID-19 world, as sures to identify areas to overcome over the next 10 years well as to reformulate our management vision. as we work toward our targets in the next 30 years. The widespread adoption of telework and online confer- As part of our response to climate change, we disclosed encing in the wake of COVID-19 has caused concerns a scenario analysis in line with task force on climate-related about a potential decline in the number of air travelers for financial disclosure (TCFD) recommendations on our website business purposes. But this trend would have arrived in April 2022. Based on this analysis, we will continue to sooner or later as a result of work-style reform and engage in dialogue with stakeholders, delving deeper into advances in technology. Now, will this diminish the value analyses to respond appropriately to risks and opportunities that the ANA Group offers? To the contrary, I believe the that may arise in the future. value of our Air Transportation Business will only increase. In August, we formulated a transition scenario for achiev- Online communications provide ease and efficiency in cer- ing carbon neutrality by 2050. One of the most important tain cases. But I am convinced that the intrinsic value in real elements of this plan is the use of Sustainable Aviation Fuel travel will gain a new appreciation. After all, experiencing a (SAF), which is expected to have a significant effect on place in person stimulates the five senses, while the plea- CO2 reduction. At present, the global production of SAF is sure of meeting face-to-face is an essential human desire. limited, and production costs are high. However, in June At the same time, there are risks in clinging solely to a 2022, the Ministry of Economy, Trade and Industry and the conventional airline business model if we are to achieve Ministry of Land, Infrastructure, Transport and Tourism stable growth as the ANA Group. Moving forward, we launched a joint public–private sector council to encourage intend to leverage the brand quality, group human the development and production of SAF in Japan. Certain resources, and customer data assets we have cultivated in Japanese companies have announced that they will the Air Transportation Business to become an airline group consider the commercialization of SAF, and we are seeing that provides a full range of products and services related a growing movement toward the early adoption of SAF to mobility and lifetime customer value. Under our new in air transportation. management vision, we will create sustainable economic The ANA Group is stepping up specific activities in collabo- value through the shared values and efforts of a diverse ration not only with the airline industry but also with other base of human resources. non-airline industries. And while we do not have the expertise At the same time, we will confront social issues head-on. to produce SAF on our own, we intend to lead cross-industry Environmental issues are a major global challenge, and we efforts in recognition of our significant role and responsibility recognize the importance of addressing environmental as an airline group in decarbonizing the skies. 10 11 11 Management Message The ANA Group DNA Inherited from Our Founder Core Beliefs In 1952, two years after the ban on aircraft operations was lifted, we became the first purely private airline company in Japan to begin operations. And we did so with only two helicopters. From humble beginnings, our employees pooled their wisdom, and through small jobs that included pesticide spraying and aerial pho- tography, these pioneers pursued the dream of opening up new skies with their own hands. The words of our founder, Hardship Now, Yet Hope for the Future, expressed his belief that no matter how severe the hardship, one must not shrink, but rather believe in a brighter future, striving, growing, and hoping for a time when prosperity comes in leaps and bounds. “Hardship Now, Yet Hope for the Future” “Wakyo” (Close Cooperation) Our Stance as Professionals The phrase Wakyo means the belief in harmonizing without necessarily agreeing. We reach Wakyo through genuine discussions and by working together to achieve our goals. In line with the words of MIDORO Masuichi, our first president, we have made the most of diverse personalities to exchange ideas openly. And we have built collective strength as a group through the process of overcoming many adversities. Our second president, OKAZAKI Kaheita, said, “Trust and love are the threads that weave a beautiful world.” The aspiration behind this saying was to create a beautiful world by spreading global harmony woven with trust and love. “Trust and love are the threads that weave a beautiful world” Our Corporate Vision Even in the midst of postwar reconstruction, the founders of our company made it their mission to contribute to the nation and to their community through their busi- ness. They began to take on new challenges, believing in a future in which the aviation industry would be in high demand. A Business with Integrity. A Resolute and Independent Business. A Self-Reliant Business. These are the values of a company responsible for public infrastructure and for contributing to the development of the Japanese aviation industry through our own efforts, without bias to profit or defer- ence to authority. This value of desire to contribute to society is still alive in the hearts of our employees today through the spirit of endeavor in our Group DNA. A Business with Integrity A Resolute and Independent Business A Self-Reliant Business Not only seriously, but with passion and sincerity. Anshin, Attaka, Akaruku-genki! (Trustworthy, Heartwarming, Energetic!) -ANA’s Way- An unwavering commitment to safety as an airline group Safety Address each customer individually and identify the role we must play to meet their needs Customer Orientation DNA Inherited from Our Forebears As a company responsible for public infrastructure, we must choose what is right for society, and not simply what is right for our own interests Social Responsibility Respect each individual as a professional, and work together to operate every flight flawlessly Team Spirit Believe in a brighter future, take on challenges, even in the face of high odds, and continue to work hard and honestly Endeavor 12 13 The ANA Group Value Creation Process The Source of Value Creation: Living Our Code of Conduct and Maximizing Our Strengths Building a corporate culture in which the source of value creation is reaching higher to live our Code of Conduct and maximize our strengths ANA’s Way is the ANA Group Code of Conduct. This code contains a philosophy that has been passed down over the 70 years since our founding. This philosophy is deeply ingrained in the hearts of every employee. Our diverse human resources put ANA’s Way into practice and create value through their unique strengths, which they continue to hone under frontline experience. The confidence and conviction gained in the process amplifies their mindset for their next actions. This corporate culture repeats a virtuous cycle that is the powerful driving force moving our strategy forward. Anshin, Attaka, Akaruku-genki! (Trustworthy, Heartwarming, Energetic!) -ANA’s Way- Safety Putting the Code of Conduct into Practice Customer Orientation Expanding Mindsets Social Responsibility Team Spirit Endeavor These Four Strengths Function in a Cycle, Driving Value Creation Building a System to Support Earnings (Employee Business Proposal System) • New business proposals by employees: Da Vinci Camp Maximizing the Power of People • Recruit internally for external secondments and intra-group transfers • The Future Creation Project: A project to foster change for employees on • New service proposal system: Gattsuri Hiroba the occasion of our 70th anniversary Productivity Improvement / Efficiency Initiatives • KAIZEN Activities Cross-Organizational Collaboration • Vaccine transportation • Establishment of flight paths to bypass Russian airspace • Initiatives to reduce CO2 Strengths Cultivated A Spirit of Challenge, Never-Ending Pursuit of the Best Comprehensive Capabilities, Working Together to Achieve Our Goals Strengths Arising from Experience on the Front Lines The Forces that Drive Strategy Strong Relationships with Our Stakeholders Group Quality, Building Even Higher Levels Strengths that Create New Value Relationships with Local Communities and Partners • Number of airports served: 103 (50 domestic, 53 overseas) Air Transportation Business Quality • SKYTRAX 5-Star rating • Cooperative agreements with local governments in 12 prefectures • CIRIUM ranked global No. 1 in on-time arrival rate (as of June 2022) (ANA Group, domestic and international routes, 2021) • SAF Flight Initiative corporate program • Cooperative educational agreements with schools Relationships with Our Customers • ANA Mileage Club members: Approximately 38 million (as of March 2022) Human Resources Quality • Certified Health and Productivity Management Organization Program: Oricon, Corporate Training Lecturer ESG Quality • Certified as an Eco-First Business (ANA) • Included in ESG indexes, etc. 14 15 The ANA Group Value Creation Process The Value Creation Process We will maximize the cycle of our four strengths, gener- ated by each employee’s implementation of the Code of Conduct, as we appropriately invest and allocate management resources. We are implementing Business Structure Reform and addressing four material issues to contribute to the Sustainable Development Goals (SDGs) of the UN. At the same time, we pursue sustainable growth in corporate value. ANA Group Management Resources • Power of People willing to endeavor • Fleet and Network connecting people with each other • Trust of our stakeholders • Limited Natural Resources shared with humankind • Financial platform allowing us to spread our wings Anshin, Attaka, Akaruku-genki! (Trustworthy, Heartwarming, Energetic!) -ANA’s Way- Putting the Code of Conduct into Practice A Spirit of Challenge, Never-Ending Pursuit of the Best Comprehensive Capabilities, Working Together to Achieve Our Goals Founding Spirit Safety Customer Orientation Social Responsibility Expanding Mindsets Strengths Arising from Experience on the Front Lines Team Spirit Endeavor Strong Relationships with Our Stakeholders Group Quality, Building Even Higher Levels Material Issues Material Issues Environment ANA Group ESG Management Human Rights Sustainable Enhancement in Corporate Value through Simultaneous Creation of Social and Economic Value Business Structure Reform Medium- to Long-Term Initiatives P.22 Overview of Business P.42 ANA Group ESG Management Structure Reform Progress and Fiscal 2022 Plan ESG Management Initiatives and Target Achievement Regional Revitalization Diversity, Equity, and Inclusion (DEI) Foundations for Sustainable Corporate Value Enhancement (Management) Safety Hygiene and Cleanliness Human Resources Corporate Governance Based on our Mission Statement, our management foundation of safety, hygiene and cleanliness, human resources, and corporate governance underpins all activities of the ANA Group and the creation of corporate value. With this management foundation, we will continue to provide added value to all stakeholders. Mission Statement P.64 Foundations for Sustainable Corporate Value Enhancement 16 17 The ANA Group Value Creation Process Value Creation Approach: ESG Management To achieve sustainable enhancement of corporate value, the ANA Group implements short-term initiatives (business strategies) in response to changes in the business environment and in social conditions. We also engage in medium- to long-term initiatives (response to materialities) that define the ideal we hold for ourselves, maintaining an awareness of both time horizons. In this way, we pursue social and economic value simultaneously. In the midst of the COVID-19 pandemic, we continue to implement initiatives under Business Structure Reform, and we plan to create our next ANA Group medium-term corporate strategy by the end of fiscal 2022. We intend to move to a stage of further value creation by implementing key mea- sures that reflect our strategies related to the environment (E), society (S), and governance (G). 2022 Short-Term Initiatives Business Structure Reform Priority Issues 1. Temporarily reduce scale of the Air Transportation Business, mainly in the ANA Brand, to overcome the COVID-19 pandemic 2. Transform the business model of our Air Transportation Business for sustainable growth under the new normal post-COVID-19 era 3. Establish a platform that utilizes customer data assets to create new revenue opportunities l F o r m u a t i o n o f M a t e r i a l i t y Most Important Risk Major Risks Operating Risks Safety (1) Infections (2) Climate change (3) International situation (4) System failures (5) Information leakage (6) Human rights (7) Natural disasters (8) Market volatility (9) Investments (10) Declining population (11) Expansion of high- speed rail networks For more details: P.116 Operating Risks 18 ANA Group Value Creation (Examples) Social value Simultaneous Value Creation Economic value Provide smart, comfortable travel Strengthen our competitive ability Expand market share Contribute to Japan as a tourism nation Revitalize our regional tourism business Stimulate new demand Promote diversity and create societies that respect human rights Foster and utilize a diverse employee base Improve quality and service Respond to the decline in the domestic workforce Generate efficiencies and innovation through DX Improve convenience and productivity Create a decarbonized society Pursue energy efficiencies Control increases in fuel and other expenses Medium- to Long-Term Initiatives Medium- to Long-Term Initiatives Addressing Material Issues Addressing Material Issues Simultaneous creation of social value and economic value Simultaneous creation of social value and economic value 2030 2050 Sustainable Sustainable Corporate Corporate Value Value Enhancement Enhancement Environment • Reduce CO2 emissions P.47 Transition Scenario for Carbon Neutrality by 2050 • Reduce resource waste ratio • Reduce food waste ratio • Conserve biodiversity 2030 Medium-Term Environmental Targets 2050 Long-Term Environmental Targets E Regional Revitalization • Innovate to resolve social issues • Regional revitalization through social contribution and resolving social issues Ongoing initiatives toward 2030 S Diversity, Equity, and Inclusion (DEI) • Promotion of universal services • Develop human resources for sustainable growth • Strengthen governance structures • Improving the effectiveness of the board of directors • Disclose commitments of top management • Increase diversity in board membership • Disclosure of appropriate information and ensuring transparency G 19 Next ANA Group Next ANA Group medium-term medium-term corporate strategy corporate strategy (to be finalized by the end of fiscal 2022) (to be finalized by the end of fiscal 2022) Human Rights • Respect human rights • Engage in responsible procurement The ANA Group Value Creation Process Business Strategy The environment surrounding the ANA Group has changed dramatically due to the impact of COVID-19. To respond to a post-COVID-19 world, we intend to pursue further Business Structure Reform to transform ourselves into a resilient airline group and chart a growth trajectory that ties our efforts to value creation. Recommencement of ANA FLYING HONU ANA FLYING HONU, an Airbus A380, returned to scheduled service for the first time in two years in July 2022. Group employees will work in concert to refine the wings within ourselves, connecting the world through secure and safe travel. 20 21 Overview of Business Structure Reform Progress and Fiscal 2022 Plan For the latest information, please refer to the following. Financial Results Presentation: https://www.ana.co.jp/group/en/investors/irdata/supplement/ Business Environment Surrounding the ANA Group Medium-Term Response to the Post-COVID-19 Era The management environment surrounding the airline industry on a review of the ANA Group revenue and profit structure, has changed dramatically due to the impact of COVID-19. which is dependent on the Air Transportation Business, we The sharp decline in passenger demand affected group intend to formulate a new medium-term corporate strategy business performance significantly. However, we have seen with a view to returning to growth and transforming ourselves signs of recovery worldwide since the beginning of 2022 into a more resilient airline group. owing to the spread of vaccines and acceptance of the new In this section, we will explain the progress of Business normal. In the medium term, we expect demand to recover Structure Reform and provide an overview of our plan for gradually to pre-COVID-19 levels as economic activity fiscal 2022. * VFR: Visiting Friends and Relatives resumes and other factors lead to further globalization. We continue to pursue our Business Structure Reform looking ahead to the post-COVID-19 world. In fiscal 2021, we undertook various reforms from both business and financial perspectives, intent on returning to growth in the future. FY2020 FY2021 FY2022 (Plan) Theme Emergency response measures Implementation of Business Structure Reform (formulated October 27, 2020) New medium-term corporate strategy (plan) At the same time, we assume that passenger demand and Operating Revenues and Operating Income (Consolidated) Adjust capacity to demand; optimize employee utilization and services needs for air travel will change drastically in the wake of the (¥ Billion) COVID-19 pandemic. The composition of high unit price demand is likely to contract. This demand, including business travel from Japan, etc., had been the main target of the ANA Brand. On the other hand, we expect the composition of low unit price demand, such as leisure and VFR*, to expand. Customer prefer- 1,500 FY2020 FY2021 ences and needs will break from the past, with more emphasis on non-personal / non-contact, hygiene, and simplicity. To respond to these changes, the ANA Group created Business Structure Reform in October 2020, under which we have pursued various reforms. We continue to pursue a vari- ety of measures such as aircraft and human resources. These ongoing efforts include optimizing the Air Transportation Business portfolio and introducing new service models tai- lored to the new normal. Amid these circumstances, we plan to accelerate our response toward the post-COVID-19 era in fiscal 2022. At the same time, we aim to increase top-line revenues in our pas- senger businesses, striving to deliver bottom-line profit and generate free cash flow for the first time in three years. Based 1,000 Operating Revenues 728.6 1,020.3 500 0 Operating Income –464.7 –500 –173.1 50.0 vs. FY2020 results +514.7 FY2022 (Plan) 1,660.0 vs. FY2020 results +931.3 Comprehensive hygiene measures ANA Care Promise Business Business Structure Reform: Three Pillars 1) Reduce resources (Fleet, HR) Aircraft retirement (Additional) 2) Transform the business model of Air Transportation Business 3) Utilize customer data assets Accelerate the speed of reform Strengthen ANA/Peach collaboration Prepare to launch AirJapan operations Introduce ANA Smart Travel Super App Promote cost reductions and control capital expenditures Secure sufficient cash on hand Maintain level of cash on hand Finance Maintain financial base + Secure funds for growth Subordinated loans Public offering Convertible bond Consolidate assets in the medium term Business Structure Reform: Three Pillars Short term (1) Temporarily reduce scale of the Air Transportation Business, mainly in the ANA Brand, to overcome the COVID-19 pandemic (2) Transform the business model of our Air Transportation Business for sustainable growth under the new normal of the post-COVID-19 era Medium term (3) Establish a platform that utilizes customer data assets to create new revenue opportunities With the impact of the COVID-19 pandemic, we began emer- In terms of finances, we strengthened our financial base gency response measures in early 2020. These measures through funds procurement from both financing and equity included flexible adjustments of capacity in line with demand sources. Our policy is to overcome the COVID-19 pandemic trends, optimized personnel utilization, and comprehensive while securing sufficient cash on hand. And our ability to gen- hygiene measures. In October 2020, we created the Business erate cash flow has been improving steadily, evidenced by our Structure Reform plan to reform our group business structure return to profitability in the third quarter of fiscal 2021. We will looking ahead to post-COVID-19 growth. maintain an accurate assessment of our business environ- Our business-related reforms focused on addressing costs ment, pursuing a plan to reduce total assets over the medium based on the Three Pillars. Having improved the ANA Group term and shift to more efficient financial management. cost structure, we intend to link a fiscal 2022 top-line recovery to the creation of new value as quickly as possible. 22 23 Business Strategy Overview of Business Structure Reform Progress and Fiscal 2022 Plan For more on ANA Smart Travel, see the following webpage. https://www.ana.co.jp/en/jp/serviceinfo/ana-smart-travel/ Progress in Business Structural Reform 1 Resource Strategy This section provides an overview of the progress in reforms targeting the airline’s key resources: aircraft and human resources. 2 Group Airline Model We are optimizing the Air Transportation Business portfolio and reforming service models across the ANA Group. Theme 1 Temporarily reduce the scale of the Air Transportation Business, mainly in the ANA Brand, to overcome the Theme 2 Transform the business model of our Air Transportation Business for sustainable growth under the new normal of the COVID-19 pandemic post-COVID-19 era 1. Aircraft Execute a flexible fleet strategy looking at demand trends 2. Human Resources Pursue personnel systems in line with changes in the business environment Number of aircraft*1 Leveraging human resources (Approach) Reduce Expand Changing customer needs = Hygiene and cleanliness, self-service, personal 303 269 272 270 237 235 Additional retirement Wide-body –2 Mid-body –3 285 –290 245– 250*2 New service model: ANA Smart Travel Example) Airport = Smooth, stress-free transit for customers In-flight = Relaxing spaces tailored to individual needs Adapt capacity structure to the new normal Implement labor savings via DX 1. Domestic Passenger Business 1) Strengthen collaboration between ANA and Peach Create joint flight schedules A Cooperative marketing and sales 2. International Passenger Business 1) Fleet strategy to respond to passenger mixture B • Increase share of mid-body aircraft 2) Capture new demand on mid-range routes C • Launch AirJapan service in the second half of fiscal 2023 Overall Concept of the Group Airline Model (Passenger Business) Domestic Business International Business Fares B Increase share of mid-body flights 3. Introduce ANA Smart Travel 1) Implement contactless services D • Improve online check-in procedures for domestic flights 2) Meet individual needs A Strengthen cooperation C Launch AirJapan operations 34 35 35 35–45 End of FY FY2019 FY2021 FY2022 (Plan) FY2025 (Plan) *1 Excludes aircraft retired and aircraft awaiting sale or lease return *2 Includes AirJapan aircraft ANA Brand DX / Non-Air • Pre-order of in-flight meals for international flights Reduce 9,000 employees over 5 years Leverage group human resources, (End of FY2020 to the end of FY2025) hire outside human resources, etc. (to reduce food loss) Implement a flexible fleet strategy while monitoring passenger demand and class composition Improve the competitiveness of group human resources capabilities to meet post-COVID-19 customer needs Enhance Customer Experience Value Strengthen Competitiveness and Increase Business Efficiency at the Same Time Trunk routes Local routes Short-range Mid-range Long-range Flight distance D Introduce ANA Smart Travel 1. Aircraft 2. Human Resources Our Domestic Passenger Business will strengthen cooperation We have also released ANA Smart Travel, a new service In response to the sharp decline in passenger demand, we To respond to changing customer needs, we plan to introduce between ANA and Peach. At the beginning of fiscal 2022, we model under the ANA Brand. Here, we will improve online determined to overcome the COVID-19 pandemic by tempo- ANA Smart Travel as a new service model, adapting airport began flights based on a joint schedule between ANA and check-in procedures on ANA domestic flights to improve rarily reducing the scale of the Air Transportation Business. and in-flight services to the new normal. The number of Peach. We will also collaborate in sales campaigns, fares, and convenience, while also promoting contactless services. We already retired aircraft, mainly wide-body models for inter- employees in ANA Brand will decrease over the medium term. other sales-related strategies. Meanwhile, we will strengthen our response to individual national business specifications, by the end of fiscal 2020. We However, we plan to use group human resources and hire The International Passenger Business will pursue a fleet needs, including the pre-order of in-flight meals on ANA plan to have 270 aircraft across the entire group at the end of from outside the group for digital transformation (DX) and strategy to respond to changes in passenger mixture. We international flights. fiscal 2022, which will represent a reduction of approximately non-air businesses. intend to increase the flight share of mid-body aircraft based Through these efforts, we aim to improve customer 10% from our pre-COVID-19 fleet. We will improve the competitiveness of group human on the assumption that it will take time for high unit price experience value, while strengthening the competitiveness for Beginning fiscal 2023 onward, we plan to increase the resources to meet customer needs in the post-COVID-19 era. demand, mainly business travel, to return to pre-COVID-19 airline business and pursuing business efficiencies at the number of aircraft again, having between 285 and 290 aircraft across the group by the end of fiscal 2025. We intend to implement a flexible fleet strategy while monitoring future developments, including passenger demands and needs. 24 levels. In addition, to capture new demand on mid-range same time. routes in Asia and Oceania, AirJapan will begin service as a new brand in the second half of fiscal 2023. 25 Business Strategy Overview of Business Structure Reform Progress and Fiscal 2022 Plan Progress in Business Structural Reform Assumptions for Passenger Demand in the Fiscal 2022 Plan (Announced April 28, 2022) 3 Non-Air Businesses We are currently engaged in strengthening e-commerce sales and expanding services to create a world in which people live in a mileage-based ecosystem. Theme 3 Establish a platform that utilizes customer data assets to create new revenue opportunities 1. Basic Approach Customer data assets accumulated in the airline business Number of ANA Mileage Club Members 38 million as of March 2022 Implement various measures to create a world in which people live in a mileage-based ecosystem Grow non-air revenues Improve Group resilience 2. Monetization Process (Overall Concept) 3. Progress in Initiatives Utilize websites and apps Centralize points of contact with customers ANA Economic Zone Offer various commercial products Enhance of group products and services Utilize customer data Secure more business partnerships Demand recovery and expansion in the Air Transportation Business FY2021 (Results) 1) Improved platform a. Create a digital platform for Travel Services b. Implement measures to encourage customer travel c. Launch various other services FY2022 (Plan) 2) Achieve monetization by ramping up business a. Release Super App by the end of 2022 b. Strengthen business foundation Medium- Term Policies 3) Establish as a pillar of Group earnings a. Increase revenues by securing more business partnerships b. Expand the ANA Economic Zone We intend to expand revenues of non-air businesses by lever- We made progress in the development of the platform aging existing customer data assets to create a world in which during fiscal 2021, laying the groundwork for monetization. people live in a mileage-based ecosystem. The ANA Mileage During fiscal 2022, we intend to monetize by ramping up Club has approximately 38 million members worldwide, and business, including the release of Super App. our objective is to expand revenues of non-air businesses by Underpinned by the recovery and expansion of airline utilizing this customer data to enhance group resilience. demand, we will encourage customer migration through and The process for achieving monetization consists of creating expansion of the ANA Economic Zone. In the medium term, interactive customer hubs through websites and apps, and we plan to establish the non-air businesses as a pillar of then offering a variety of products and services. The ANA group earnings. Group intends to acquire business partners from outside the group by strategically utilizing customer data in this process. We have developed and are executing a business plan based on the following assumptions regarding passenger demand. FY2021 Results FY2022 Assumptions Domestic Continued impact of travel restrictions Demand recovered once the number of infections subsided Wider acceptance of with-COVID-19 lifestyles International Weak demand for Japan inbound / outbound Trilateral passenger demand recovered first Gradual easing of travel restrictions globally Quarterly Passenger Demand [Index] ANA passenger volume prior to COVID-19 (Jan–Dec 2019) = 100 100 [Dom] FY2021 Results [Int’l] FY2021 Results FY2022 Plan FY2022 Plan ANA / Peach total to recover to pre-COVID-19 levels in FY2022 1H 90 90 80 75 50 25 0 State of emergency declarations (twice) 30 5 1Q 32 7 2Q 52 9 3Q Priority preventative measures 60 ANA domestic FY2022 avg. 80 45 11 4Q 25 30 35 40 ANA international FY2022 avg. 35 ANA / AirJapan total to recover to pre- COVID-19 levels by the end of FY2023 1Q 2Q 3Q 4Q *1 Figures represent ANA Brand only, not including Peach results and plans *2 FY2022 plans are calculated based on Jan-Dec 2019 results under the same standards as the new revenue recognition FY2021 Results FY2022 Plan 1. Fiscal 2022 Plan 2. First-Quarter Status and Second-Quarter Outlook On domestic flights, we project ANA Brand passenger volume Demand for domestic flights steadily increased over the first to average 80% of the pre-COVID-19 levels for the fiscal year. quarter, mainly for leisure and return trips home. On interna- This projection is based on the assumption that demand will tional flights, demand to and from Japan increased due to the increase beginning in summer with the wider acceptance of relaxation of border measures by the government, as well as with-COVID-19 lifestyles. With the recovery in leisure demand, firm trilateral passenger demand between Asia and North America. which has been slow, we expect the number of passengers In the second quarter, we aim to boost demand further, on domestic flights, including Peach, to recover to pre- while closely monitoring trends in the number of infections. COVID-19 levels in the first half of the fiscal year. We expect to resume operations of wide-body Boeing 777 For international flights, we expect travel restrictions and aircraft on domestic flights in phases. We plan to strengthen entry restrictions to ease in stages around the world. We plan efforts on international flights to capture demand for business for ANA demand to recover for the full year, averaging 35% of travel originating from Japan and for inbound travel to Japan pre-COVID-19 levels over the fiscal year. We assume that originating from overseas. leisure demand will recover for certain routes; however, we expect international passenger volume, including AirJapan, to recover to pre-COVID-19 levels by the end of fiscal 2023. 26 27 Business Strategy Overview of Business Structure Reform Progress and Fiscal 2022 Plan Cost Management Present Measures Anticipating a Return to Growth The ANA Group implements consistent and comprehensive cost management to be cost- competitive in the post-COVID-19 era. After achieving profitability in fiscal 2022, we aim to return to growth while implementing the ANA Group Mission Statement. Cost Reductions FY2021 Results*1 Breakdown Reflected in FY2022 Guidance*1 Under COVID-19 With-COVID-19 Post-COVID-19 Variable Costs ¥345.0 Bn ¥275.0 Bn Impact of controlling capacity ¥70.0 Bn Fixed Costs*2 ¥255.0 Bn ¥255.0 Bn Reduction through self-help efforts Total ¥325.0 Bn FY Plan ¥315.0 Bn Control fixed cost increases while recovering capacity ¥120.0 Bn Increase of certain fixed costs reduced in the previous year in line with capacity recovery ¥130.0 Bn Impact of permanent cost reductions FY2020 to FY2021 Business Structure Reform FY2022 Full-Year Profitability FY2023 and beyond Sustainable Growth Medium-Term Corporate Strategy Mission Statement: The Wings Within Ourselves Transform cost structure looking at post-COVID-19 Recover top line and move to the value creation stage Structural reforms by DX Invest in human resources Respond to climate change Create social value and economic value simultaneously [Opportunities] Signs of demand recovery Dom. 1) Acceptance of the new normal 2) Progress in vaccination Int’l 3) Relaxation of border control 4) Approval and expansion of new drugs Air Transportation Business: Support the skies of the world through our comprehensive capabilities [Risks] External environment 1) Continued impact of COVID-19 2) Soaring crude oil prices and yen depreciation 3) Ukraine and Russia issue Non-Air Businesses: Pursue group growth together with the Air Transportation Business Transform into a resilient airline group Total ¥600.0 Bn *1 Versus FY2019 results *2 Includes Employment Adjustment Subsidy Improve unit costs (cost of ASK) over the medium term Management Foundation Safety Hygiene and Cleanliness Human Resources Corporate Governance We have stepped up cost management since the impact of expenses, as we accelerated aircraft retirements in wide-body The past two years during the COVID-19 pandemic were a human resources, and climate change, as we aim to create the COVID-19 pandemic first began to emerge, implementing and other models through the end of fiscal 2020. phase of cost reforms. During fiscal 2022, we will move to a social value and economic value simultaneously. We intend to measures throughout the group. Expenses tied to revenues and operations, etc., will increase stage of value creation. The current external environment transform ourselves into a resilient airline group with both During fiscal 2020, we reduced costs by a total of ¥590.0 in fiscal 2022 compared with the previous year as we restore remains uncertain given soaring crude oil prices and the airline and non-air businesses on growth trajectories. billion compared to fiscal 2019 results. In fiscal 2021, we capacity in line with passenger demand. However, of the Ukraine–Russia conflict. But we will face these risks and lever- In December 2022, the ANA Group will celebrate our 70th reduced costs by ¥600.0 billion compared to the previous ¥255.0 billion in fixed costs reduced in fiscal 2021, approxi- age the recovery in demand as an opportunity to achieve anniversary. On our way toward this historical milestone, we year. Of this amount, we reduced ¥325.0 billion through self- mately ¥130.0 billion are reductions we plan to sustain profitability for the full year. plan to formulate a new management vision for the post- help efforts, exceeding our fiscal year plan. permanently. By the end of fiscal 2022, we expect to formulate our next COVID-19 era. And as we aim to achieve sustainable We reduced variable costs tied to revenues and operations Even when we return to a growth trajectory in the future, we medium-term corporate strategy. This strategy will reflect growth, we will also put the ANA Group Mission Statement through consistent and comprehensive management of rev- plan to curb increases in fixed costs by utilizing external responses to key ESG topics such as digital transformation, into practice. enues and expenses per flight in accordance with trends in resources and other means. We will continue to improve unit passenger and cargo demand. We reduced fixed costs, cost steadily through thorough cost management. mainly in depreciation and amortization and maintenance 28 29 Business Strategy Business Strategy Air Transportation Business Modern Samurai: Speeding efforts toward net profits and medium-term profit growth INOUE Shinichi Member of the Board of Directors ANA HOLDINGS INC. President & Chief Executive Officer ALL NIPPON AIRWAYS CO., LTD. In fiscal 2022, the ANA Group will work with undaunted deter- mination, pursuing our mission to return to full-year profitability and accelerating efforts to establish a business structure capa- ble of generating sustainable and stable profits. Based on a firm platform of safe flight operations, we will assess insights from customers and maximize revenues, continuing unrelenting cost controls. This year also happens to be the 70th anniversary of ANA, and we are engaged in efforts to establish a sustainable business structure with a view to the next 70 to 100 years. In fiscal 2022, the third year of the COVID-19 pandemic, travel sentiment on domestic flights has shown signs of recov- ery following the lifting of priority preventative measures. At the same time, demand on international flights is recovering rapidly in the wake of easing border measures and increased trilateral passenger demand. Our multi-brand strategy through ANA and Peach will maximize earnings through an optimized sharing of roles. Air cargo demand remains stable due to the impact of ocean transportation congestion and other factors. We aim to strengthen profitability through the best mix of passenger and cargo businesses. In services, we plan to deepen marketing strategy based in customer experience value, responding to customer needs from a customer-in mindset built on synergies between self- service and digitalization and enhanced human services. And we will continue to reduce fixed costs and improve productivity through the use of digital technologies, all while we maintain cost structure reforms at current speeds. Our response to ESG management, particularly with regard to decarbonization, encompasses national and inter-industry cooperation as we aim to achieve our medium-term targets. The title of this section includes the phrase Modern Samurai. This company, which began with only two helicopters 70 years ago, has always taken on challenges by being A Business with Integrity, A Resolute and Independent Business, and A Self-Reliant Business. In today’s terms, we are a group that embodies diversity, equity, and inclusion (DEI), embracing diverse ways of thinking to work together to achieve a single direction in contributing to the world through engagement, passion, and determination. In this 70th anniversary year, we will return to the foundations of ANA, striving as one to work through this difficult situation. 30 Although the impact of the COVID-19 pandemic continued throughout fiscal 2021, we captured the phased recovery in passenger demand and robust cargo demand to the greatest extent possible. As a result, Air Transportation Business operating revenues amounted to ¥885.0 billion, an increase of 46.5% year on year, while operating loss amounted to ¥162.9 billion, compared with operating loss of ¥447.8 billion in the previous fiscal year. Our fiscal 2022 plan for the Air Transportation Business calls for operating revenues of ¥1,470.0 billion and operating income of ¥52.0 billion. We aim to grow our top line, expanding capacity in a flexible manner as demand recovers. ANA International Passenger Business Recovering capacity in a flexible manner in conjunction with easing travel restrictions in Japan and around the world ANA International Passenger Business Results Revenues ASK RPK (Index) Fiscal 2017 = 100 125 100 75 50 25 0 2017 2018 2019 2020 2021 (FY) 32 12 11 Resumption of Airbus A380 FLYING HONU Service (Narita–Honolulu) Fiscal 2021 in Review Passenger demand remained significantly weak due to the reemergence of COVID-19 infections and the outbreak of mutant variants. However, business demand, mainly related to overseas assignments, return trips to Japan, and a recovery in demand in connections from Asia to North America resulted in the shift of certain North American routes from Haneda to Narita Airport in July. In this way, we made efforts to select flexible routes and establish extra flights. In March 2022, we suspended operations on the Haneda–London and Paris routes due to the Russia–Ukraine crisis. We continued opera- tions on the Haneda–Frankfurt and Narita–Brussels routes, bypassing the airspace over Russia. In terms of sales and services, we launched Face Express on certain routes to and from Narita Airport in July. Face Express is a new boarding procedure based on facial recogni- tion technology. In February 2022, for certain routes departing from Japan, we introduced ANA Travel Ready, a service that facilitates boarding by allowing passengers to register and confirm their travel documents online in advance. These are just a few examples of our efforts to improve convenience that will continue into the future. As a result, passenger numbers for the ANA International Passenger Business in fiscal 2021 was 0.82 million (up 93.2% year on year), and operating revenues amounted to ¥70.1 billion (up 56.8%). Fiscal 2022 Business Policies As travel restrictions ease around the world and transition to a with-COVID-19 era, passenger demand in Japan is shifting into a recovery phase in the wake of the gradual relaxation of entry restrictions beginning in March 2022. We will closely monitor the status of border control measures in each country and capture business demand, which is recovering ahead of other types of demand, as aggressively as possible. We will also capture demand for connections between Asia and North America. At the same time, we will strengthen efforts to gain leisure demand on Hawaii routes and for passengers visiting Japan. We plan to recover capacity through a flexible approach to resuming or adding flight operations, while holding down increases in operating costs. These measures will include switching cargo flights operated using passenger aircraft to passenger flights according to passenger demand trends. 31 Air Transportation Business ANA Domestic Passenger Business ANA Cargo and Mail Business Maximizing revenues by utilizing wide-body aircraft to increase ASK and capture steadily recovering demand Maximizing the use of freighters and passenger aircraft (belly), strengthening efforts to improve profitability Fiscal 2021 in Review Passenger demand on domestic flights was sluggish over the first half of the year due to repeated state of emergency dec- larations. After the lifting of the declarations in the third quar- ter, we saw a trend toward recovery. However, demand declined again in the fourth quarter due to the emergence of the Omicron variant. As demand fluctuated depending on the number of infections, we endeavored to maximize marginal profit by adjusting the scale of operations flexibly, while adding extra flights on weekends, during the year-end and New Year holidays, and during spring break to capture recovering demand. During the winter schedule beginning October 31, we transferred some flights to Peach to optimize the route network for the entire Group. In terms of sales and services, we improved comfort by introducing Boeing 787-9 aircraft for domestic routes in December, featuring an upgraded specification that included new seats with personal monitors. In addition, we captured demand through a boarding campaign and in-flight services tied to the animated TV series Demon Slayer: Kimetsu no Yaiba. We also introduced two special-livery aircraft featuring characters from the anime. As a result, passenger numbers for the ANA Domestic Passenger Business in fiscal 2021 amounted to 17.95 million (up 41.9% year on year), and operating revenues amounted to ¥279.8 billion (up 37.8%). Fiscal 2022 Business Policies Since March 2022 and the lifting of priority preventative mea- sures, demand has been recovering for both business and leisure travel. We began using the domestic-specification Boeing 777 aircraft, which had been out of service since February 2021, in late June 2022 after conducting the necessary repair work to ensure safety. As with-COVID-19 is becoming a part of daily life, we will capture as much demand as possible for leisure travel and return trips that will increase during the summer season. ANA Domestic Passenger Business Results Revenues ASK RPK (Index) Fiscal 2017 = 100 120 100 80 60 40 20 0 59 41 41 2017 2018 2019 2020 2021 (FY) Boeing 787-9 Aircraft Seat with Personal Monitor The First Aircraft with Demon Slayer: Kimetsu no Yaiba livery ©Koyoharu Gotoge / SHUEISHA, Aniplex, ufotable ANA International Cargo Business Results Revenues ATK RTK (Index) Fiscal 2017 = 100 180 300 250 120 200 150 60 100 279 116 102 50 0 2017 2018 2019 2020 2021 (FY) Fiscal 2021 in Review In addition to the active demand for cargo due to the recovery of the economy, the shift to air due to congestion in ocean freight resulted in strong air cargo demand. We captured this demand for the transportation of automobile-related compo- nents, semiconductors, electronic devices, and vaccines and other pharmaceuticals. We introduced the Narita–Los Angeles route to our network in April, the Narita–Hong Kong and Narita–Taipei routes in October, and the Narita–Qingdao route in November. These routes made the most of the Boeing 777F and other cargo- only aircraft (freighters). In addition, we endeavored to capture 0 strong demand by using passenger aircraft for cargo flights when needed. As a result, ANA International Cargo volume in fiscal 2021 was 0.976 million tons (up 49.1% year on year), and operating revenues amounted to a record high ¥328.7 billion (up 104.8%). Fiscal 2022 Business Policies Our plan assumes that the supply–demand balance will gradu- ally ease over the second half of the year and beyond. This trend will reflect the resumption of passenger flights and an easing in ocean transport congestion. We plan to maintain and improve profitability by continuing to make maximum use of freighters while also establishing extra cargo flights using passenger air- craft to secure capacity. We also plan to strengthen sales initia- tives to capture high-unit-price products and large-lot demand. Boeing 777F Aircraft Cooperating in the Transport of COVID-19 Vaccines Beginning in February 2021, ANA began transporting Pfizer’s COVID- 19 vaccine on the international route from Belgium in Europe to Japan via DHL Global Forwarding Japan K.K. Existing guidelines were upgraded for transportation at –70°C, and we increased dry ice load- ing to ensure transport volume and guarantee quality. Since June 2021, we have been cooperating in the international transportation of COVID-19 vaccines from Japan to various parts of Asia. In addition to international transportation, we also provided air transportation for vaccines within Japan, mainly to remote islands. We will continue to cooperate in the transport and supply of COVID-19 vaccines, taking all possible measures to contrib- ute to the rapid abatement of infections and to help create a society in which people live with peace of mind. 32 33 Business Strategy Air Transportation Business Non-Air Businesses Stepping up efforts to establish a new earnings pillar next to the Air Transportation Business, focusing on leveraging customer data assets LCC (Peach Aviation) Airline Related Aggressively expanding domestic route network to capture more leisure and VFR* demand Fiscal 2021 in Review We opened the Kansai–Memanbetsu route in our network in July and the Fukuoka–Ishigaki route in October. We con- tinued to monitor the impact of the state of emergency declarations and priority preventative measures. In August, we began code-sharing and mileage partnership between Peach and ANA on certain routes out of Narita and Chubu airports, expanding options for ANA Brand customers and improving convenience. Beginning with the winter schedule, we transferred certain routes from ANA to Peach. In this way, we worked to improve profitability while pursuing an optimal Air Transportation Business portfolio for the Group as a whole. In terms of sales and services, we conducted several campaigns to commemorate the 10th anniversary of Peach flight service on March 1, 2022. These campaigns included sales, limited-edition goods, and special events with col- laborating companies. We also introduced the Tabi Kuji ticket, which offers travelers a random destination available via in-flight sales and special vending machines. The Tabi Kuji ticket incorporates Peach points to be used for airline tickets purchases to designated destinations, special mis- sions at destinations, etc. With this new tool, we endeav- ored to build demand through new travel experiences that introduce an element of chance in destinations. As a result, LCC passenger numbers in fiscal 2021 amounted to 4.26 million (up 105.1% year on year), and operating revenues totaled to ¥37.8 billion (up 71.3%). Fiscal 2022 Business Policies We will improve aircraft utilization and expand our domestic route network by increasing flights during early morning and late-night time slots. In addition, we intend to improve con- venience through a redesign of the Peach app, strengthen- ing our efforts to capture leisure and VFR demand by leveraging the effects of flight schedules formulated jointly with ANA. Meanwhile, international flights have been suspended since April 2021. Operations on the Kansai–Incheon route are resumed at the end of August 2022. Going forward, we will resume flights gradually on routes where we anticipate demand recovery, taking into account the regulatory situation in each country. LCC Results Revenues ASK RPK (Index) Fiscal 2017 = 100 150 100 50 0 67 48 43 2017 2018 2019 2020 2021 (FY) We endeavored to increase revenues in fiscal 2021 by Airline Related: Operating Revenues expanding our product lineup for online sales of in-flight meals and other products and services. However, the decline in transaction volume for systems development work due to investment restraints within the group resulted in operating revenues of ¥206.8 billion (down 6.9% year on year) and an operating loss of ¥0.6 billion (compared with operating income of ¥3.6 billion in the previous fiscal year). With the easing of travel restrictions in Japan and other countries in fiscal 2022, we expect a gradual recovery in the number of flights operated, including those by overseas airlines. We plan to pursue efforts to recover and strengthen profitability, mainly through contracts for ground handling and other services. (¥ Billions) 284.3 291.0 299.4 222.1 206.8 2017 2018 2019 2020 2021 (FY) Notes: 1. The graph above includes ancillary revenues. 2. Figures prior to fiscal 2019 include Vanilla Air results. Travel Services All overseas travel projects of the ANA Group were can- Travel Services: Operating Revenues celed in fiscal 2021. In addition, domestic travel volume declined compared to the previous fiscal year, when the Go To Travel Campaign was in place and had a positive impact (¥ Billions) on performance. On the other hand, the transfer of digital marketing and other functions from within the group led to an increase in contract revenues, resulting in operating revenues of ¥46.2 billion (up 2.7% year on year) and an operating loss of ¥2.1 billion (compared with an operating loss of ¥5.0 billion in the previous fiscal year). We will strengthen our efforts in fiscal 2022 to generate businesses that leverage customer data, driven by ANA X Inc. Here, our aim is to create a world in which people live 159.2 150.7 143.9 45.0 46.2 2017 2018 2019 2020 2021 (FY) * VFR: Visiting Friends and Relatives in a mileage-based ecosystem. Trade and Retail A New Form of Travel via Tabi Kuji In fiscal 2021, the gradual recovery in passenger demand Trade and Retail: Operating Revenues led to sales increases at ANA FESTA, airport retail stores. In addition, we saw an increase in transaction volume in our electronics business in response to strong demand in the semiconductor market. As a result, operating revenues amounted to ¥81.6 billion (up 2.2% year on year), while operating income came to ¥549 million (compared with an operating loss of ¥4.2 billion in the previous fiscal year). Passenger demand in fiscal 2022 is recovering on domestic routes in response to the easing of travel restric- tions and other factors. We will work to improve profitability further, focusing on the airport retail business. (¥ Billions) 143.0 150.6 144.7 79.9 81.6 2017 2018 2019 2020 2021 (FY) 34 35 Business Strategy Business Strategy Special Feature Enhancing Cargo Business Profitability Demand for air freight forwarding has been strong amid supply chain disruptions caused by marine transportation congestion and growing in-home consumption. We began transporting medical supplies (masks, protective clothing, hygiene products, and pharmaceuticals) in early fiscal 2020. Thereafter, we loaded cargo in passenger aircraft and expanded freighter opera- tions (cargo-only flights) to meet supply chain needs of customers, particularly in the automo- tive, semiconductor, e-commerce, and pharmaceutical industries, where cargo movement is very active. By maximizing capacity using the ANA Group fleet of 11 freighters (two B777-F and nine B767-300F) and capturing strong cargo demand, we posted a record high for international cargo operating revenues in fiscal 2021. We expect cargo demand to continue to be strong, particularly for automobiles and semiconductors. And we also assume that the supply- demand balance will remain tight for the foreseeable future. In this way, the ANA Group contributes to society, supporting daily lives and corporate activi- ties by maintaining supply chains for various industries, including emergency transportation of COVID-19 vaccines and other pharmaceuticals and medical equipment. The ANA Group Cargo Business Model: Strengths of a Combination Carrier The ANA Group is the only combination carrier in Japan that owns both passenger and freighter aircraft. We seek to improve profits by taking advantage of our strengths in transporting oversize cargo using our 11-freighter fleet and our extensive network of passenger flights to schedule flight routes flexibly and adjust supply in response to demand trends. 1 Leveraging the Strengths of a Combination Carrier through Passenger and Freighter Aircraft Passenger Aircraft (Belly) Freighters Targets Routes Products Small and Medium Size Market Medium and Large Market Extensive Network and Number of Flights Fresh Foods, Pharmaceuticals, Small-Lot Cargo Complementary Network Balance Oversize and Special Cargo Revenue Maximization Increase Revenues from Passenger Flights Increase Revenues Using Freighters 2 Use Wide-Body Freighters to Secure Highly Profitable Supply Volume between Japan and North America Passenger Flights Passenger Flights Asia / China Japan North America B767-300F Freighters B777-F Freighters While we secure supply between Japan and Asia using abundant belly space on passenger flights and B767-300F, we supple- ment routes between Japan and North America, where supply is short on passenger belly space alone, using B777-F. During the COVID-19 pandemic, we have scheduled more flights than before the pandemic since demand is particularly strong on North American routes. (Reference) Special cargo that can only be carried by wide-body freighters Jet engines Semiconductor manufacturing equipment Racehorses SUVs MRI equipment 36 37 Special Feature Initiatives for Sustainable Cargo Business Growth To compensate for the decline in passenger revenues due to COVID-19, we introduced several mea- sures to increase profits in the cargo business. In addition, we are pursuing initiatives to secure stable revenues over the medium term in anticipation of a future easing in supply–demand balance. 1 Measures to Increase Revenues during the COVID-19 Pandemic 1. Consolidate Freighters in Narita Improve operational efficiency by having freighters operate to/from Narita Airport (the Okinawa hub is transitioning to a new model utilizing cargo space on passenger flights) 2. Expand the Number of Destinations Served by Freighters Expand the number of destinations served by freighters and increase choices for flight routes, to schedule flights flexibly in meeting demand and to secure greater revenues New Routes B767-300F (Nine aircraft) Fiscal 2020: Wuhan / Manila; Fiscal 2021: Beijing / Hangzhou B777-F (Two aircraft) Fiscal 2020: Frankfurt / Bangkok; Fiscal 2021: Los Angeles / Hong Kong / Taipei / Qingdao 3. Change Departure / Arrival Airports for Certain Passenger Flights Change certain passenger flights on North American routes from Haneda to Narita to capture strong North America-Asia trilateral cargo traffic (Washington, D.C., Houston, Vancouver, and Seattle routes) 4. Operate Cargo Flights Actively Utilizing Passenger Aircraft TOYAMA Toshiaki President ANA Cargo Inc. Message from the President of ANA Cargo Inc. ANA Cargo Inc. began operations in April 2014. As the manufacturing equipment and complete vehicles, we now core company of the ANA Group cargo business, ANA transport more special cargo than in the past, including Cargo is responsible for cargo business strategy planning, racehorses. Our aim is to provide services in which development of transportation products and solutions, customers feel confident in entrusting their cargo to ANA sales, and airport operations. Cargo for transport around the world. Amid the prolonged spread of COVID-19, demand for air Currently, we are working on Business Structure Reform cargo transport increased in response to disruptions in the in anticipation of the post-COVID-19 competitive environ- supply chain caused by ocean shipping congestion. At the ment. Measures include streamlining operations further Maximize robust cargo demand by operating extra cargo-only flights using belly space on passenger aircraft same time, semiconductor and automobile-related cargo through facilities reorganization, improving transportation 2 Initiatives to Secure Stable Earnings over the Medium Term 1. Capture High-Unit-Price Commercial Goods through More Competitive Products (Figures represent percentage increases in revenues from FY2019 to FY2021) Strengthen sales of PRIO products (quick, reliable transport of special commercial goods), and expand the ratio of high-value-added, high-unit-price cargo Pharmaceuticals 9 times Temperature-controlled transportation 6 times Semiconductor manufacturing equipment 65 times Complete vehicles 8 times 2. Expand Long-Term Contracts Acquire long-term purchase contracts for freighter-operated flights coordinated with shipper supply chains 3. Improve Cost Competitiveness movement was robust, as was demand for PCs and quality, and strengthening our product lineup. We are also e-commerce freight related to rising in-home consumption. conducting business process reform by utilizing the latest Under these circumstances, and as the only Japanese digital technologies, and we will pursue digital transforma- combination carrier owning both 11 freighters and passenger tion by redesigning our systems in 2023 to improve cus- aircraft, we are playing a part in maintaining the supply tomer convenience and operating efficiencies. ANA Cargo chains of nearly every industry by maximizing our resources. is contributing to the SDGs, including efforts to decarbon- We have scheduled numerous cargo flights and charter ize cargo transportation through the use of sustainable flights using freighters, as well as extra cargo flights using aviation fuel (SAF). passenger aircraft cargo space. We will continue to refine our strengths as Japan’s only Over the most recent two years of the pandemic, we combination carrier with both cargo and passenger aircraft, fulfilled our social mission as indispensable infrastructure by and we will strive for a stable and growing business, even transporting masks, protective clothing, and vaccines to in the post-COVID-19 world. We look forward to your con- halt the spread of infection. tinued support. In addition, we are expanding our handling of new trans- port products. Besides the transport of semiconductor Secure labor and worker savings by reviewing work flows associated with the consolidation of shed facilities at Narita Airport Secure labor savings by using an AI-based revenue management system to maximize revenues by route Customer Testimonials Introduce Boeing 777-8F We decided to replace two of the 20 B777-9 aircraft we originally announced for introduction in 2014 with two B777-8F aircraft to secure resources for future growth in the cargo business. The introduction is scheduled for fiscal 2028 or later. The B777-8F is a state-of-the-art wide-body freighter that boasts the largest cargo capacity of any twin-engine aircraft. At the same time, this aircraft features reduced fuel consumption, CO2 emissions, and operating costs per ton compared to conventional aircraft. © Boeing 38 International Cargo Agent, Tokyo Area We have enjoyed a long relationship with ANA Cargo, and over the past two years of the pandemic, we have become even stronger cooperative partners. The number of international cargo flights, flexible aircraft operations, network, and service quality remained stable throughout the pandemic, and ANA has been indispensable in maintaining supply chains while meeting shipper demands. The outlook for materials procurement, packaging, production, etc., has been uncertain, and the volume of cargo being shipped remains unstable. However, ANA Cargo, which operates both freighter and pas- senger flights over a large network of direct flights from Japan, has been very convenient for us. The manager we work with offers proposals tailored to our specific situation, which I find very reassuring. And while instabilities, such as the situation in Ukraine and the port strike on the west coast of the U.S., are likely to continue, we believe ANA Cargo will be an indispensable and important partner in maintaining supply chains across every industry. 39 Business Strategy Medium- to Long-Term Value Creation The ANA Group strives to resolve social issues through our business activities to continue to grow together with society. We pursue our ideal future from a medium- to long-term perspec- tive, aiming to create sustainable societies and enhance corporate value as we implement our strategies steadily and from a global viewpoint. Toward Carbon Neutrality ANA is building a foundation for Sustainable Aviation Fuel (SAF) procurement as we serve as a model of decarbonization to society. In 2021, we launched the SAF Flight Initiative, and in 2022, we established ACT FOR SKY to accelerate our efforts toward net zero CO2 emissions by fiscal 2050. 40 41 ANA Group ESG Management The ANA Group pursues ESG management that considers the environment, society, and gov- ernance from a global and long-term perspective transcending the boundaries of the group. In this way, we contribute to resolving environmental and social issues through our busi- nesses and continue to create value that will be an indispensable part of society in the future. Through ESG-conscious business strategies, we create social value and economic value simultaneously, and we embody the ANA Group Mission Statement, “Built on a foundation of security and trust, the wings within ourselves help to fulfill the hopes and dreams of an interconnected world.” Creating Social Value and Economic Value in Parallel For the ANA Group to create value sustainably, we must respond to long-term needs from a global perspective that includes environ- mental and social issues (creation of social value), as well as implement strategies in both business and finance areas (creation of eco- nomic value). To this end, we have identified and defined material issues to use as guidelines for ESG management. These material issues are topics of common targets for three approaches: Social trends, mission statement and corporate strategy, and ANA Group strengths. In addition, addressing these material issues is indispensable for short-term decision-making in these uncertain times. They also serve as useful concepts for setting medium- and long-term goals. Further, these material issues are consistent with issues we address on an ongoing basis under the ANA Group Management Vision and the ANA Group Mission Statement. At the same time, these issues represent matters we must tackle head-on when formulating Business Structure Reform measures in response to the COVID-19 pandemic and when discussing future medium-term management strategies. Our strengths lie in the spirit of challenge, comprehensive capabilities, group quality, and strong relationships with shareholders— strengths cultivated through a history of hard work and taking on all challenges. Leveraging these strengths and addressing material issues, we strive to create sustainable societies and improve corporate value as an airline group that creates value needed for society in our own unique way. 42 Identification of Materiality We identified four material issues from the three perspectives of social trends, mission statement and corporate strategy, and ANA Group strengths: (1) Environment; (2) Human Rights; (3) Regional Revitalization; and (4) Diversity, Equity, and Inclusion (DEI). We mapped the identified issues on two axes, one representing the impact on group business (management axis) and one representing the impact on the environment and society (society axis). We assigned a level of concern along the society axis, with those matters having a high level of importance and impact identified as material issues. To scrutinize whether material issues were consistent with global affairs and the environment as discussed in our corporate strategy, we continue to confirm suitability through discussions and information gathering with internal and external stakeholders. We also engage in an ongoing process to identify any new material issues. Schematic for Identifying of Materiality Checking links with the ANA Group’s corporate philosophy and strategy Contribution to issue resolution via group business activity Mission Statement and Corporate Strategy Material Issues ANA Group Strengths Social Trends Materiality Matrix Extremely important Human Rights • Human rights violations across the supply chain DEI • Diversity of customers and employees Society Axis Consideration for stakeholders / Impact on the environment and society Environment • Climate change • Environmental pollution Regional Revitalization • Decline of Japanese regions • Income / education disparity in emerging countries Determining long-term issues in global society Management Axis Extremely important Impact on the operations of the ANA Group (Mission Statement, Management Vision, direction of corporate strategy, business opportunities and risks) The Four Identified Material Issues For the ANA Group For Society Issue Recognition Environment • Controlling fuel costs • Controlling the costs of future emission trading schemes • Maintaining / improving evaluations by avoiding environmental risk • Reducing environmental footprint Human Rights • Maintaining / improving evaluations through avoiding • Realizing a world that respects human rights risk human rights Regional Revitalization • Improving profitability by generating new inbound tourism demand • Maintaining / improving profitability of domestic airline business • Improving profits of international airline business • Revitalizing regional economies • Promoting international exchange Diversity, Equity, and Inclusion (DEI) • Improving profitability by generating new demand • Providing an issue resolution system to strengthen capacity to respond to customers • Realizing an inclusive society P.46 P.56 P.58 P.60 43 Medium- to Long-Term Value Creation ANA Group ESG Management ESG Management Promotion Cycle Through our business, we pursue ESG management to contribute to resolv- ing environmental and social issues and to continue creating value as a company that will be an indispensable part of society in the future. Through dialogue with stakeholders, we are able to understand the latest social needs and changing interests and use this to evaluate the impact on busi- ness and society. We then incorporate this information into our management strategies and initiatives. We disclose our progress on our corporate website and through other channels as necessary. At the same time, based on infor- mation we disclose, we engage in deeper dialogue with our stakeholders. We also report our progress and confirm the appropriateness of our initia- tives in those discussions. Through a cycle of dialogue, initiatives, and information disclosure, we promote ESG management focusing on material issues to enhance corpo- rate value and contribute to achieving sustainable societies. Stakeholder Dialogue ANA Group ESG Management Promotion Cycle Information Disclosure Progress External Dialogue • Dialogue with experts on the environment • Dialogue with experts on business and human rights • Dialogue with overseas ESG investors Internal Dialogue • Internal discussions to promote ESG management awareness • Alignment with corporate strategy P.92 Trust Building with Stakeholders Non-Financial Information Disclosure Global standards are under development for sus- tainability disclosures, including disclosures related to climate change. We are also engaged actively in disclosing the process and results of setting and achieving targets related to ESG. • Annual Report - Progress, results related to material issues - Information disclosures in line with the TCFD recommendations • Human Rights Report • ANA SKY website - ESG-related data - Progress, results related to medium- to long-term environmental targets ESG Management Implementation Structure The ANA Group established the Group ESG Management Promotion Committee in accordance with Group ESG Management Promotion Committee Regulations. This com- mittee, which operates under the guidance of the president and under the chairmanship of the director in charge of group ESG management (CEPO: Chief ESG Promotion Officer), consists of ANA HOLDINGS INC. and group directors, group company executive officers, and the full-time Audit & Supervisory Board members of ANA HOLDINGS INC. The committee discusses core policies and measures related to ESG management. In addition, important issues directly related to management are submitted to the Group Management Committee and reported to the Board of Directors and the Audit & Supervisory Board. Based on these regulations, each Group company has appointed an ESG Promotion Officer (EPO) as the person responsible for promoting ESG management and participates as a member of the Group ESG Management Promotion Committee, and each Group company and department has an ESG Promotion Leader (EPL) to lead the ESG activities of their respective organization. Matters discussed, resolved, and reported at the Board of Directors, Group Management Committee, and Group ESG Management Promotion Committee are shared and implemented throughout the entire Group in close collaboration with EPOs and EPLs. We also hold EPL meetings twice a year to share information in a compre- hensive manner and promote initiatives at each Group company and department. ESG Management Implementation Structure Board of Directors and Board of Corporate Auditors Group Management Committee President & Chief Executive Officer Group ESG Management Promotion Committee Chief ESG Promotion Officer (CEPO) ESG Promotion Officer (EPO) ESG Promotion Leader (EPL) G r o u p C o m p a n e s i 44 Material Issues Specific Initiatives Relevant SDGs Environment • Reduce CO2 emissions • Reduce resource waste ratio • Reduce food waste ratio • Conserve biodiversity • Achieve ANA Group 2030 medium-term targets and 2050 long-term environmental goals • Disclose information in line with the TCFD recommendations 2030 2050 • Contribute to biodiversity conservation through initiatives such as those aimed at preventing wildlife trafficking Human Rights • Respect human rights • Engage in responsible procurement • Ensure respect for human rights based on the United Nations Guiding Principles on Business and Human Rights • Thoroughly implement environment and human rights-conscious procurement and build a transparent supply chain Regional Revitalization Diversity, Equity, and Inclusion (DEI) • Innovate to resolve social issues • Regional revitalization through social contribution and resolving social issues • New value creation through the use of avatars, drones, MaaS, etc., and cross-industry collaboration • Contribute to regional revitalization through social contribution activities and resolving social issues • Promotion of universal services • Develop human resources for sustainable growth • Respect the diversity of customers by promot- ing universal services • Develop human resources and a sustainable 2030 work environment, improve employee productivity 2030 2030 Strengthen Governance Structures Disclose commitments of top management Increase diversity in Board membership Ensure appropriate information disclosure and transparency i S m u l t a n e o u s V a l u e C r e a t i o n I m p r o v i n g S u s t a i n a b l e C o r p o r a t e V a l u e t h r o u g h 45 Medium- to Long-Term Value Creation Medium- to Long-Term Value Creation Material Issues Environment Please visit our corporate website for more: https://www.ana.co.jp/group/en/csr/environment/ 1 Reduce CO2 Emissions Reduce CO2 Emissions from Aircraft Flight Operations 1 Reduce CO2 emissions 2 Reduce resource waste ratio 3 Reduce food waste ratio 4 Conserve biodiversity The ANA Group has formulated a transition scenario toward achieving carbon neutrality by fiscal 2050. In order to keep CO2 emissions below fiscal 2019 levels in 2030, we will work toward operational improvements and techno- logical innovations for aircraft and other equipment. In addition, we will complete replacement of at least 10% of fuel with SAF by 2030, and will convert our aviation fuel almost entirely to low-carbon fuels by 2050. For CO2 that cannot be completely eliminated through transitioning to low-carbon fuels, we will use negative emissions technologies (NETs) to remove CO2, aiming for carbon neutrality without relying on emissions trading. Basic Approach The ANA Group has introduced the ANA Group Environmental Principles and the ANA Group Environmental Policies, working to reduce our environmental impact. We recognize that efforts to reduce our environmental impact and the conservation of biodiversity are important environ- mental problems, and we are working to promote these through our business activities in recognition that they are management issues. Progress and FY2021 Results: ANA Group 2050 Long-Term Environmental Goals and 2030 Medium-Term Environmental Targets In 2021, we declared that we will achieve carbon neutrality by fiscal 2050 in our 2050 Long-Term Environmental Goals, and we formulated the 2030 Medium-Term Environmental Targets as a roadmap for achieving this goal. We will promote initiatives to reduce our environmental impact on both the medium and long term, using our fiscal 2019 results as a benchmark and monitoring their progress every year. Initiatives FY2030 FY2050 FY2021 Results Targets • Improve flight operations • Adopt new aircraft technologies • Shift to low-carbon aviation fuel, including utilizing SAF*1 Aircraft • Utilization of negative emissions technologies (NETs) • Use of emission trading schemes Below FY2019 levels (12.33 million tons), net Net zero 7.67 million tons Reduce CO2 Emissions External Environment Necessary for Achieving Goals • Stable supply of SAF (volume and price) • Adopt new aircraft technologies (Development of electric and hydrogen airplanes, etc.) • Establish an environment for the emissions trading market • Energy conservation and renewal of aging facilities and equipment • Use of renewable energy Non- Aircraft • Select Electric Vehicle (EVs) and Fuel Cell Vehicles (FCVs) when upgrading airport vehicles 33%+ reduction vs. FY2019 Net zero 25.1% reduction External Environment Necessary for Achieving Goals • Expansion of renewable energy supply • Development of airport infrastructure to convert to EVs/FCVs Reduce Resource Waste Ratio (Plastics, Paper, etc.) • Promote cargo plastic film (wrap) recycling • Digitize paper resources (in-flight magazines, timetables, travel brochures, and cargo air waybills) • Replace disposable plastics for eco-friendly materials 70%+ reduction (waste generated vs. FY2019) Zero waste ratio 69.1% reduction Reduce Food Waste Ratio (Including In-Flight Meals, etc.) • Monitor the disposal of in-flight and domestic airport lounge meals and reevaluate loading capacity Less than 3.8% waste ratio (FY2019: 4.6%) Less than 2.3% waste ratio (50% reduction vs. FY2019) 8% Conserve Biodiversity • Raise awareness to eradicate the wildlife trafficking trade in air transportation • Environmental conservation programs to conserve biodiversity, etc. Transition Scenario for Carbon Neutrality by 2050 (Ten thousands of t-CO2) CO2 emissions if no action is taken Scenario devised in consideration of our plan, the volume of traffic supporting the Japanese government’s target of 60 million visitors to Japan, and the growth forecast for interna- tional air demand published by the Air Transport Action Group*2 Effective CO2 emissions after implementation of 1), 2), and 3) measures Effective CO2 emissions after implementation of all measures, including 4) 2020 2025 2030 2035 20402040 20452045 2050 2050 CO2 Reduction 1 2 Improve flight operations and adopt new aircraft technologies Shift to low-carbon aviation fuel, including utilizing SAF CO2 Offset 3 Use of emission trading schemes CO2 Removal 4 Utilization of negative emissions technologies (NETs) 2,000 1,500 1,000 500 0 –500 2030 Medium-Term Environmental Targets and 2050 Long-Term Environmental Goals Below FY2019 levels, effective Replace at least 10% of fuel with SAF Effective CO2 emissions 26% 15% 6.5% 3.5% Net zero Carbon negative by use of NETs 100% 20% 70% *2 Air Transport Action Group: A research group on sustainability in the airline industry, with involvement from the International Air Transport Association (IATA), aircraft manufac- turers, and others *1 Sustainable Aviation Fuel (SAF): Aviation fuel that is not produced from fossil fuels but from sustainable sources such as vegetable oils and animal fats. 2019 –1% 2030 2050 –10% 46 47 Environment 1 Improve Flight Operations and Adopt New Aircraft Technologies Our Initiatives In addition to SAF procurement and use, we are promoting public–private and cross-industry initiatives to build supply chains and expand production volumes. Flight Planning Cruise Descent 2019 • Signed an offtake agreement with U.S.-based SAF manufacturer LanzaTech, Inc. for medium- to long-term supply, conducted a delivery flight of a new aircraft to Japan using SAF Preparations for SAF introduction • Launched strategic alliance with Finland-based SAF manufacturer NESTE for medium- to 2020 long-term supply, procured commercial-scale SAF, launched first scheduled flights using SAF departing from Haneda and Narita airports Climb Haneda Airport in the NEDO project • Used domestically produced SAF manufactured by IHI Corporation for regular flights from Use of SAF Improve Flight Operations We are working to reduce environmental impact by imple- menting initiatives tailored to each stage of our operations. Our actions to realize environmentally friendly flight operations include fuel consumption improvement through engine wash- ing, reduction of auxiliary power unit time use while aircraft are parked, reduction of total aircraft weight, selection of optimum altitude, speed, and route, devising energy-efficient operating methods during climb, cruise, and descent, reduction of thrust reverser usage after landing, single-engine taxiing, post-flight review and data analysis, etc. In addition, the Ministry of Land, Infrastructure, Transport Renovation of Air Traffic Systems (CARATS), a long-term vision, and the ANA Group is participating in discussions in the MLIT’s program. The transformation of air traffic control networks will not only improve safety and operational effi- ciency but will also contribute to reducing CO2 emissions in an environmentally friendly manner. and Tourism (MLIT) has formulated Collaborative Actions for Parking in Spot / Takeoff Maintenance Post Flight Landing For more information on what we are doing at each stage of our operations, please refer to: https://www.ana.co.jp/group/en/csr/environment/operating/ Adopt New Aircraft Technologies We were the launch customer for the development of the participating in joint research projects with these aircraft man- highly fuel-efficient Boeing 787, which celebrated its 10th ufacturers. When we determine that the social implementation anniversary in service in 2021. As of the end of July 2022, the of these technologies are in view, we will verify their effective- Group operates 77 of these aircraft (B787-8/-9/10) and is ness and reflect them in our plans. actively introducing state-of-the-art aircraft such as the Airbus A320neo and A321neo. As of the end of March 2022, 74.6% of the Group’s aircraft (of jet aircraft) is fuel-efficient aircraft. Furthermore, a final purchase agreement has been signed for the introduction of Boeing 737-8 aircraft, scheduled for fiscal 2025 and thereafter. © Boeing Aircraft manufacturers are currently developing technologies to fly on hydrogen and electricity, and the ANA Group is B737-8 A320neo 2 Shift to Low-Carbon Aviation Fuel, Including Utilizing SAF SAF is highly valued in positively contributing to the environment and so the ANA Group has placed its use at the center of our mea- sures to reduce aircraft CO2 emissions. However, a large gap exists between the global demand for jet fuel and the current supply of SAF. The stable supply of SAF is therefore an imminent challenge. To support the development of domestic SAF production, we have been participating since 2011 in a project run by the New Energy and Industrial Technology Development Organization (NEDO). Since then, we have been working to build a supply chain and promote the development and manufacture of SAF in anticipation of increasing demand for the fuel. 48 2021 • Our carbon recycling business model* was selected by the Ministry of the Environment for the “FY2021 Project to Promote the Creation of Circular Carbon Society Model through CO2 Recycling,” and we launched a demonstration project in September in collaboration with Toshiba Energy Systems & Solutions Corporation, Toshiba Corporation, Toyo Engineering Corporation, Idemitsu Kosan Co., Ltd., and Japan CCS Co., Ltd. • Participated in the Japanese government’s study group on carbon neutrality by 2050 for the purpose of building a supply chain and manufacturing SAF in Japan • Launched the SAF Flight Initiative: For the Next Generation (See next page for details) • Established ACT FOR SKY, a cross-industrial voluntary organization, to commercialize, promote, and expand the use of SAF produced in Japan 2022 • Participated in the Public-Private Council to Promote the Introduction of Sustainable Aviation Fuel (SAF), which promotes the development and manufacture of SAF produced in Japan, discusses issues and solutions for the establishment of a supply chain, and promotes unified public–private action * Carbon recycling business model: Power to Chemicals (P2C) is a carbon recycling technology that uses renewable energy and renewable hydrogen to recycle CO2 into highly valuable materials that positively contribute to the environment. This not only reduces CO2 emissions but also contributes greatly to the expansion of renewable energy. Dissemination throughout society ACT FOR SKY On March 2, 2022, we jointly established ACT FOR SKY, a in cooperation with various stakeholders, aiming for the devel- voluntary organization working for the commercialization, opment of Japan’s airline networks and the industry as a promotion, and expansion of SAF produced in Japan, along- whole, as well as the realization of a sustainable society. side JGC HOLDINGS CORPORATION, REVO International Inc., and Japan Airlines Co., Ltd. As global SAF demand grows, a stable supply of domesti- cally produced SAF is considered essential in Japan. However, domestically produced SAF has not been commer- cialized yet, and there is an urgent need to establish a stable supply chain from procurement to SAF supply. ACT FOR SKY, with “ACT” representing the cross-industry cooperation and collaboration by companies committed to taking action for these goals, aims to promote behavioral change through transforming the awareness among citizens and companies, while appealing to the importance of SAF, carbon neutrality, and achieving a circular economy. Since its establishment with 16 founding companies, more and more companies have come to participate in the organi- zation. ACT FOR SKY will work to promote and expand SAF 49 Medium- to Long-Term Value Creation Environment New Initiatives Utilizing SAF SAF Flight Initiative In October 2021, we launched SAF Flight Initiative: For the Next Generation, a new program to work with customers to reduce CO2 emissions in the industrial value chain, becoming the first in Asia to take this action. By utilizing SAF, we will con- tribute to the reduction of CO2 emissions (Scope 3) by our customers in their cargo transportation, employee business trips, etc., while aiming to improve the corpo- rate value of each company involved and to achieve the mass production and promotion of SAF, creating a virtuous cycle for the economy and the environment. More details on the project, please refer to: https://www.ana.co.jp/en/jp/brand/ana-future-promise/saf-flight-initiative/ 3 Use of Emission Trading Schemes Emission trading schemes (purchase of carbon credits) represent one of the available methods to offset CO2 emissions in the overall global environment. We intend to use it as a short- to medium-term measure during the period when CO2 emissions cannot be fully reduced through the implementation of the aforementioned initiatives. In the long term, we aim to achieve carbon neutrality without relying on emission trading schemes. 4 Utilization of Negative Emissions Technologies (NETs) Reduce CO2 Emissions from All Non-Aircraft Flight Operations The ANA Group implements appropriate energy management under the Act of the Rational Use of Energy of the Ministry of using our energy management system ANA Eiims based on Economy, Trade and Industry (METI). ANA has achieved S our own Energy Management Standard. We reduced CO2 Class certification for six consecutive years since the estab- emissions by 2% in fiscal 2021 compared to the previous lishment of this class system. To achieve net zero CO2 non- fiscal year. ANA and ANA Foods Co., Ltd. (Specified Business aircraft emissions by fiscal 2050, we will work to reduce Operators under the Act on the Rational Use of Energy) energy consumption by fiscal 2030, focusing on the use of achieved their target of annual energy reduction of at least 1% electricity and vehicle fuel (gasoline and diesel fuel), which in their fiscal 2020 results. As a result, they received the accounts for the majority of our total emissions. Excellence in Energy Efficiency Award (S Class) certification We will systematically upgrade our facilities and equipment to energy-saving devices. ANA Blue Base, the ANA Group comprehensive training center, ANA Tonomachi Business Center, and ANA TELEMART Nagasaki Branch Call Center have installed solar panels, and generate electricity from solar power. In addition, Electricity since fiscal 2020, some of our own facilities in the Osaka and Kyushu areas have been purchasing an amount of CO2-free energy from electric power companies. Since fiscal 2022, we have been introducing renewable energy and started use at our Shiodome Office. We are now working to introduce renewable energy across the ANA Group. Solar Panels at ANA Blue Base Vehicle Fuel In addition to deepening energy-saving measures, we are gradually upgrading our airport vehicles to hybrid vehicles (HVs), electric vehicles (EVs), and fuel cell vehicles (FCVs). We will make the switch to EVs and FCVs from all vehicles (ones that use gasoline) by fiscal 2030. The ANA Group plans to neutralize 1% of CO2 emitted by Climeworks in March 2022 to evaluate the potential purchase aircraft operations by 2030 and 10% by 2050 through utilizing of high-quality, permanent carbon removal via Climeworks, We promote the 3Rs (Reduce, Reuse, and Recycle) and are working to reduce our resources waste ratio. We encourage use Negative Emissions Technologies (NETs) such as direct air service in the near future. reduction and recycling, especially of plastics and paper. 2 Reduce Resource Waste Ratio (Plastics, Paper, etc.) capture* and storage (DAC+S) that actively remove historic ANA will continue to promote the decarbonization and and residual CO2 emissions from the atmosphere. sustainability of the aviation industry. In addition, the ANA Group also plans to utilize air-captured CO2 as a raw material for aviation fuel. As a first step in this process, we signed a Memorandum of Understanding with * Direct air capture (DAC): Technology to capture CO2 directly from the atmosphere. Climeworks AG Climeworks empowers people to reverse climate change by perma- nently removing carbon dioxide from the air. One of two things happens to the Climeworks air-captured carbon dioxide: either it is returned to earth, stored safely and permanently away for millions of years, or it is upcycled into climate-friendly products such as carbon-neutral fuels and materials. The Climeworks direct air capture technology runs exclusively on clean energy, and the modular CO2 collectors can be stacked to build machines of any capacity. 50 Reduce the Use of Plastics We are progressively replacing plastic products used in airport lounges and on flights with eco-friendly materials. Since August 2021, we have changed the containers for economy class in-flight meals on international flights to plant-derived materials, resulting in a reduction of approximately 317 tons of disposable plastic (compared to fiscal 2019). In addition, as of October 2021, we no longer provide plastic bags for baggage packaging used at airports, resulting in a reduction of approximately 94 tons of disposal plastic per year. Reduce Paper Resources We are taking a number of actions to reduce paper resources. As an example, from April 2021, the ANA Group’s in-flight magazine TSUBASA -GLOBAL WINGS- and maga- zines and newspapers for in-flight services have been replaced with a new service that allows customers to use them on their own digital devices through the ANA app. 51 Medium- to Long-Term Value Creation Environment 3 Reduce Food Waste Ratio (In-Flight / Airport Lounge Meals, etc.) 4 Conserve Biodiversity The ANA Group is working to reduce our food waste ratio such as in-flight meals. Reduce Food Waste Ratio In-Flight and at Domestic Airport Lounges We recognize that addressing biodiversity is an important environmental issue and have been taking actions toward biodiversity conservation since 2004. In addition, since May 2022 we have been supporting the World Wildlife Fund (WWF)’s environmental conservation activities and promoting biodiversity conservation activities as a corporate member of WWF Japan. When it comes to loading in-flight meals, we check the number of reservations up to the last minute before departure, working Organizing Seminars to Eradicate Wildlife Trafficking to ensure that as little as possible is wasted on each flight to the extent that it does not affect on-time operations. Food Loss Initiatives As an initiative against food loss, we utilize food waste generated in cooking. ANA Catering Service Co., Ltd. (ANAC), which manufactures in-flight meals for ANA, recycles 100% of food waste from the cooking process into compost and animal feed. As a recycling initiative using this waste effectively in-house, soft kale grown using compost derived from cooking food waste generated at ANAC’s Narita factory is provided in salads served in economy class on international flights from March 2022. This soft kale is in salads provided on flights departing from Japan, excluding flights to mainland China, Taipei, Hong Kong, Manila, Seoul, and late-night flights. We will continue to make effective use of recycling mechanisms for cooking food waste recycling system and contribute to the achievement of the SDGs. Cooking food waste generated at the factory Served in in-flight meals Collecting food waste Cooking Food Waste Recycling System Growing soft kale using compost Initiatives to Reduce Environmental Impact Carbon Offset Program Since fiscal 2019, the ANA Group offers the ANA Carbon Offset Program for each class on domestic and international routes. This program is a mechanism that provides customers with opportunities to offset the amount of CO2 emitted by their aircraft. We select offset programs that meet global certification standards. For more details on the project, please refer to: https://www.ana.bluedotgreen.co.jp/en/home Eco-First Certified Company In 2008, ANA became the first in the transportation industry and the first airline to become a certified Eco-First Company. We received this honor in recognition of our environmental initiatives and corpo- rate stance that emphasizes social responsibility, and are working toward achieving a sustainable society. In March 2022, we updated our Eco-First Promise for protecting the global environment as an environmentally advanced company to reflect our medium- and long-term environmental goals. For the Eco-First Promise (in Japanese only), please visit: https://www.ana.co.jp/group/csr/environment/pdf/eco_first_2203.pdf Composting Supporting Amami Oshima, Tokunoshima, Northern Okinawa, and Iriomote Island as World In March 2018, ANA became the first Japanese airline to sign the Buckingham Palace Declaration, which aims to eradicate wildlife trafficking as recommended by IATA. Since fiscal 2018, we have been conducting seminars using educational textbooks supervised by ROUTES*1 in collaboration with TRAFFIC*2 as awareness-raising activities for group employees. Beginning in fiscal 2019, we have been consistently working to raise awareness both internally and externally in a joint effort with Narita International Airport Corporation. *1 ROUTES: An international collaborative platform for dealing with criminal activities involving the trafficking of wild animals. *2 TRAFFIC: An international NGO that surveys and monitors wildlife trafficking. Established as a joint project between the WWF and International Union for Conservation of Nature (IUCN) Airport Training Handbook Team Chura Sango Coral Reef Conservation Project in Onna Village, Okinawa Team Chura Sango is a coral reef conservation project by Onna Village, Okinawa Prefecture, with par- ticipation from the ANA Group since 2004. With the support of the Ministry of the Environment, Okinawa Prefecture, and Onna Village, we work to plant coral seedlings and conduct educational activi- ties in and outside Okinawa Prefecture alongside local stakeholders. Mile donations from ANA Mileage Club members help pay for coral seedling costs and activity expenses, with a cumulative total of around 4,000 participants helping to plant 16,106 seedlings. Planting Coral Seedlings Natural Heritage Sites Since fiscal 2017, we have supported the registration of Amami Oshima Island, Tokunoshima Island, the northern part of Okinawa Island, and Iriomote Island as World Natural Heritage sites. Here, we mainly engage in volunteering by group employees who help to remove invasive plant species that significantly harm the ecosystem within Yambaru National Park, like bitter vine, under the direction of rangers from the Ministry of the Environment. Since fiscal 2021, we have also been providing new support for the preservation of the Iriomote Cat in western Iriomote Island. ANA Forest of the Heart Project As part of volunteer activities by group employees across Japan, we have been carrying out the ANA Forest of the Heart Project since July 2012 in Minami Sanriku, Miyagi Prefecture, to support recon- struction and forest conservation. We aim to regenerate forests through appropriate thinning and stew- ardship, and the thinned wood is commercialized and sold at local mills. Invasive Plant Removal Volunteers Deer Repellent Work (Protecting Bark) Information Disclosure on Responding to Climate Change CDP We disclose information on corporate strategies for CO2 emissions and climate change. Science Based Targets (SBT) Initiative These are greenhouse gas reduction targets based on scientific evidence consistent with the Paris Agreement. In January 2022, we submitted our reduction targets based on SBT guidance. TCFD We analyze the risks and opportuni- ties that climate change poses to the ANA Group’s Air Transportation Business and disclose information in accordance with the guidelines. (See next page for details) 52 53 Medium- to Long-Term Value Creation Environment Disclosures in Line with the TCFD Recommendations In March 2019, the ANA Group became the first Japanese airline to endorse the recom- mendations of the Task Force on Climate-related Financial Disclosures (TCFD), established by the Financial Stability Board. We disclose information in accordance with the four items required by the TCFD recommendations: Governance, Strategy, Risk Management, and Metrics and Targets. We will continue to enhance our disclosure content in line with the TCFD framework. Please visit our corporate website for more on disclosure based on TCFD recommendations: https://www.ana.co.jp/group/en/csr/environment/goal/ Strategy We carried out scenario analysis based on the 4°C and 1.5°C scenarios provided by the United Nations Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) to identify risks and opportunities that climate change poses to the ANA Group’s Air Transportation Business and to examine the impact on revenues and expenses as well as countermeasures. The analysis covers the period from 2030 to 2050, as set forth in the ANA Group’s medium- to long-term environmental targets. 4°C scenario: A scenario in which, by not taking measures to combat global warming beyond the status quo, temperatures rise about 4°C above pre-industrial levels, and risks related to physical changes caused by climate change become apparent 1.5°C scenario: A scenario in which a fundamental system transition is achieved, resulting in a temperature increase of less than 1.5°C above pre- industrial levels, and risks related to the transition to a low-carbon economy become apparent Description of Opportunity / Risk Impact on Revenues and Expenses*1 Action Plans and consists of group company directors and executive offi- Group Management Committee Board of Directors and Board of Corporate Auditors Submit agenda / Report Submit agenda / Report Increasing Severity and Frequency of Extreme Weather • Increased operational costs due to severe natural disasters • Increased cost of restoration from damage to aircraft and facilities due to disasters Physical Risks Propose management issues ANA HOLDINGS INC. President & Chief Executive Officer Overall management Changes in Rainfall and Weather Patterns • Decreased revenues due to difficulty in maintaining flight operations to affected areas Actions to Reduce CO2 Emissions (Aircraft) • Establishing a more advanced BCP • Upgrading to disaster-resistant facilities, equipment, etc. • Determining destinations, number of flights, etc., and appropriate reflection in business plans Large Medium Group ESG Management Promotion Committee Chief ESG Promotion Officer (CEPO) —SAF Instruction / Supervision Eco-First Subcommittee Ground Energy Subcommittee Instruction ESG Promotion Officer (EPO) ESG Promotion Leader (EPL) Cross- coordination Environment Officer Group Companies and Departments Transition Metrics and Targets In 2021, the ANA Group formulated the 2030 Medium-Term Environmental Targets and the 2050 Long-Term Environmental Goals. We are currently strengthening our efforts to achieve our goal of net zero CO2 emissions by fiscal 2050. • Concern about increased costs due to higher SAF prices • Strategically investing in concluding strategic purchase until around 2040 and decreased revenues due to restricted flight operations as a result of insufficient procurement • Differentiating through strategic purchases, contracts, and investments to benefit from priority procurement and stable supply • Increased cost of introducing next-generation aircraft (hydrogen, electricity, etc.) • Reduced fuel costs due to fuel efficiency improvements over the medium to long term, and creation of opportuni- ties for technological innovation and priority procurement by investing in negative emissions technologies contracts and establishing systems for mass production of SAF produced in Japan • Achieving priority procurement of SAF produced in Japan through grants and subsidies through engagement with policymakers • Partially compensating for SAF purchase costs through development of schemes such as the SAF Flight Initiative Large • Engaging with policymakers and other relevant parties to realize aircraft with new technology and to improve airport infrastructure Oppor- tunities —New Technology —Credit Risks • Increased costs due to the use of credits (price increases due to excess demand for emission credits / increased offsetting) • Securing stable and inexpensive means of procuring eligible credits • Minimizing cost impact through an optimum combination of SAF and credits Actions to Reduce CO2 Emissions (Non-aircraft) • Increased costs due to replacement with EVs • Reduction in fuel costs and offset costs and labor-saving in airport operations due to the evolution of new tech- nologies such as unmanned autonomous driving Medium —Vehicle*2 Fuel (Light Oil) • Engaging with policymakers and other relevant business operators to promote the shift to EVs and improve airport infrastructure • Procurement and construction of a supply chain for alterna- tive fuels such as next-generation biofuels • Engaging with policymakers continuously, in collaboration with industries and other organizations, for subsidies for the shift to EVs and alternative fuel procurement • Penalties and fines for failure to comply with laws and • Appropriately responding to and disclosing information for regulations in each country climate change Litigation / Fines / Taxation • Pressure from stakeholders to delay climate action • Increased costs as a result of higher prices due to the Medium introduction of carbon pricing (carbon taxes, emissions trading) • Engaging with national governments continuously, in collaboration with industries and other organizations, for relaxation of regulations and tax systems Changes in Consumer Awareness and Preferences • Securing talent from a younger environmentally sensitive generation and increasing sales due to securing cus- tomer trust as a result of proactively addressing climate change to improve brand value Medium • Appropriately responding to and disclosing information for climate change • Identifying needs through ongoing dialogue with society and reflecting these needs in strategies • Growing new businesses that do not require physical • Developing measures that move forward while acquiring the travel understanding and cooperation of customers Oppor- tunities Financing • Successfully financing through loans and incorporating • Identifying needs through ongoing dialogue with investors ESG investment through proactively responding to climate change ahead of the market Medium and responding appropriately • Information disclosure in accordance with international frameworks *1 Large: ¥10 billion or more per year; Medium: ¥1 billion to ¥10 billion per year; Small: less than ¥1 billion per year *2 Airport ground handling vehicles Key issues related to climate change are also handled Aircraft within the overall risk management framework. Reduce CO2 Emissions FY2030 Target FY2050 Goal Below FY2019 levels (12.33 million tons), net Net zero Non- Aircraft 33%+ reduction vs. FY2019 Net zero Governance To address environmental issues, including climate change, we established the Group ESG Management Promotion Committee, which is overseen by the President & Chief Executive Officer, chaired by the Chief ESG Promotion Officer, cers, as well as the full-time Audit & Supervisory Board mem- bers of ANA HOLDINGS INC. At its meetings, which are held four times a year, members discuss important policies and measures related to environmental issues, including climate change, and monitor progress toward targets. Under the committee, we have also established the Eco-First Subcommittee (related to aircraft operations) and the Ground Energy Subcommittee (related to ground energy other than aircraft operations), which report and discuss CO2 reduction measures, initiatives, and progress. Important matters related to corporate strategy are discussed at the Group Management Committee and submitted to the Board of Directors. Furthermore, in order to realize sustainable growth as a company and enhance corporate value over the medium to long term, the status of promotion of ESG management is objectively and multilaterally monitored. Here, we employ evaluation indicators such as CO2 emissions volume and external ESG evaluation indicators, which are also reflected in officer remuneration. Risk Management Based on the basic policies determined by the Board of Directors, the ANA Group Total Risk Management Regulations provide the basic terms of the group’s risk management system. Under these regulations, the Group ESG Management Promotion Committee develops, implements, and monitors progress of basic policies. 54 55 Medium- to Long-Term Value Creation Medium- to Long-Term Value Creation Material Issues Human Rights 1 Respect human rights 2 Engage in responsible procurement Basic Approach The ANA Group has a wide range of business operations which involve various risks to human rights. The ANA Group is committed to upholding human rights in accordance with the global standards provided in the United Nations Guiding Principles on Business and Human Rights. In April 2016, we established the ANA Group Policy on Human Rights. We based this policy on the International Bill of Human Rights (the Universal Declaration of Human Rights and the two International Covenants), the International Labour Organization Declaration on Fundamental Principles and Rights at Work, the Ten Principles of the United Nations Global Compact, and the United Nations Guiding Principles on Business and Human Rights. In fiscal 2020, we reviewed our existing procurement policy and formulated a new ANA Group Procurement Policy con- sisting of the Basic Procurement Policy and the Supplier Code of Conduct. We continue to encourage our contractors and suppliers to adopt similar policies. We continue to encourage our contractors and suppliers to adopt similar policies. We will continue human rights initiatives, recognizing that respect for human rights lies at the very foundations of the philoso- phy of the SDGs. Issuing the Human Rights Report The ANA Group issued our first Human Rights Report in Japan in fiscal 2018, aiming to promote communication with stakeholders through active dissemination of our initiatives to respect human rights. The Group has continued to issue these reports since then. Human Rights Report 2020 https://www.ana.co.jp/group/en/csr/effort/pdf/Human_Rights_Report_2020_e.pdf Expert Review Since fiscal 2016, the ANA Group has held regular annual discussions with international human rights experts to obtain advice on ANA Group initiatives to respect human rights. In October 2021, we invited three human rights experts from the Institute for Human Rights and Business*1 and World Benchmarking Alliance*2 to evaluate the progress of the initiatives set forth by the ANA Group given the advice received in fiscal 2020. The experts advised us on the importance of reliable stakeholder engage- ment and direct dialogue, as well as the importance of initiatives that connect human rights with the environment, and collabo- ration with other companies and industry groups that effect significant change. *1 Institute for Human Rights and Business (IHRB): An international think tank working in the field of business and human rights and leading efforts in this area. Established in 2009. *2 World Benchmarking Alliance (WBA): The Index Initiative established primarily by the United Nations Foundation and British insurance company Aviva. This organization develops benchmark indicators to evaluate company contribution levels to a sustainable society. 56 Please visit our corporate website for more: https://www.ana.co.jp/group/en/csr/human_rights/ https://www.ana.co.jp/group/en/csr/supply_chain_management/ 1 Respect Human Rights To ensure respect for human rights, in fiscal 2016 we conducted a review to identify potential risks to human rights related to business activities across the ANA Group and in all countries to which we offer service. We are working to prevent the occurrence of risks with regard to the areas we have identified. Survey on Employment Conditions of Foreign Workers in Japan Every year since fiscal 2017, we have been conducting in- Prevent the Use of Airplanes in Human Trafficking In addition to conducting training for all cabin attendants, we began a program in fiscal 2019 to report potential cases of person interviews with foreign workers involved in airport human trafficking found in-flight to authorities on the ground. We ground handling and catering work. With the cooperation of will continue to collaborate with authorities and other companies our contractors in Japan, we utilize third-party organization in the industry to ensure that this topic is treated as a priority to survey the workers’ living conditions. across the entire aviation industry, and continue to participate in In fiscal 2020, we used the Global Supply Chain Worker initiatives that increase deterrence of human trafficking. Data Management System to conduct a survey of the employment status of foreign workers at ANA Group compa- nies and a total of 92 major contractors. In fiscal 2021, we Corruption Prevention To comply with the anti-bribery laws of countries around the conducted a survey based on the previous year’s results of world, we have established the ANA Group Anti-Bribery 198 technical intern trainees at nine companies which are Regulations, which explain these laws with specific examples. either ANA Group companies or major contractors. Our aim By distributing the ANA Group Anti-Bribery Handbook and was to confirm that their recruitment and employment status conducting e-learning programs, we are working to educate conformed with the Dhaka Principles*3. We will continue to our employees. In 2021, in response to revisions made to conduct regular surveys of the employment status of foreign the Ministry of Economy, Trade and Industry’s Guidelines workers across our supply chain, and further investigate how for the Prevention of Bribery of Foreign Public Officials, to ensure safe and secure recruitment practices for foreign we revised the ANA Group Anti-Bribery Regulations and workers in the ANA Group and supply chain. conducted e-learning for relevant departments and *3 Dhaka Principles for migration with dignity: International standards that companies, governments, and NGOs, etc., should consider with respect to their responsibilities toward migrant workers. managers thereof. 2 Engage in Responsible Procurement As well as providing safe and secure services, the ANA Group will contribute to the creation of social value through our procurement activities by taking initiative in considering local and global social and environmental issues. ANA Group Initiatives In fiscal 2020, based on the ANA Group Procurement Policy, overseas suppliers (Vietnam), in order to gain a better under- standing of our Tier 2 and Tier 3 suppliers. we analyzed priority risk factors in our supply chain, and iden- The ANA Group conducts regular training to ensure aware- tified uniforms and linen used during in-flight service as high- ness of and adherence to our procurement policy. In fiscal priority items. Acting on these results, we held briefing 2021, ANA Group procurement managers (approximately 100 sessions regarding the ANA Group Procurement Policy to people) participated in three internal training programs regard- seven uniform suppliers in Japan in fiscal 2020 and nine linen- ing the importance of complying with social norms and laws related suppliers in fiscal 2021, in order to ensure that all of and regulations as well as constantly endeavoring to reduce our suppliers understood the concept of responsible procure- environmental impacts when conducting procurement activi- ment. Additionally, we conducted ESG surveys of the suppli- ers at which the briefing sessions were held. Through this process, we were able to understand and evaluate the initia- tives taken on by each supplier, offer advice on the intentions of the ANA Group, and strengthen dialogue with all of our suppliers. Furthermore, in fiscal 2021 we enlisted the help of a third-party organization to conduct in-person interviews that were focused on production plant workers at our Tier 3 ties. Going forward, we will continue to promote awareness- raising activities. Supplier Briefing Session 57 Medium- to Long-Term Value Creation Medium- to Long-Term Value Creation Material Issues Regional Revitalization 1 Innovate to resolve social issues 2 Regional revitalization through social contribution and resolving social issues Promotion of Agriculture Tourism Promotion Promotion of Commerce and Industry Lifelong Learning (Human Resources Development) Employment Measures Regional Issues Cultural Community Measures Measures for a Declining Population Problem Solving Strategies Welfare and Nursing Care Other Measures External Partners • Regional Governments • NGOs, DMOs • Local Businesses • Accommodations • Tourist Facilities • Restaurants • Farmers, etc. Collaborations Collaborations ANA Group Assets Digital Aviation Network ANA Group Companies External Partners • Collaborations with Various Companies with Various Achievements and Expertise Basic Approach Regional revitalization is an initiative to overcome the declin- ing population and shrinking regional economy, and to ensure that the region will grow in the future. In addition to air trans- portation, the ANA Group is developing businesses that con- tribute to the local communities in many areas, including hometown tax donations, supporting primary industries, digi- tal advertising using ANA Mileage Club data, and resolving social issues through our mobile app ANA Pocket*1. With the relationships we have built with local communities through our airline and travel businesses, we collaborate with local governments, NGOs, NPOs, as well as various local companies. These collaborations will address the concerns and issues of local communities, and both utilize and apply the strengths and assets of the ANA Group, while focusing on the promotion of tourism and agriculture for the sustainable development of local communities. We will take on the chal- lenge of expanding the scope of problems to resolve. *1 ANA Pocket: A mobile app service run by ANA X Inc. Users can collect points for their daily movement and exchange them for a variety of perks. Implementation Structure The ANA Akindo Regional Revitalization Department works with 33 branches nationwide to hold community-based activities and organizes the ANA Group Regional Revitalization Meeting. This meeting coordinates and integrates group companies initiative and promotes itself as a place to connect with regional issues through value creation and planning. Please visit our corporate website for more: https://www.ana.co.jp/group/en/csr/regional_creation/regional_revitalization/ 1 Innovate to Resolve Social Issues We are working on projects to revitalize local communities through promoting movement with our ANA Pocket mobile app service, which allows users to collect points from their daily movement. This app creates fun opportunities to move, featuring game-like aspects such as “Challenge Spots” and “Gacha.” It also allows for extra points to be earned when users travel by eco-friendly methods of transportation (walking and biking). Case 1 Promoting Tourism: Get Points by Traveling to Challenge Spots, and Discovering Local Charm Regional Issues We Wish to Resolve Solution Methods • Desire to expand specialty goods and regional consumption, which are declining due to a drop in the number of tourists • Desire to convey the charm of locally produced goods and areas • Desire to have many people know and experience good products from local communities • Set TOCHI-DOCHI, a shop that sells products from all over the country while conveying their charm, as a Challenge Spot to create opportunities for customers to visit the shop • Users collect points through movement and by visiting Challenge Spots. They can discover new favorite products as well as collect tourist information. • For more details, please refer to: https://www.tochidochi.com/ (in Japanese only) ANA Pocket App 2 Regional Revitalization through Social Contribution and Resolving Social Issues The ANA Group is working to resolve essential regional issues. Ranging from the production of agricultural products to branding and marketing development, we contribute to expanding recognition and improving the attractiveness of primary industries through ANA Group assets, expertise, and regional cooperation. We also promote community-driven sustainable cycle practices. Case 2 Tangerine Farm Restoration: ANA Farm Project @ Ehime Prefecture Regional Issues We Wish to Resolve Solution Methods • Desire to stop the increase in the number of abandoned farms due to a lack of successors • Desire to expand sales channels and increase sales • Desire to spread awareness of locally produced goods • ANA will oversee an abandoned tangerine farm and support the entire process, from production to processing, distribution, and sales • Expansion of sales channels and branding of prefecture-specific products that were produced with ANA’s assets, as well as food processing using ANA catering expertise • Promotion of green tourism through planning and operations of trial package tours, workcations, agricultural experiences, etc. • Dispatch of ANA personnel to farms For more details, please refer to: https://www.ana-akindo.co.jp/activities/ehime-nouen/ (in Japanese only) Tangerines Grown in Magnificent Views of Nature Government Agencies ANA X Travel package planning and sale, tourist promotions through apps, digital promotions, crowdfunding Case 3 Agriculture-Welfare Collaboration: Spreading Awareness on the Efforts and Products of People with Disabilities in Agriculture Deployment across the Group Regional Governments / DMO / Regional Businesses 33 Branches Nationwide • Regional ANA Group General Information Desk ANA Akindo Regional Revitalization Department • Prioritize issues • High-quality trial and error with the community • Ideas are valuable and competitive ANA Group Regional Revitalization Meeting ALL NIPPON AIRWAYS TRADING Sales of goods at airports, advertising media ANA Business Solutions Provide ANA Group expertise (education, training, etc.) ANA Strategic Research Institute Human resources development, consulting, surveys ANA Cargo Expansion of export regional, local products ANA Department Overseas HQs, Offices International promotions, marketing and facilitation of inbound tourism ANA HOLDINGS INC. Group Companies Cross-organizational initiatives Regional Issues We Wish to Resolve Solution Methods • Activities of people with disabilities within the agriculture field, through the agricul- ture-welfare collaboration (between agriculture and welfare), are unrecognized • Desire to spread awareness of locally produced goods • Expand agricultural production through the efforts of people with disabilities in the agricultural field, and further promote production and branding of carefully grown, high-quality agricultural produce • Spread awareness by using agricultural produce as thank-you gifts for ANA Furusato Tax Payment For more details, please refer to: https://furusato.ana.co.jp/feature/noufuku/2022/04/ (in Japanese only) Vegetable Cultivation at AI FACTORY*2 *2 AI FACTORY: A special subsidiary company that aims to employ people with disabilities. They oper- ate their All-weather plant factory in a former ele- mentary school building in Tottori City. 58 59 Medium- to Long-Term Value Creation Medium- to Long-Term Value Creation Material Issues Diversity, Equity, and Inclusion (DEI) 1 Promotion of universal services 2 Develop human resources for sustainable growth Basic Approach The ANA Group is promoting diversity, equity, and inclusion (DEI) throughout the group. As customer values diversify and the social environment changes, continuing to be chosen and trusted by all customers is crucial for the future growth of the ANA Group. We will continue to accelerate initiatives aimed at providing world-class inclusive and universal services in an effort to fulfill our responsibility as a public transportation entity and build a sustainable inclusive society in which everyone can live together. Implementation Structure We aim to provide ANA Group services that every customer can enjoy comfortably and with peace of mind. In addition to striving to enhance our services and facilities, we promote the development of human resources that can develop and provide services that respect the diversity of each customer and are attentive to their feelings. We take customer feedback and opinions of group employees with disabilities into account, and strive to create an environment where all customers can fly anxiety- and stress-free. * This map depicts various points of contact between customers and the ANA Group from daily life to post-use. 1 Promotion of Universal Services Creating a Comfortable Environment for All (Tangible Initiatives) ANA CX MAP* Please visit our corporate website for more: https://www.ana.co.jp/group/en/csr/customer_diversity/ Airport (Information, Facilities) Aircraft • We have introduced a • Apartment-style low counters at five major domestic airports • In-flight wheelchair-accessi- Telecommunications Relay including Tokyo (Haneda) and Osaka (Itami) Service at counters for cus- • Installation of low counters in check-in areas at all other airports tomers with hearing and speech impairments (located at major domestic airports). ble restrooms have been installed on small jets (A320neo/A321) in addition to large and medium-sized aircraft. Developing Human Resources to Respect Customers Diversity (Intangible Initiatives) We are enhancing our internal education to deepen understanding and accommodation of people with disabilities as well as other diverse customers. The 15th Ministry of Land, Infrastructure, Transport and Tourism Award for Distinguished Service in Promoting Barrier-Free Measures Universal Service Refresher Training • To ensure a safe journey for all passengers during the COVID-19 pandemic, we partnered with • We conduct quarterly Japan Airlines Co., Ltd. to formulate new hospitality guidelines for customers requesting special e-learning regularly to raise assistance in accordance with COVID-19 countermeasures. the level of universal services • We worked to promote airport management staff’s understanding of people with disabilities by throughout the Group. All giving lectures on hospitality guidelines, demonstrating how to guide disabled persons, and holding Group executives and opinion forums at major domestic airports. employees attend these • We were highly praised for our initiatives to transcend company boundaries to promote barrier-free lectures. access in the airline industry and were co-awarded the 15th Ministry of Land, Infrastructure, We will continue to create services, facilities, and equipment offering even greater comfort and convenience in any scenario, Transport and Tourism Award for Distinguished Service in Promoting Barrier-Free Measures. from pre-departure through arrival. Enhancing Web Accessibility Support Assistance Information Registration Service Elderly and Pregnancy Simulations ANA’s Sora-Pass Classes Barrier-Free Mindset Seminar • We implemented tools that allow for the enlargement of text, • We operate a service that allows users to complete the reserva- background color changes, as well as voice readings of on-screen tion process smoothly by registering the necessary assistance information, in conformance with the global accessibility standards information for boarding in advance. (WCAG2.0/2.1), so that anyone can use our websites and apps comfortably. 60 • We conduct elderly and pregnancy simulations to raise the level • The ANA Group continues to • We hold lectures to which we of universal services throughout the group. visit special-needs schools to invite people with disabilities teach a hands-on curriculum and experts on barrier-free that addresses characteristics access to be speakers. of disabilities for students that are planning school trips through ANA flights. 61 Medium- to Long-Term Value Creation Diversity, Equity, and Inclusion Further Promotion of ESG Management Promotion of Universal Services through Group Businesses ANA Future Promise Creating Comfortable and Safe Spaces for Everyone: ANA Wing Fellows Vie Oji Co., Ltd. Under the slogan ANA Future Promise, the ANA Group will aim to achieve the SDGs while gaining the understanding and cooperation of our To achieve a universal environment where anyone can lead their lives without feeling inconvenienced, ANA Wing Fellows Vie Oji customers. continues various consulting businesses based on perspectives of people with disabilities, as well as flight attendants’ spirit of hospitality. So far, we have provided ANA Group employee training, sign language supervision for safety videos, and usability support for the visually impaired. Through our daily work and actions, we will proactively enhance elements of ESG, hygiene and cleanliness, universal values, etc., in the products and services we offer so that the ANA Group continues to be a company needed In addition, as online opportunities increase amid the COVID-19 pandemic, we propose and provide universal standards that by society. are sought in the now, by offering online tours which allow wheelchair and white cane users to safely participate in travel, etc. Universal Seminars for Tourist Facilities for Businesses and Government Enjoyable Online Tours with Flight Attendants for Wheelchair and White Cane Users Office Facilities Consulting One year has passed since the launch of our ANA Future Promise. On the specially designed Boeing 787, we will provide in-flight service products made from sustainable materials (some in-flight meal tableware, packing materials for aircraft supplies, etc.), expand sales of aviation-themed upcy- cled goods, and handle CO2 emission reduction, etc., to further promote measures over the medium to long term. We will further promote sustain- able activities together with various business partners, as well as our customers, to achieve our medium- to long-term environmental goals. • We conduct seminars lead by lecturers • In a collaborative business with ANA X • We inspected facilities and equipment with disabilities (vision, wheelchair) to Inc. we planned, performed, and sold from the perspective of people with recommend ways to comfortably enjoy online tours aimed for those anxious to disabilities and offered specific improve- travel, promote employment of people leave home, the elderly, etc. We intro- ment methods. We also gave advice and with disabilities, improve customer cor- duced famous places in Miyazaki support for office setups that reflect DEI respondence, and promote barrier-free Prefecture, such as Aoshima Shrine, with perspectives. mindsets. ANA flight attendants. 2 Develop Human Resources for Sustainable Growth At the ANA Group, we respect diversity in terms of age, nationality, gender, values, disabilities, etc., and work to create inclusive workplaces for each person to work lively. In addition, in 2015 we made the ANA Group Diversity and Inclusion Promise (D&I Promise) and worked with D&I as one pillar of our management strategy since then. However, from April 2022 we began to promote diversity, equity, and inclusion (DEI), which now includes equity, and are deepening our actions. More details are available on page 74. Using External Evaluations Related to ESG Results of the four following external evaluations have provided us with an objective and multifaceted understanding of ANA Group ESG management. We reflect these results in officer remuneration. DJSI FTSE MSCI* CDP FY2021 Evaluation FY2022 Targets Remarks Selected for inclusion in the World Index and Asia Pacific Index Same as FY2021 Stock index developed jointly by U.S.-based S&P and Switzerland-based RobecoSAM. Evaluates corporate sustainability from the perspectives of economy, environment, and society. Selected as a component member of FTSE4Good Index Selected as a component member of the Japan Empowering Women Index (WIN) Same as FY2021 Stock index managed by the U.K.-based FTSE. Evaluates the initiatives and results of ESG management based on benchmarks. Selected as a component member of the Japan ESG Select Leaders Index Stock index managed by the U.S.-based MSCI. An index based on the performance of stocks around the world from various perspectives. Examines and evaluates corporate commitment to ESG. A– A– and above External evaluation for institutional investors managed by a U.K-based NPO. Analyzes the corporate impact of CO2 on the environment and climate change, evaluating the company’s responses. * THE INCLUSION OF ANA HOLDINGS INC. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF ANA HOLDINGS INC. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES. In June 2021, we issued Sustainability-Linked Bonds to make the abovementioned external evaluations related to ESG into Sustainability Performance Targets (SPTs). See our corporate website for more details. https://www.anahd.co.jp/group/en/pr/202105/20210519.html 62 63 Medium- to Long-Term Value Creation Foundations for Sustainable Corporate Value Enhancement We work with ANA Group stakeholders, aiming to share a variety of values that lead to a brighter future. Today, we are building a foundation for the appropriate allocation of management resources and nimble decision-making. Turning Ideas from Employees into New Services and Businesses Environmentally friendly in-flight meals, direct air transport of fresh food from local production areas, tote bags made from upcycled mechanic work clothes, and the launch of a store that communicates the charms of local communities. These are just a few examples of the services and businesses that have emerged from the ideas of employees who have taken on new challenges and turned them into reality. And the starting point is always the Power of People who are willing to endeavor. 64 65 65 Safety Strengthening Safety as a Business Foundation, Passing Down Safety as a Culture Building Stronger Sustainable Structures for Safety Safety is the unequivocal mission of every business in the ANA Group. Solid Approach to Safety Safety is the absolute value underlying every ANA Group corporate activity and the foundation of everything we do. Our dedication to safety extends to every part of our group businesses, even beyond our aircraft operations, including cargo, food services, and information. Our everyday efforts to improve safety and our conscientious response to customer expectations build confidence and trust with society. An environment of mutual understanding and trust form relationships among employees across various job descriptions to support safe aircraft operations and other aspects of the ANA Group business. In every workplace, we post the ANA Group Safety Principles and Course of ANA Group Safety Action, which are pledges shared by all ANA Group employees. ANA Group Safety Principles Safety is our promise to the public and is the foundation of our business. Course of ANA Group Safety Action (1) Strictly observe rules & regulations, and all actions will be grounded on safety. (2) As a professional, place safety as the #1 priority while keeping your health in mind. Safety is assured by an integrated management (3) Address any questions and sincerely accept the opinions of others. system and mutual respect. (4) Information will be accurately reported and shared in a timely manner. Safety is enhanced through individual performance and dedication. (5) Continuous self-improvement for prevention and avoiding reoccurrence. (6) Lessons learned from experiences and increased skills for risk awareness. ANA Group Medium-Term Safety Promotion Plan In working toward higher levels of safety, we formulated the FY2021– FY2025 ANA Group Medium-Term Safety Promotion Plan as part of our efforts to accelerate the transformation necessary to return to growth, while responding flexibly to the COVID-19 pandemic and a changing environment. In fiscal 2022, the second year of the plan, we will implement this safety promotion plan while understanding immediate environmental changes and responding appropriately. We defined matters of the highest priority as our core safety values, establishing three pillars for engaging in specific priority actions: (1) Sense of Safety for Our Customers, (2) Safety Structures, and (3) Safety Culture. Safety Implementation of Implementation of Safety Measures Safety Measures C o m m u n c a t i o n i Safety Structures Education / Education / Awareness Awareness Safety Culture ANA Group ANA Group Core Safety Values (1) Build an organization that is resilient to change and innovation (2) Pursue safety based on global standards (3) Establish a culture of deep-rooted safety behavior (4) Foster core human resources who strive for safety (5) Instill confidence in our customers and society regarding ANA Group safety Priority Actions for Safety (Three Pillars) 1. Sense of Safety for Our Customers Disclose information and engage in greater dialogue with customers and society regarding our safety efforts as we pursue ESG management 2. Safety Structures Sense of Safety • Work closely with code-share, partner airlines to standardize and raise the level of our safety foundation, including safety information, safety rules, safety audits, safety education, and more • Engage in stronger preventive measures and bring visibility to safety through risk management and SPIs (Safety Performance Indicators) • Strengthen initiatives in predicting risk (including the Three Task Customer Customer Categories*) and change management; provide safety education and awareness activities via online and on-demand technologies 3. Safety Culture • Share specific examples of safety behaviors that embody safety cul- ture; pursue the practice of safety as a personal responsibility * First Time Task, Procedure Changes, and Task After Extended Time Gap Amid impact from the spread of COVID-19 and global affairs, we are creating a stronger structure to maintain safety, even as we adopt new and different mechanisms and procedures. (1) We adopted safety management methods within change management to prevent organizational errors when changes occur in structures or work flows. a. Identify risk factors (hazards) in advance b. Verify potential risks that may occur due to hazards c. Take measures to reduce risks and then implement change (2) During this fiscal year, as the number of flights has been recovering, we are promoting the effective practice of risk a. Each individual uses their foresight to anticipate risks b. Share information on matters identified and respond to risks before prediction from the perspective of the Three Task Categories beginning work (First Time Task, Procedure Changes, and Task After c. Use the assertion* method to respond appropriately with coworkers Extended Time Gap), which we developed during the COVID- 19 pandemic. With this effective practice, we are working to take measures to prevent unsettling events from occurring. d. Proactively send out spontaneous reports of near-misses when notic- ing something unusual or dangerous * Expressing opinions in a constructive and cooperative manner Developing Human Resources that Embrace and Enhance Safety Culture The ANA Group engages in ongoing education and training programs to preserve the memory of past accidents and hijackings in our pursuit of safety. We are harnessing the lessons learned during the COVID-19 pandemic, utilizing both face-to-face and online methods to pass on a broader and deeper safety culture. ANA Group Safety Education Center (ASEC) Total number of participants: 16,524 (including online participation) ASEC, located in the ANA Group Training Center (ANA Blue Base), provides safety education in which participants learn actively, leading participants to practice safe behavior in the workplace. Online training programs are also available, and all group employees worldwide have been taking its courses. Emergency Aircraft Evacuation Training Safety Forum Conducted by Senior Management Total number of participants: 8,483 Number of forums: 17 Total number of participants: 1,022 This training is mandatory for all group employees to support cabin attendants, as well as to provide assistance and guidance to passengers in the event of an aircraft emergency. The ANA President & Chief Executive Officer and three directors in charge of safety at ANA delivered safety-related lectures and engaged in dialogue with employees both face-to-face and online. Participants and leaders discussed and shared thoughts on a wide range of topics. Initiatives for Aviation Safety and Security Promotion Month 8 case studies shared We observe the Aviation Safety and Security Promotion Month every July, holding programs featuring seminars, presentations, and awards related to safety. Of the approximately 40 case studies of safety and quality improvement initiatives solicited from our front lines, the best were care- fully selected and shared in video format on our corporate intranet. 66 67 Foundations for Sustainable Corporate Value Enhancement Safety Ensuring Safety in Non-Air Operations Food Safety The ANA Group introduced the ANA Catering Quality Program (ACQP), from the three aspects of food safety for hygienic inflight and ANA Lounge meals, the pursuit of delicious quality, and the safe and correct loading and unloading of goods on and off aircraft. Full-time auditors and chefs make regular visits to our catering contracts in Japan and around the world, offering guidance on improvements based on our own strict hygiene standards. We also engage regular external hygiene audits from third parties based on international standards. Results are reported to the group to maintain and improve quality. We also discuss the results regularly at board meetings, where decisions are made on the spot and implemented promptly to correct issues. Information Security The ANA Group is continuously working to ensure the secure handling of information, including personal customer information, as an issue equally important to flight operations. For our sys- tems, we have implemented a multi-layered security mechanism for entrance and exit control and anti-virus measures, and we monitor our security system 24 hours a day, 365 days a year. In addition, we have established the ANA Group Information Security Management Manual for employees in accordance with ISO 27001, and apply this to the entire group. We also use hand- books, e-learning, training, and email newsletters to ensure that this manual is widely understood throughout the group, and conduct audits to check compliance. In this way, we are strengthening our information management system and reducing the risk of information leaks from both tangible and intangible perspectives. In addition, we comply with the EU General Data Protection Regulation (GDPR) and other laws and regulations enacted or revised in various countries regarding the protection of personal information. Further, we publish our privacy policy on our corporate website as appropriate. These initiatives are regularly reported to the management of the entire group through the Group ESG Management Promotion Committee. Hygiene Audit of the In-Flight Meal Production Facility at Haneda Airport Cybersecurity Response Training for Employees in an Online Game Format Seconding Employees to Develop Cybersecurity Human Resources As a critical infrastructure organization, the ANA Group also dispatches personnel to public expert organizations to analyze trends in cybersecurity incidents, formulate countermeasures, and contribute to the development of cybersecurity human resources through joint public–private sector efforts. I am currently on secondment to the Cabinet Secretariat’s National Center of Incident Readiness and Strategy for Cybersecurity (NISC), where I am in charge of formulating “The Cybersecurity Policy for Critical Infrastructure Protection” and the secretariat of its Expert Panel. This offers me a number of opportunities to interact with current affairs and the latest information surrounding cybersecurity, and I am keenly aware of the magnitude of the mission that the ANA Group, as a critical infra- structure operator, must fulfill. At the same time, I am proud of the ANA Group’s systems for cybersecurity and its extensive employee education, as seen from the outside. I look forward to continuing to deepen my knowledge of cybersecurity while utilizing the team spirit I have developed at the ANA Group, and to return the lessons I have learned to the ANA Group so that it can continue to fulfill its responsibilities as a business operator. MAEOKA Yuko Seconded to the National Center of Incident Readiness and Strategy for Cybersecurity New Foundation: Hygiene and Cleanliness In the with- and post-COVID-19 eras, the ANA Group is deepening its efforts related to hygiene and cleanliness as the basis for creating an environment in which passengers may board our flights with confidence. ANA Group Response to COVID-19 Our ANA Care Promise, a countermeasure against COVID-19, was well-received. In 2021, we were awarded World’s Best Airline Cabin Cleanliness, an honor bestowed for the highest-rated cabin hygiene and cleanliness, and the COVID-19 Excellence Award by U.K.-based SKYTRAX. By assessing the social situation and taking appropriate action in each particular instance, we will stay close to the voice of our customers and provide a safe and clean World’s Best Airline Cabin Cleanliness environment and service to all customers in all aspects of their travel. Enhanced Hygiene and Cleanliness We are working to enhance hygiene and cleanliness with the aim of continuing to be the airline of choice by meeting the needs of a diverse set of customers, even in the midst of social changes and new values. In addition to working to improve employee mindsets toward hygiene and cleanliness through in-house education and training, the company makes a list of areas prone to uncleanliness and conducts periodic inspections and improvements based on this list under the supervision of Nihon Stery, Inc. We are also working to create a system to enhance hygiene and cleanliness through cross-functional collaboration. We are taking action to ensure that the initiatives that began with the ANA Care Promise will not be one-off instances, and that spotlessness will take root as part of the ANA Group culture by establishing mechanisms and thoroughly promoting the perme- ation of these initiatives. Mechanism to Make Spotlessness Part of ANA Group Culture Strengthening mechanisms for cross-functional collaboration to pass the spotlessness baton Rigorous management incorpo- rating customer per- spectives and scientific findings Spotlessness as culture Fostering employee mindsets toward hygiene and cleanliness 68 69 Foundations for Sustainable Corporate Value Enhancementウウイイルルスス対対策策ソソフフトトををイインンスストトーールル10部部門門長長へへ事事象象報報告告10 Human Resources Letting Our Greatest Asset-Human Resources-Shine, and Achieving Growth as the ANA Group Toward Career Fulfillment We will create an environment where each employee feels engaged and can demonstrate their diverse strengths. Basic Approach to Human Resources The greatest asset of the ANA Group is our human resources—each and every person working for the group. In order to overcome the COVID-19 pandemic and achieve new growth, it is essential that every employee of our group, with their diverse talents and strengths, work with enthusiasm and demonstrate their abilities to the greatest extent possible. To this end, the ANA Group will improve engagement with our employees to maximize the capability of the individual and the organization. Establishing a Mechanism for Sustainable Growth Focused on and Inspired by Our People Human Resources Diverse human resources maximizing individual strengths Engagement Engagement Ease of Work Stability and Fulfillment in Life Mental and Physical Health Enhanced Basic Quality Improved Customer Satisfaction Digital Enhanced Productivity Sustainable Growth Generating Innovation Improved Corporate Value Key Elements for Improved Engagement Job Fulfillment • Expand self-actualization mechanisms, such as an internal proposal system • Provide challenging opportunities for achieving diverse careers • Strengthen education and training programs for employees to take on challenges and achieve self-growth For the group to remain strong and grow Major Initiatives for Career Fulfillment sustainably in a changing environment, we must maximize and evolve the strengths of employees who have diverse expertise. We are strengthening opportunities for each individual to autonomously develop their strengths and carve out a career, including through new graduate ANA global staff recruitment in fiscal 2023 by segment and by specialty, and through enhancing challenging opportunities and providing diverse work style options after being hired. Enhancing Challenging Opportunities Supporting diverse work styles • Open Job Posting within the group • Sabbatical leave system* Allowing employees to voluntarily take on the work they want within the group Allowing employees to take temporary leave/absence for a certain period of time, regardless of reason • Open transfer within the group Offering opportunities to change career at other group companies • Job change challenge* Offering opportunities for employees to change their job type, e.g., from cabin attendant to ground staff • Secondment outside the group • Dual employment system* • Welcome back system* Welcoming retired former employees back via re-employment • Elective workplace system Allowing employees to request a transfer to a group company within each region if there are circumstances in their area of residence Support for career development Self-reporting interviews* Career training Career counseling Support for self-growth Group rank-based training Self-development program Systems marked with an asterisk (*) are company-specific within the group, and implementation differs for each company Linking Experiences Outside the Company to Both Personal and ANA Group Growth In response to the significant decrease in air passenger demand due to the COVID-19 pandemic, the ANA Group has been promoting secondment outside the group as one of our measures to protect the jobs of our group employees. Roughly 300 entities in the financial, telecommunications, government, and other sectors have cooperated with this effort and accepted our employees. As of July 1, 2022, approximately 700 employees are on secondments (cumulative total of 2,300 since October 2020). Each individual contributes to business by demonstrating their individuality and cultivated skills where they have been seconded. They also return the diverse set of work experiences and values accumulated there back to the ANA Group, demonstrating these and contributing to both their own growth and that of the ANA Group. Through open job posting, I was seconded to a company in real estate, and gained experience in areas like operating seminars for businesspeople. During my secondment, I gained lots of insights into the social role expected of cabin attendants from my interactions with people outside the company. Now, after returning to ANA, I am striving to deepen my understanding of the context behind our own various policies, as well as to deepen my cultural understanding and aptitudes so that I can convey the values and strengths of the ANA Group to as many customers as possible through my own work. In addition, together with my colleagues who have experienced secondment outside the group, I would like to take the importance of Connecting with Colleagues • Respect diverse individuals through practicing DEI • Create a proactive corporate culture through the promotion of ANA’s Way by each and every group employee ongoing self-improvement as a cabin attendant and permeate that broadly across the group. • Deepen mutual communication by utilizing internal platforms Looking ahead, my goal is to think of and implement solutions that only I can provide as a cabin attendant to social issues such as environmental conservation, regional revitalization, and gender equality. ISHIHARA Miku Inflight Services Center, ALL NIPPON AIRWAYS CO., LTD. Sense of Contribution • Roll out groupwide employee education founded in customer orientation • Share the group’s business activities through internal newsletters • Present the ANA’s Way AWARDS to recognize good practices In order to increase engagement and to create innovation and new value in the midst of a drastically changing business environ- ment, each employee must work autonomously based on their own ambition. To achieve this, we will promote a change to a co- creation style of management that creates value together by eliciting self-starting behavior and autonomy while maintaining closeness to the individual, such as by enhancing one-on-one communication. Using the Power of People to Achieve Sustainable Growth in the Post-COVID-19 Era Amid the impact of COVID-19, I have been keenly reminded of how significant the power of people is. With major restrictions on flying airplanes, at the core of our businesses, we were able to realize various employee-generated ideas through teamwork in a way that transcended company and departmental boundar- ies, including sightseeing flights, in-flight restaurants, weddings, and the sale of in-flight meals and maintenance parts planned for disposal. In addition, many of our cabin attendants and airport staff in particular have been given the opportunity to be seconded to companies and other organizations outside the group. Here, they have been able to demonstrate their ingenuity and ANA’s unique value in their respective environments, as well as their growth through the experience of taking on other cultures. By promoting improved engagement and creating an environment where each employee can demonstrate their expertise and strengths, we aim to create a strong ANA Group that will achieve sustainable growth after NAOKI Yoshiharu Executive Vice President Group CHO (Chief Human Resource Officer) ANA HOLDINGS INC. COVID-19. 70 71 Foundations for Sustainable Corporate Value Enhancement Human Resources Promoting ANA’s Way ANA’s Way, our course of action, serves as the foundation for the attitudes and actions to be taken by all ANA Group employees toward the achievement of our Mission Statement and management vision. Daily practice of these actions conducted by every employee is the source of our core management—strength for brand enhancement—and the driving force behind creating the value of the ANA Group. The ANA Group is working to promote understanding of our Mission Statement, management vision, and ANA’s Way, as well to pass on the culture and DNA inherited over our 70 years of history. The Group is also continuously working to improve our engagement level through communication. Groupwide ANA’s Way Promotion Activities Through various initiatives within the group, every employee embodies ANA’s Way and creates corporate culture. Promoting ANA’s Way ANA’s Day Training • Share values that resonate with ANA Group employees • Reflect on past accidents and understand safety ANA’s Way Survey (ANA Group Employee Engagement Survey) The ANA Group conducts an annual employee engagement survey to improve satisfaction and corporate value. The survey • Return to our founding philosophy of Wakyo (close coopera- consists of 63 questions, each worth five points, related to the tion) and Hardship Now, Yet Hope for the Future five categories of ANA’s Way (safety, customer orientation, • Launched online training in fiscal 2020, with participation by all Group employees social responsibility, team spirit, and endeavor) and engage- ment. The survey also asks four open-ended questions. In fiscal 2021, we conducted the survey at 44 group companies with 37,945 employees taking part, for a response rate of 97.1%. ANA’s Way Survey Score (ANA Group Average Score) Health Management The ANA Group made the ANA Group Health Management Declaration in April 2016. Our employees are the engine that drives sustainable growth together with society, and it is our employees who embody the motto, Anshin, Attaka, Akaruku-genki! (Trustworthy, Heartwarming, Energetic!). We encourage Quality of Life (QOL) and improved corporate value through employees who engage in their work in physical health, mental health, and passion. ANA Group Health Management https://www.ana.co.jp/group/en/csr/human_resources/health_care/ Implementation Structure Led by the CWO (Chief Wellness Officer), a director responsible for promoting health management, and Wellness Leaders at each Group company, all ANA Group employees, companies, and health insurance associations work in unison to promote health man- agement. As a result of groupwide efforts, 12 companies, including ANA AIRPORT SERVICES Co., Ltd., ANA CHUBU AIRPORT, and ANA OSAKA AIRPORT, were named Certified Health and Productivity Management Organization Recognition Program (White 500) companies in fiscal 2022. In addition, ANA Systems Co., Ltd. was named a Certified Health and Productivity Management Organization Recognition Program company. P.101 External Recognition Four Important Themes of the ANA Group Health Management Declaration The ANA Group Health Management Declaration promotes the maintenance and improvement of employees’ physical and mental health and the creation of environments that encourages long, motivated careers. With a focus on four important themes, we engage in regular situational monitoring, while analyzing and responding to positive impacts and challenges. 1 Health Management Initiatives • Create an environment for health management throughout the group for the extension of healthy life expectancy (review of health checkup system, health management system, etc.) 2 Disease Prevention Initiatives • Enhance cancer prevention measures for all group employees and women’s health measures • Establish and monitor health management indicators for strengthening lifestyle disease prevention 3 Mental Health Initiatives • Reinforce initiatives for primary prevention and prevention of recurrence in employees Strengthening Safety and Health Initiatives 4 • Develop safe and secure work environments and conducting groupwide awareness who have returned to work • Practice the four types of mental healthcare at ANA Group companies activities to eradicate the occurrence of occupational accidents Health Maintenance amid the COVID-19 Pandemic 3.97 4.00 New lifestyles, including activity restrictions and changes in dietary habits, have led to concerns by many employees about (1) lack of exercise and physical ailments and (2) mental health. The ANA Group is taking the following groupwide initiatives to overcome these challenges. Initiatives Against Lack of Exercise and Physical Ailments Mental Initiatives Good Job Message • Launched in fiscal 2001 as a tool to foster a culture of mutual appreciation and respect • Messages are sent to colleagues in other group companies or divisions via a dedicated web system • The total number of messages sent across the entire group exceeded one million in fiscal 2021 4.05 4.00 3.95 3.90 3.85 3.80 3.75 3.70 3.90 3.80 2019 2020 2021 2022 Target (FY) Survey Results for FY2021: • Overall score of 3.97, an improvement of 0.07 points from the previous fiscal year • Even during the COVID-19 pandemic, average scores improved related to engagement through more opportunities for dialogue with management and communication within the workplace • We analyzed the results of this survey, including 72,468 com- ments in the open-ended questions section. The results were shared and discussed at each group company and department, and we made efforts to improve the issues identified and to revitalize our organization We are establishing an environment for self-management, including con- ducting various online seminars to alleviate the lack of exercise and to provide more education regarding physical fitness. • Dietary seminars given by nutritionists • Seminars on body maintenance: building an injury-free body • Health seminars connected in a relay format by health management offices across Japan • Holding online walking events with ANA Group companies and other companies, etc. Healthy minds are an important factor in QOL and work. The ANA Group implements measures in line with the four types of mental healthcare described in the Ministry of Health, Labour and Welfare’s Guidelines for Maintaining and Improving Workers’ Mental Health, and we also use video materials and e-learning to promote the mental health of our employees. Care through External Consultation Desks Consultations through external specialists Care through Occupational Health Staff Health consultations though industrial physicians / nurses Care by Line Supervisors Self-Care Managers address mental health problems, including workplace environment and active communication improvements Self-awareness through stress checks, voluntary consultations 72 73 Foundations for Sustainable Corporate Value Enhancement Human Resources Diversity, Equity, and Inclusion Promotion Fostering Human Resources for Promoting Digital Transformation (DX) After presenting “The ANA Group Diversity and Inclusion Promise” (D&I Promise) in 2015, we have been promoting D&I as one of the key pillars within our management strategy. However, as of April 2022, we have added equity (providing fair support and creat- ing opportunities in accordance with diversity) as an important element and are deepening our activities with the promotion of diversity, equity, and inclusion (DEI). In connection with this, we created the position of Group CDO (Chief Diversity, Equity & Inclusion Officer) to accelerate our promotion efforts. Understanding and Addressing Diversity (1) Gender Equality: Women in Leadership In June 2021, the ANA Group set medium-term goals in regard to women in decision-making positions. In addition to reviewing personnel and support systems and promoting actions such as capability development and awareness-building, management holds discussions and regularly checks the progress of key indicators to realize a workplace that leverages diversity and fosters the creation of new value. Furthermore, we are working to permeate DEI through town hall meetings, management messages, and communications with employees. Ratio of Female Executives Ratio of Female Managers As of June 2022 (And year-on-year change) Medium-term Goal As of June 2022 (And year-on-year change) Medium-term Goal ANA Group ANA 10.0% (+0.7%) Achievement of 30% as early as possible in the 2020s 16.3% (+1.6%) ANA Group ANA 18.2% (+1.0%) Achievement of 30% as early as possible in the 2020s 18.3% (+1.3%) The ANA Group’s efforts toward gender equality were presented at the UN Global Compact Leaders Summit in June 2021 (attended by approximately 22,000 people from 180 countries). In October of the same year, we became the first Japanese airline to receive the Diversity & Inclusion Team Award at the Diversity & Inclusion Awards held by the International Air Transport Association (IATA), a result of our efforts to revitalize the airline industry through the promotion of D&I. (2) Promoting Diverse Work Styles: Increasing the Percentage of Employees Taking Paternity Leave (3) LGBTQ+: Respect for Diversity of Sexuality The ANA Group is working to establish an environment, including with regard to its internal systems and facilities, To promote diverse work styles and enhance the lives of that is mindful of diversity of sexuality, and to promote under- employees, the ANA Group is making efforts to encourage standing among all executives and employees. In April 2022, male employees to take paternity leave. Using the feedback in accordance with the "Respect human rights and diversity" obtained through awareness surveys of employees who have section of the ANA Group Social Responsibility Guidelines, used this system in the past, we are working to change we established the Basic Policy on Respect for Diversity of awareness and establish systems so that, in our workplaces, Sexuality, which summarizes our policies and specific actions paternity leave is taken as a matter of course. to respect LGBTQ+ employees. We are working to establish As of April 2022, the utilization rate of this leave system was these throughout the entire group. 30% (28% for ANA) and the utilization rate of special paid For the sixth consecutive year, we were awarded a rating leave for childbirth and childcare was 61% (58% for ANA). of Gold in the PRIDE Index*, an evaluation index for corpo- rate actions related to LGBTQ+. * Organized by the NPO good aging yells 74 The utilization of digital data and the promotion of DX are important themes that are essential to the devel- opment of our business. Under the motto of "Digital for extending the power of employees," we are striving to enhance the value of the customer experience. For example, we achieve this by deepening personalized services that only people can provide by streamlining operations through the use of digital technology, and by providing tailored services by utilizing customer-related data held by the group. To promote these mea- sures, we have launched a program to develop digital human resources who can firmly promote DX with a high level of expertise, and an educational curriculum (ANA Digital Resonance) to improve the digital lit- eracy of all employees. Digital Human Resources Development We have defined the roles of Digital Navigators and Digital Digital Literacy Training for the Entire Group In order to promote innovation with the united efforts of all Leads, drivers of business transformation by leveraging employees, we held our third Innovation Week in October their deep knowledge of digital technologies, and train 2021 in conjunction with the Digital Agency’s “Japan Digital employees to fill these roles. Through education ranging Day.” At the Innovation Week, we provided opportunities for from fundamental knowledge of digital technologies and IT group employees to experience innovation through exhibits to programming, data analysis, and project based learning of the latest technologies, online lectures, workshops, and (PBL), we develop digital specialist human resources tai- others. We are also expanding our online content to help lored to the business characteristics of the ANA Group, employees understand information security and digital with the Air Transportation Business at its core. tools, with a total of over 45,000 employees taking part in programs in fiscal 2021. Employees Taking on the Challenge of Moving from the Sky to the Digital Field We develop digital human resources with a deep understanding of the group’s business by having them acquire skills in IT, digital technologies, and data, based on the experience and knowledge gained at various sites, including airports and maintenance. At the ANA Digital Transformation Office, ANA Systems Co., Ltd., and other units responsible for DX in the group, more than 100 group employees with diverse backgrounds have undergone digital human resources education and are now working as core human resources for the promotion of DX. I am currently in charge of agile development for business systems used by employees at various workplaces in the ANA Group. From my two years of on-site experience at airports, I realized that in order to deliver services and hospitality to customers that only people can provide, it is necessary to harness the power of DX to improve our environments. This gave me the interest in getting involved with the area of DX in the ANA Group. Thanks to my experience on the front lines at airports, I firmly believe that it is my strength, and my mission, to understand the context behind the specialized terminology and language out in the field, accurately capture the thoughts and insights of the field, and swiftly grasp the true cause of issues. I would like to continue to grow as a digital talent, supporting the provision of value unique to the ANA Group to customers, while never losing my field-focused perspective. WATANABE Ryosuke ANA Systems Co., Ltd. Digital Innovation Department 75 Foundations for Sustainable Corporate Value Enhancement Risk Management Preserve Corporate Value through Safe and Reliable Business Operations The ANA Group takes steps to identify, analyze, and appropriately address risks with the potential to severely impact management. In addition, we have developed groupwide frame- works to minimize the impact of risks and prevent reoccurrence in case risks materialize. Risk Management Structure The ANA Group Total Risk Management Regulations General Determine Basic Policies Board of Directors provide the basic terms of the group’s risk management system. Under these regulations, the Group ESG Management Promotion Committee develops and imple- ments basic policies. These policies are executed in line with the basic policies determined by the board of direc- tors. Each group company / department has established a risk management system. Here, the ESG Promotion Officer (EPO) and the ESG Promotion Leader (EPL) are responsible for promoting and leading risk management operations, respectively. Each EPL assumes a role to conduct risk management (risk prevention) operations according to plans and take swift action while working with the secre- tariat in the event of a crisis. General Formulate and Issue Basic Policies Monitor Response Status Group ESG Management Promotion Committee General Supervise Risk Management Chief ESG Promotion Officer (CEPO) Preventive Measures Identify Risks Analyze and Evaluate Consider Response Measures Implement and Monitor Crisis Response Collect Information Implement Initial Response Determine Causes Formulate Measures to Prevent Reoccurrence General Administration Risk Management Team ESG Promotion Officer (EPO) EPO EPO ESG Promotion Leader (EPL) EPL EPL Group Company A Group Company B Group Company C Major Initiatives Share Information with EPLs We provide newly appointed EPLs with organizational risk man- measures in accordance with policy. We are currently revising our privacy policies and internal rules to comply with established agement training. During regular meetings, EPLs share case overall fundamental policies, as well as domestic and interna- studies and provide instructions on measures that need to be tional laws and regulations regarding personal information and strengthened. Under this system, EPLs provide instructions and privacy. We are also complying with the revision of Japan’s Act responses within their respective companies. on the Protection of Personal Information, executed on April 1, 2022. We require every employee to receive internal education Business Continuity Plan (BCP) In the event of disaster, we have established policies and proce- on the handling of these laws and regulations, rules on using our information systems, and the importance of information dures to ensure the safety of our customers, executives, and assets and their proper handling. In this way and others, we employees, to minimize the impact on management and society, strive to raise employee awareness of the significance and and to resume normal business operations as quickly as pos- awareness of information security. sible. We also make efforts to station emergency communication equipment and disaster supplies at main offices. The Ministry of Land, Infrastructure, Transport and Tourism established guide- Security Export Control* The ANA Group exports the parts, apparatuses, and other lines which address building airports resistant to natural disasters. articles necessary for aircraft maintenance to overseas airports Under these guidelines, ANA conducts inspections and reinforce- and aircraft maintenance centers. We recognize that certain ments of airport facilities and equipment for flooding and power articles have the potential to be used as weapons. Accordingly, outages. Additionally, we perform emergency drills at airports in we practice rigorous security export control of exported articles case of disasters. Thus, ensuring prompt responses in the event and their related technologies. We established regulations and of emergency. Information Security Under the ANA Group Security Control Regulations, we con- structures regarding security export control, and strictly maintain them through annual audits and training. We not only target exporting divisions that work in direct export but also divisions that are involved with custom clearances and other export- struct and maintain groupwide regulations, in addition to an related processes. information security control system. Through this system, we * Security export control is a term that refers to all regulations placed on exports from work to enhance system functionality and implement security Japan by the Foreign Exchange and Foreign Trade Act. Cybersecurity Measures The ANA Group is designated as a critical infrastructure provider in Japan by the National Center of Incident Readiness and Strategy for Cybersecurity (NISC). We implement a multi-level defense in accordance with the guidelines formulated by related ministries. We monitor our security system 24 hours a day, 365 days a year. The ANA Group trains security specialist human resources, and we have estab- lished the Computer Security Incident Response Team (CSIRT) to ensure swift action in response to any incidents. Cybersecurity intelligence is most effective when providing early alerts to counter cyberattacks. Therefore, we participate in informa- tion sharing organizations, such as the Aviation Information Sharing and Analysis Center (A-ISAC), which consists of airline, aircraft man- ufacturer, and other members. We also participate in the Surface Transportation Information Sharing and Analysis Center (ST-ISAC). In these ways, we acquire information from internal and external industry sources as early as possible for use in taking preventive measures. We are working on response measures, under the premise that cybersecurity incidents are inevitable. At the same time, we are adopting a Zero-Trust approach based on a conventional security measure TRUST (i.e., communication with trusted people and objects based on authentication and process reliability checks). We use this approach as we simultaneously pursue DX in ANA Group services and products, such as Mobility as a Service (MaaS) and the ANA Super App. In addition, we intend to work even more closely with relevant ministries and agencies, economic organizations such as Keidanren, and private security organizations such as ISAC; to improve security between supply chains in today’s society, which is connected across all manner of business industries and sectors. Recent Increases in Natural Disaster Measures Recently, torrential downpours and typhoons have been growing in size, inflicting natural disasters countrywide. In response to this, we are taking various measures to protect our communication facilities and power supply facilities, which are essential infrastructure facilities for operations within airports. As a countermeasure for flood damage, we are working to establish an environment that allows for early restoration at our top five main airports assumed at high risk for flooding (Haneda, Chubu, Kansai, Fukuoka, and Okinawa). To do this, we are using the latest hazard maps to begin construction to install water gates and relocate equipment to higher areas. Also, we are taking measures for power outages at major airports to establish environments where operations can con- tinue during power outages. These measures include connect- ing necessary terminals for aircraft operations with emergency power equipment, and replenishing capacity of emergency power supplies through the use of large storage batteries. Operation Management Center and an Installed Large Storage Battery (bottom left) Responses to COVID-19 (Employee Infection Prevention Measures) The ANA Group created a response system based on the Crisis Management Manual and the Emergency Response Manual in late January 2020, when the COVID-19 infection began to spread. We adhere to • Disseminate knowledge about COVID-19 to all group employees • Ensure employees comply with basic preventative measures: avoiding the Three Cs (Closed spaces, Crowded places, and Close-contact settings), wearing masks, and washing and disinfecting hands policies and directions issued by the government and • Check employee health on a consistent basis before reporting to and local authorities and prevent the spread of infection as starting work we safely operate air transportation services, and our other services, to support socioeconomic activity, as • Segregate members into teams and avoid contact between teams to minimize the impact of an outbreak • Ensure there is no discrimination against infected employees or employees well as the lives of the people. suspected of having been infected In addition, the company began administering COVID- 19 vaccinations for ANA Group employees and their families, as well as employees of contractors and related businesses in June 2021. As of May 2022, the third round of workplace vaccinations had been completed. 76 77 Foundations for Sustainable Corporate Value Enhancement Compliance Maintain Corporate Value by Enhancing Internal Systems and Further Instill Our Mission Statement The ANA Group is taking steps to minimize exposure to legal risks and prevent incidents that could diminish corporate value. Compliance Implementation Structure The ANA Group has developed a compliance structure based on the ANA Group Compliance Regulations to promote compli- Information Dissemination To spread awareness of compliance throughout the ANA Compliance Survey of Group Companies Surveys on compliance at group companies are conducted Group, we distribute email and other newsletters on topics annually. The survey consists of self-evaluations on compli- related to revisions to laws and regulations, as well as ance to relevant laws and regulations as to assess issues points of caution regarding labor and contract practices. In pertaining to each group company and to the entire group. fiscal 2021, we reorganized and renewed our compliance We conduct follow-ups with each company based on website on our intranet, from a compliance point of view, to survey results as necessary to resolve any issues. facilitate a concrete understanding of the do’s and don’ts of the rules commonly followed by our group executives and Internal Reporting System Based on the ANA Group Rules for Handling Internal ance with laws, regulations, and other standards related to business activities. Under the Group ESG Management Promotion employees. Committee Regulations, our advisory Board of Directors, we strive to strengthen awareness of compliance throughout the We also post manuals and guidelines on various laws Reporting, we have set up a point of contact (ANA Alert) entire Group. We appointed an ESG Promotion Officer as the person responsible for promoting compliance at each company, and regulations to the appropriate website, providing an both inside and outside the group (via a law firm) to collect and an ESG Promotion Leader to drive compliance at each workplace. Major Initiatives Legal Compliance Education We conduct a variety of educational programs for every Initiatives to Prevent Harassment We provide various training and education programs to group executive and employee to acquire correct knowl- prevent workplace harassment including training for newly edge of and exercise appropriate judgment related to vari- appointed managers. In fiscal 2021, in response to ous laws and regulations. We hold regular seminars on requests from each group company, implemented training contract practices, labor practices, and laws and regula- that encourages participants to recognize and reconsider tions related to air transportation, improving our familiarity the risk of harassment and appropriate measures in their with business-essential knowledge. Seminars on competi- own workplace based on a harassment awareness survey. tion law and air transportation for group executives and Additionally, we provided harassment prevention education employees working overseas, are also available, focusing for each group executive and employee through e-learning on minimizing legal risks globally. We also organize semi- to develop a proper understanding of harassment and nars tailored to topics and content that reflect the needs of strive for zero-tolerance and more comfortable work envi- each group company and/or department as needed. In ronments throughout the group. addition to conducting online seminars, we maintain a global learning environment for group executives and employees to learn about various laws and regulations by posting educational materials and explanatory videos on the intranet. infrastructure where group executives and employees have compliance-related information and resolve any issues. The access to such information at any time. In addition, we reporting system is available to all group executives, established a simple way for group executives and employ- employees, and temporary personnel involved in the ees to ask questions from the website on legal issues of group’s business. The ANA Group retirees and executives their business. This allows us to support them in making and employees of our business partners may also use the appropriate decisions in compliance with said laws and reporting system. We protect the privacy of the whistle- regulations. blower and relevant parties, and assure that no punitive measures will be taken against those that seek consultation or cooperate in confirming facts. This enables us to obtain internal risk-related information promptly and aids in self- correction. Additionally, we introduced a report form that can be accessed directly from our internal reporting web- site on our intranet. In doing so, we improved the system and increased convenience. In fiscal 2021, there were 184 reports within the group, and the system has spread throughout the group as a reliable and effective whistle- blowing system. Compliance Website Strengthening Cooperation with Group Companies and Overseas Branches To strengthen the compliance structure across the entire group, we have clarified the points of contact between our Legal & Insurance Department, group companies, and ANA overseas branches, building and operating a structure facilitating two-way communication. ANA Alert Poster Educational Materials on Various Laws and Regulations E-Learning Materials 78 79 Foundations for Sustainable Corporate Value Enhancement Corporate Governance Mission Statement Built on a foundation of security and trust, “the wings within ourselves” help to fulfill the hopes and dreams of an interconnected world. The ANA Group aims to practice management that contrib- utes to value creation for our various stakeholders in accor- dance with our Mission Statement and to promote sustainable growth and enhance corporate value over the long term. To accomplish this goal, ANA HOLDINGS INC. plays the lead role in group management for overall policies and goal-setting, pursuing transparent, fair, prompt, and effective decision-making. For this purpose, we have built a corporate governance system and work continuously to enhance governance within the ANA Group. ANA HOLDINGS Corporate Governance System Holding Company Structure The ANA Group has adopted a holding company structure to remain competitive in any challenging business environment. Each group company is guided by experi- enced and specialized personnel who are delegated authority to operate their respective businesses. Company with Audit & Supervisory Board Members The board of directors and members of the Audit & Supervisory Board oversee and audit the execution of duties by directors. The group strengthens the supervisory function of the board of directors by appointing outside directors. We also strengthen the audit function of members of the Audit & Supervisory Board by appointing full-time outside members. Corporate Executive Officer System The group has adopted a corporate executive officer system under which management and executive functions are separated to promote efficient decision- making and to clarify responsibilities and authority in the execution of duties. Under this system, directors supervise manage- ment decision-making and the execution of duties, while corporate executive officers conduct day-to-day business. Corporate Governance System Appointment / Dismissal Appointment / Dismissal Accounting Auditors Account auditing Reporting Personnel Advisory Committee Remuneration Advisory Committee Audit & Supervisory Board Auditing Reporting Audit & Supervisory Board Members Office General Meeting of Shareholders Board of Directors Group Management Committee Appointment / Dismissal Board of Directors Advice Appointment / Dismissal Supervision Proposal / Report Proposal / Report President & Chief Executive Officer Group Management Committee Reporting Overall management Proposal / Report Group ESG Management Promotion Committee Number of Board Members Directors 11 (including 4 independent outside directors and 1 female director) Audit & Supervisory Board members 5 Term of Office 1 year (also applies to outside directors) Number of Meetings* 14 Number of Meetings* 78 The board of directors of ANA HOLDINGS INC. sets groupwide man- agement policies and goals, while also overseeing the management and business execution of each group company. The board of directors is chaired by the chairman of the board. All directors, including outside directors, and all members of the Audit & Supervisory Board, including outside members, participate in board meetings. Chaired by the President & Chief Executive Officer, the Group Management Committee consists of full-time directors, full-time Audit & Supervisory Board members, and others, and functions as an organiza- tion that complements the board of directors. The role of the committee is to provide more timely and detailed discussions of management matters. Internal Audit Division Instruction / Supervision Advisory Committees Chief ESG Promotion Officer Director in charge of Group Risk and Compliance Internal auditing Instruction / Supervision Secretariat Corporate Sustainability General Administration Legal & Insurance Group Companies and Divisions ESG Promotion Officers / Leaders Responsible for ESG promotion in each company / department (As of July 31, 2022) Personnel Advisory Committee Remuneration Advisory Committee Chairman Number of Members Number of Meetings* Chairman Number of Members Number of Meetings* YAMAMOTO Ado 5 4 YAMAMOTO Ado 7 3 The Personnel Advisory Committee discusses the selection of director candidates and the dismissal of directors, and reports to the board of directors. The Personnel Advisory Committee, chaired by an outside director, consists of four outside directors and one inside director to ensure transparency and fairness in the selection process of directors. The Remuneration Advisory Committee consists of a majority of outside directors, outside Audit & Supervisory Board members, and outside experts to ensure fair and transparent process of decision-making related to director remuneration. The committee develops the director remuneration system and director remuneration standards based on surveys of director remuneration at other companies provided by out- side experts and reports to the board of directors. Audit & Supervisory Board Number of Members Audit & Supervisory Board members 5 (including 3 independent outside Audit & Supervisory Board members) Term of Office 4 years (also applies to outside Audit & Supervisory Board members) * The number of meetings held in fiscal 2021 Number of Meetings* 13 To ensure healthy development and to earn greater levels of trust from society through audits, we appoint five individuals to serve as Audit & Supervisory Board members who possess extensive experience and the advanced expertise required to conduct audits. The Audit & Supervisory Board strengthens the collaboration with the accounting auditors and the Internal Audit Division. The board also exchanges opinions with outside directors on a regular basis. 80 81 Foundations for Sustainable Corporate Value Enhancement Corporate Governance Management Members: Directors As of July 31, 2022 7 6 8 9 10 11 2 1 3 4 5 Name Position at ANA HOLDINGS Independent Directors Executive Officers Assignments Personnel Advisory Committee Remuneration Advisory Committee Corporate Management and Long-Term Strategy Airlines Business and Safety Human Resources Development and Diversity Finance and Accounting Legal and Risk Management Sustainability Technology and Innovation Global Management Special Knowledge, Experience, and Skills 1 KATANOZAKA Shinya Representative Director, Chairman Chairman of the Board of Directors 2 HIRAKO Yuji Member of the Board, Vice Chairman 3 SHIBATA Koji 4 FUKUZAWA Ichiro Representative Director, President & Chief Executive Officer Representative Director, Senior Executive Vice President Chairman of the ANA Group Management Committee, Head of Group ESG Management Promotion Committee, In charge of the Internal Audit Division Chairman, ALL NIPPON AIRWAYS CO., LTD. Chairman of the ANA Group Productivity Enhancement Committee In charge of Corporate Strategy 5 INOUE Shinichi Member of the Board President & Chief Executive Officer, ALL NIPPON AIRWAYS CO., LTD. 6 HATTORI Shigeru Member of the Board, Executive Vice President Chairman of Group ESG Management Promotion Committee; In charge of Group Risk and Compliance, Legal & Insurance, General Administration 7 HIRASAWA Juichi Member of the Board, Executive Vice President In charge of Government & Industrial Affairs and Executive Secretariat 8 YAMAMOTO Ado Independent Outside Director 9 KOBAYASHI Izumi Independent Outside Director 10 KATSU Eijiro Independent Outside Director 11 MINEGISHI Masumi Independent Outside Director Chairman Chairman 82 83 The reasons behind the selection of the skill sets that the company expects its directors to possess are set forth in the Notice of the 77th Ordinary General Meeting of Shareholders. https://ssl4.eir-parts.net/doc/9202/ir_material5/184654/00.pdf Foundations for Sustainable Corporate Value Enhancement Corporate Governance Appointment of Directors Approach to Selection of Director Candidates Internal Directors The Company selects directors from among candidates who have impeccable character, extensive experience, broad insight, and advanced expertise. Ideal candidates have the potential to contribute to improved policy-making, decision-making, and oversight befitting a global airline group with widespread businesses centered on the Air Transportation Business. Our selection is made without regard to gender, nationality, or other such factors, and falls within the scope of the Civil Aeronautics Act and other relevant laws. The group selects a multiple number of outside directors who possess practical viewpoints based on extensive Outside Directors experience in corporate management, or who possess unique global or regional viewpoints. These individuals must be independent from the company, and able to offer objective and expert opinions based on a sophisticated knowl- edge of social and economic trends. Reasons for Appointment of Directors • • The following director candidates were selected based on the judgment that their abundant experience, performance, and insight would be crucial to overcoming the management crisis caused by the current COVID-19 pandemic and for achieving sustainable increases in group corporate value. • • These director candidates assumed their positions after being appointed at the 77th Ordinary General Meeting of Shareholders. KATANOZAKA Shinya Chairman of the Board Chairman of the Board of Directors HIRAKO Yuji Member of the Board, Vice Chairman Brief Personal History / Major Concurrent Positions 2011: Executive Vice President 2015: President & Chief Executive Officer, Representative Director 2022: Representative Director, Chairman (present) Major Concurrent Position Outside Director, Tokio Marine Holdings, inc. 2015: Member of the Board of Directors 2022: Member of the Board, Vice Chairman (present) I n t e r n a l D i r e c t o r s SHIBATA Koji Representative Director, President & Chief Executive Officer 2020: Member of the Board of Directors 2021: Representative Director 2022: Representative Director, President and CEO (present) Reasons for Appointment KATANOZAKA Shinya has extensive experience in sales, human resources, corporate planning, and other disciplines. He was appointed representative director and president & CEO in April 2015. Since then he has achieved four consecutive years of profit growth, and at the time of the business crisis caused by COVID-19, he moved immediately to secure liquidity on hand and took the lead in formulating and implementing the Business Structure Reform plan. Since April 2022, Mr. Katanozaka has served as chairman and chairman of the board of directors, endeavoring to strengthen the functions of the board by leveraging his extensive experience and achievements over his career. HIRAKO Yuji has been involved in sales and finance divisions for many years. In April 2017, he was appointed president & CEO of ALL NIPPON AIRWAYS CO., LTD., a core subsidiary of the ANA Group. Since that time, he has guided the company with an uncompromising stance on safety and lead the company toward becoming the world’s leading airline. He has also taken a leadership role in reforming the service model for the post-COVID-19 era. As a member of the board and vice chairman since April 2022, Mr. Hirako has contributed to strengthening the functions of the board of directors by lever- aging his extensive experience. SHIBATA Koji has been involved in sales and international alliances for many years. As a corporate executive officer since June 2020, and as representative director and executive vice president since April 2021, he has been in charge of the planning and execution of Group Corporate Strategy. As representative director, president & CEO since April 2022, Mr. Shibata has been pursuing group management, always maintaining a global perspec- tive and placing the highest priority on safety. He contributes to strengthening the func- tions of the board of directors by leveraging his extensive experience and achievements over his career. FUKUZAWA Ichiro Representative Director, Senior Executive Vice President 2019: Member of the Board of Directors 2022: Representative Director, Senior Executive Vice President (present) Major Concurrent Position Outside Director, Japan Airport Terminal Co. Ltd. Since June 2019, FUKUZAWA Ichiro has served as director and chief financial officer. In April 2021, he was named executive vice president and chief financial officer, responsible for securing a stable financial base for the group and for implementing financial strategies, including efficient capital restructuring. In addition, as representative director and senior executive vice president since April 2022, he has been in charge of the planning and execution of Group Corporate Strategy, providing appropriate support to the president & CEO and contributing to the strengthening of the functions of the board of directors by leveraging his extensive experience and achievements over his career. I n t e r n a l D i r e c t o r s i O u t s d e D i r e c t o r s Brief Personal History / Major Concurrent Positions Reasons for Appointment INOUE Shinichi Member of the Board of Directors 2022: Member of the Board of Directors (present) President & Chief Executive Officer ALL NIPPON AIRWAYS CO., LTD. Chairman of All Japan Air Transport and Service Association Co., Ltd. 2022: Member of the Board of Directors (present) HATTORI Shigeru Member of the Board, Executive Vice President HIRASAWA Juichi Member of the Board, Executive Vice President 2022: Member of the Board of Directors (present) INOUE Shinichi was involved in the establishment of Peach Aviation Limited, Japan’s first low cost carrier (LCC), and as representative director & CEO, he has achieved rapid growth for the company. In addition, since April 2020, he has overseen the sales division as representative director and executive vice president of ALL NIPPON AIRWAYS CO., LTD., a core subsidiary of the ANA Group. As representative director and president & CEO of the company from April 2022, Mr. Inoue has been pursuing the management of that company with safety as the top priority in order to put it back on a growth trajectory that will see it become a leading global airline. HATTORI Shigeru has been involved with the airport and human resources divisions for many years and has also been stationed in both Europe and the U.S. Since April 2016, he has overseen the airport division as executive officer of ALL NIPPON AIRWAYS CO., LTD., a core subsidiary of the ANA Group. In addition, he has steadily cultivated his global experience and abilities by serving as ALL NIPPON AIRWAYS CO., LTD. General Manager of the Americas since April 2019. Since April 2022, as a senior executive officer at the company, Mr. Hattori has been pursuing the promotion of ESG and risk management. HIRASAWA Juichi has been involved with the business planning and planning divisions for many years. From April 2018, he served as an executive officer of ALL NIPPON AIRWAYS CO., LTD., a core subsidiary of the ANA Group, where he was in charge of creating and promoting innovations such as automated airport vehicle operation and MaaS in addition to formulating and implementing the company’s Corporate Strategy. Since April 2022, Mr. Hirasawa has served as a senior execu- tive officer at the company, working primarily on industrial policy and other matters. Brief Personal History / Major Concurrent Positions Reasons for Appointment YAMAMOTO Ado Independent Outside Director 2013: Member of the Board of Directors (present) Major Concurrent Positions Advisor of Nagoya Railroad Co., Ltd. Outside Director, Chubu-Nippon Broadcasting Co., Ltd. Chairman, Nagoya Chamber of Commerce & Industry KOBAYASHI Izumi Independent Outside Director 2013: Member of the Board of Directors (present) Major Concurrent Positions Outside Director, Mitsui & Co., Ltd. Outside Director, Mizuho Financial Group, Inc. Outside Director, OMRON Corporation KATSU Eijiro Independent Outside Director 2020: Member of the Board of Directors (present) Major Concurrent Positions President and Representative Director and Co-CEO and COO, Internet Initiative Japan Inc. Outside Director, Nippon Television Holdings, Inc. YAMAMOTO Ado has a wealth of experience and wide-ranging expertise in transporta- tion industry management and as a top executive in an economic organization. At meet- ings of the board of directors, he offers the benefit of his background to provide opinions and advice on corporate strategy, management of strategic investment projects, new businesses, and personnel policies. Mr. Yamamoto was appointed member of the Remuneration Advisory Committee and the Personnel Advisory Committee in June 2016. In June 2020, he was appointed chair of the Remuneration Advisory Committee and Personnel Advisory Committee. KOBAYASHI Izumi has a wealth of experience and expertise as a representative for private financial institutions and international development and finance institutions, as well as an outside director for other operating companies. At meetings of the board of direc- tors, she offers the benefit of her background to provide opinions and advice on Corporate Strategy, risk management, DEI, sustainability, and other issues from a global perspective. Ms. Kobayashi was appointed as a member of the Remuneration Advisory Committee in July 2013 and a member of the Personnel Advisory Committee in June 2016. KATSU Eijiro has provided opinions and recommendations on issues regarding the management of strategic investment projects and new businesses based on a high level of insight due to his experience as a government official, including his tenure as vice minister of finance and his extensive experience in ICT company management. Mr. Katsu was appointed as a member of the Remuneration Advisory Committee and the Personnel Advisory Committee in June 2020. MINEGISHI Masumi Independent Outside Director 2020: Member of the Board of Directors (present) Major Concurrent Positions Chairperson and Representative Director of the Board, Recruit Holdings Co., Ltd. Outside Director, Konica Minolta, Inc. MINEGISHI Masumi has led many new businesses to success at Recruit Co., Ltd. (cur- rently Recruit Holdings Co., Ltd.). As representative director and president & CEO of the company since April 2012, he has contributed to a significant increase in the company’s corporate value through mergers and acquisitions of overseas companies, and has extensive experience as a corporate manager in the lifestyle and service industry. He has been elected as a new candidate for the position of independent outside director in the expectation that he will supervise the company and provide general management advice from an objective perspective based on his experience and knowledge. 84 85 Foundations for Sustainable Corporate Value Enhancement Corporate Governance Management Members: Audit & Supervisory Board Members As of July 31, 2022 Fiscal 2021 Initiatives Approach to Selection of Candidates for Audit & Supervisory Board Member Major Agenda Items for the Board of Directors (Fiscal 2021) Audit & Supervisory Board Members To ensure healthy development and to earn greater levels of trust from society through audits, the Company appoints individuals to Audit & Supervisory Board members from both inside and outside the Company who possess extensive experience and the advanced expertise required to conduct audits. Our selections do not consider gender, nationality, or other factors. The Company appoints at least one individual who possesses appropriate levels of knowledge related to finance and accounting. Outside Audit & Supervisory Board members are selected from among candidates who have advanced levels of knowledge in a variety of areas and who are independent of the ANA Group. These individuals include candidates who are well-versed in corporate management, candidates who have sophisticated knowledge of social and economic trends, and candidates who have advanced knowledge in finance, accounting, or legal matters. KANO Nozomu* MIURA Akihiko MITSUKURA Tatsuhiko MATSUO Shingo* OGAWA Eiji* Outside Audit & Supervisory Audit & Supervisory Board Member Board Member Audit & Supervisory Board Member Outside Audit & Supervisory Outside Audit & Supervisory Board Member Board Member * Independent Audit & Supervisory Board members Reasons for Appointment of Audit & Supervisory Board Members Mr. MITSUKURA Tatsuhiko and Mr. OGAWA Eiji were elected at the 77th General Meeting of Shareholders. MITSUKURA Tatsuhiko Audit & Supervisory Board Member MITSUKURA Tatsuhiko has been involved in maintenance for many years. Since April 2021, he has pro- moted safety and security activities as the chief safety officer of ALL NIPPON AIRWAYS CO., LTD., a core subsidiary of the ANA Group. Mr. Mitsukura has extensive knowledge and experience in the airline busi- ness as well as technical areas such as safety assurance. Reasons for Appointment OGAWA Eiji Outside Audit & Supervisory Board Member OGAWA Eiji, as a specialist in advanced international finance, etc., has a high degree of expertise and knowledge in finance, accounting, and financial matters. Although his corporate management experience is limited to serving as an outside executive officer, in addition to the above expertise, he has extensive experience and accomplishments as a manager of a university. B o a r d M e m b e r s A u d i t & S u p e r v s o r y i Mr. KANO Nozomu was elected at the 74th General Meeting of Shareholders. Mr. MATSUO Shingo was elected at the 75th General Meeting of Shareholders. Mr. MIURA Akihiko was elected at the 76th General Meeting of Shareholders. 1. Items Related to General Meetings of Shareholders • ANA brand / Peach business plan • Proposals to be submitted to General Meetings of • Current situation and strategy of Cargo business Shareholders for approval • Current situation and issues of Trade and Retail business 2. Items Related to Directors, Corporate Executive Officers, the 8. Items Related to Disposal and Receipt of Important Assets Board of Directors, etc. • Aircraft procurement, sales, and leases • Selection of director candidates and corporate executive • System investment and capital investment officers 9. Investment-Related Matters • Results of the evaluation of the effectiveness of the Board 10. Items Related to Major Debts of Directors • Financing plans • Policies for officer remuneration • Subordinated syndicated loan agreement • Renewal of liability insurance contract for directors and • Bond issuances officers 11. Items Related to Corporate Governance 3. Items Related to Financial Results • Compliance with the revised Corporate Governance Code • Financial results and earnings forecasts • Climate change-related disclosure based on the guidance • Reports from group companies • Evaluations in the capital markets 4. Items Related to Shares and Capital of TCFD • Establishment of goals for women in leadership positions • Group ESG Management Promotion Committee report • Response to the Tokyo Stock Exchange’s market • Valuation of cross-shareholdings restructuring • Capital stock, etc. 12. Other Items • Progress of metaverse business 5. Items Related to Organizational Restructuring • Status report on strategic investments • Reorganization of ANA X Inc. and ANA Akindo Co., Ltd. • ANA SKY WEB system failures 6. Items Related to Personnel and Organizations • Net Promoter Score (NPS) survey results 7. Items Related to the Company and Important Subsidiaries • ANA’s Way Survey (employee awareness survey) results • ANA Group situation under the COVID-19 pandemic • Personnel Advisory Committee report • ANA Group Business Structure Reform (action plan) • Remuneration Advisory Committee report • Discussions regarding business and other risks and risk management Changes in Board Meeting Length Since we began encouraging more substantial discussions Discussion by Agenda Topic (Fiscal 2021) We encourage active discussions of corporate strategy at in board meetings, the annual total time devoted to board board meetings, selecting major related topics about which to meetings has increased over the last several years. exchange opinions from medium- to long-term perspectives. Name Independent Directors Remuneration Advisory Committee Special Knowledge, Experience, and Skills Airlines Business Finance and Legal and Risk and Safety Accounting Management Sustainability 27.7 28.9 26.4 22.8 34.4 hours Matters related to general meetings of shareholders, board of directors, etc. 5.2% Other 9.7% Matters related to financial results 14.5% 16.6% 54.0% Important matters, including corporate strategy and busi- ness plans 2017 2018 2019 2020 2021 (FY) Matters related to fleet plan, investments, asset sales, etc. 87 KANO Nozomu MIURA Akihiko MITSUKURA Tatsuhiko MATSUO Shingo OGAWA Eiji 86 Foundations for Sustainable Corporate Value Enhancement Corporate Governance Efforts to Improve the Effectiveness of the Board of Directors The Company believes that it is important for directors themselves to enhance the effectiveness of the board of directors, while con- Third-Party Evaluation and Analysis Process stantly considering the state of the board of directors and governance. At least once each year we analyze, evaluate, and discuss the overall effectiveness of the board of directors, and work to address issues identified during this process. Through the PDCA cycle, in which we again address and evaluate those issues at the end of each fiscal year, we work to improve the functions of the board. In fiscal 2021, in order to further enhance the objectivity and transparency of the evaluation, we conducted a third-party organization questionnaire as well as interviews regarding the results of that questionnaire to further deepen our analysis and evaluation. We will continue to enhance the PDCA cycle in order to further improve its effectiveness. In fiscal 2021, we commissioned Sumitomo Mitsui Trust Bank, Limited, which has a track record of supporting board effectiveness assessments for many companies, to conduct a questionnaire and interviews. The number of survey questions, including Questionnaire to all directors and Audit & Supervisory Board members Analysis and evaluation by a third-party organization open-ended questions, was increased from 16 to 36 in order to expand and deepen Interviews with the board chair, representative directors, and outside directors the scope of the survey. As a result, the company’s board of directors was evaluated as more active in discussions and more effective than those of other companies. It was confirmed that there is room for improvement in terms of meeting management and the composition of the board of directors. In-depth analysis and evaluation by a third-party organization Reporting of results to the board of directors / deliberation and consideration of improvement measures Fiscal 2020 Action / Plan Define Issues Fiscal 2021 Do Improvement Initiatives Check Evaluate Action / Plan Identify Issues Fiscal 2022 Do Improvement Initiatives Materials provided to the board of directors will include a summary of internal meeting discussions to enhance the amount and quality of information shared. In addition to including the status of internal discussions in the materials, it is now possible to receive explana- tions regarding details of the discussions, which is an improvement over the past. Increase time in board meetings for discussion of medium- to long-term management issues and, depending on the content, set aside time separately from board meetings. Provide periodic explanations of ANA Group management issues from representatives of major group companies. Discussions concerning corporate strategy and our business portfolio are also gaining momentum. Due to time constraints, it will be necessary to generate time for discussion by transferring authority to the executive officers, who can narrow down the agenda and reduce the time allotted for explanations. Extra efforts should be made to enhance the follow-up of corporate strategy and in-depth study of investment decision criteria and withdrawal criteria. In addition to meetings with the finan- cial statement auditor, opportunities should be provided to outside directors to discuss issues in meetings separate from board of directors’ meetings. Time was set aside, separate from board meetings, for outside directors to discuss issues facing the Group. We have established opportunities for meetings in which outside executives engage in direct dialogue with the Audit & Supervisory Board, and we feel this is sufficient. Management Further streamlining of board meeting operations is needed, as there is insufficient time for discussion of corporate strategy and investments. Increase the number of written reports and allow time for discussion. Share the estimated discussion time with the director in charge of discussions in order to enhance time management. Discussion Details More discussions on medium- to long-term manage- ment issues and monitoring of investments are necessary. For matters requiring more time for discussion, such as medium-term corporate strategy and strategic investment projects, opportunities shall be provided for small-group discussions separately from board of directors’ meetings, as necessary. In cooperation with the Corporate Planning Department, further enhance discussions at board of directors’ meetings. Providing Information to Outside Directors While enhancing the provision of information, the content and quantity of materials should be carefully examined according to the characteristics of each agenda item, so that the content can be understood more efficiently. Depending on the topic, either reduce the number of materials or, if the amount of material is more significant, attach an executive summary or similar document that clearly states the key points of the discussion. Town meetings will continue to seek effective operation methods. S h a r i n g I n f o r m a t i o n Efforts are being made to provide the details of discussions at internal meetings (opinions for and against topics) in greater depth than before. However, there is still insufficient information sharing related to the background behind the discussions and the tone of debate. More substantial explanations and discus- sions of medium- to long-term manage- ment issues and the status of each group company are necessary. In addition to meetings with the financial statement auditor, outside directors are required to hold meetings separate from board of directors’ meetings. i D s c u s s o n D e t a i i l s A c t i v i t i e s A d d i t i o n a l Visits to frontline business units and town meetings* were generally well-received and should be continued. We will conduct interviews in advance regarding the interests and wishes of outside directors regarding on-site visits and town meetings with frontline divisions, and continue to implement effective initiatives. Town meetings were very effective in terms of listening to voices on the ground. Board Membership Within the company, there is a need to increase the number of female executives and executives with digital skills. The appropriate composition of the board of directors will be discussed on an ongoing basis by the Personnel Advisory Committee and the board of directors. * Dialogue between officers and employees Cross-Shareholdings We believe that it is essential to maintain and strengthen col- the significance of holdings and the benefits and risks associ- laborative relationships with our business partners for further ated. If, as a result of a comprehensive review, we determine Equity Alliances with Overseas Airlines The total amount of shares of overseas airlines owned by ANA (1) PAL HOLDINGS, INC. (Parent Company of Philippine Airlines) • Strengthen strategic partnership with PAL through a wide range of business alliances, including code-share and mileage program alliances, the dispatch of directors, and growth and development of group businesses. that the evaluation results will continue to be low for a certain HOLDINGS on our balance sheet is ¥33,844 million, which outsourcing of airport operations. The ANA Group, consisting mainly of our Air Transportation period of time and further will not contribute to sustainable Business, engages in cross-shareholding when we deem such growth over the medium to long term, we will reduce our hold- holdings to contribute to improved corporate value over the ings in said stock. In fiscal 2021, we reduced our cross-share- medium to long term from the viewpoint of continuing smooth holdings in nine companies. business, maintaining business alliances, and growing profits ANA HOLDINGS owns shares in 27 publicly traded compa- through strengthening business relationships. nies as cross-shareholdings for other than pure investment Every year, the board of directors conducts a comprehensive purposes. The total amount on the balance sheet corresponding review of individual cross-shareholdings. The board evaluates to these shares as of the end of fiscal 2021 is ¥86,682 million. accounts for 39.0% of our cross-shareholdings. The purpose of these holdings is as described on the right. Overseas airlines 39.0% Details of Cross- Shareholdings Ongoing cross-shareholdings deemed necessary 31.9% Cross-shareholdings likely to increase revenues or provide other synergies 29.1% • Pursue the transportation of people and cargo between Japan and the Philippines, where passenger traffic is relatively high within Southeast Asia. • Enhance the ANA Group presence in the Southeast Asian market. (2) Vietnam Airlines • Strengthen strategic partnership with Vietnam Airlines through a wide range of business alliances, including code-share and mileage program alliances, the dispatch of directors, and outsourcing of airport operations. • Pursue the transportation of people and cargo between Japan and Vietnam, which has particularly high growth potential in Asia. • Enhance the ANA Group presence in the Southeast Asian market. 88 89 Foundations for Sustainable Corporate Value Enhancement Corporate Governance Director and Audit & Supervisory Board Member Remuneration 1. Basic Policies for Director Remuneration The basic policies for director remuneration are as follows. annual performance targets have been accomplished. The ratio of variable remuneration ranges from 0.0 to 1.0 times according • We set compensation at a level commensurate with the role to the degree of achievement for annual performance targets. and responsibility of each position. a. Bonuses • This will contribute to the enhancement of medium- to long- We use net income, safety, customer satisfaction, and term corporate value. employee satisfaction as indicators that reflect the perfor- • We will incorporate stock-based compensation that allows us mance and basic quality for a single fiscal year. Bonuses are to share profits with our shareholders. determined based on the scores of each indicator. • A Remuneration Advisory Committee, chaired by an outside b. Stock-based compensation director and consisting of a majority of outside directors, will be established to ensure a fair and transparent decision- making process. 2. Procedures for Determining Remuneration The board of directors decides director remuneration after We use return on equity (ROE), operating income margin, CO2 emissions volume, an external ESG evaluation indicator, and a productivity indicator as indicators of improved corporate value over the medium to long term and of sus- tainable growth. Stock-based compensation is determined based on the scores of each indicator. deliberation of the details, taking into account reports by the (2) Outside directors Remuneration Advisory Committee. The total amount of direc- Remuneration for outside directors consists of fixed compen- tor remuneration shall be within the scope of the amount sation (monthly compensation) without a performance-linked approved at the Ordinary General Meeting of Shareholders. portion. This compensation encourages outside directors to exercise their supervisory functions from an independent 3. Remuneration Advisory Committee See page 81 standpoint. 4. Remuneration System (1) Internal directors (3) Audit & Supervisory Board members Remuneration for both inside and outside Audit & Supervisory Board members consists of fixed compensation (monthly com- In addition to a fixed basic remuneration, remuneration for pensation) without a performance-linked portion. This compen- directors includes an annual variable performance-linked bonus sation encourages those members to exercise their supervisory and long-term incentive stock option plan as a means of pro- functions from an independent standpoint. viding healthy incentives for pursuing sustainable growth for Remuneration levels for members of the Audit & Supervisory the Company. Board are determined in line with remuneration at other com- The ratio of fixed basic remuneration and bonus / stock panies and in consultation with outside experts. options for total remuneration is 1:0.67 fixed to variable if Conceptual Diagram for the Officer Remuneration System Ratio Fixed 1 Variable 0.67*1 Remuneration (1) Basic remuneration (2) Bonus (short-term performance-linked) (3) Stock-based compensation (long-term incentive) Measure for fiscal year results according to various criteria Evaluate contributions to corporate value over the medium to long term P a y m e n t c r i t e r i a Internal directors Payment according to title, etc. Net Income Safety Customer Satisfaction Employee Satisfaction Outside directors Uniform payment for all members Audit & Supervisory Board members Payment according to status as full-time or part-time — — Return on Equity (ROE) Operating Income Margin CO2 Emissions ESG Indicators Productivity — — Payment method Monthly (cash) Annually (cash) Multi-year evaluation*3 Remuneration limits Annual total for (1) and (2) is limited to a maximum of ¥960 million Per resolution at the 66th Ordinary General Meeting of Shareholders, held June 20, 2011 (3) Annual maximum of ¥100 million*2 Per resolution at the 70th Ordinary General Meeting of Shareholders, held June 29, 2015 Annual maximum of ¥180 million Per resolution at the 74th Ordinary General Meeting of Shareholders, held June 21, 2019 *1 Range from 0.0 to 1.0 times according to the degree of achievement for annual performance targets. *2 At the 70th Ordinary General Meeting of Shareholders held June 29, 2015, our shareholders passed a resolution to contribute funds to a trust up to a total of ¥100 million per fiscal year (up to ¥500 million for every five fiscal years) to be used as stock-based compensation. *3 Upon retirement, stock-based compensation granted during a term of office will be delivered in the form of shares (or partly in cash equivalent to the amount when converted to market value) through the stock delivery trust. 90 Calculation Method Performance-linked remuneration for internal directors is calculated based on the following approach. Bonuses The payment coefficient is determined by combining the following four indicators. The figures in the graph show the percentage of each indicator related to the total bonus when a target is achieved (minimum 0%, maximum 150%). Payment Concept: Bonus Net Income Customer Satisfaction Employee Satisfaction Minimum (0%) Target Achieved (100%) Maximum (150%) 82 8 10 125 12.5 12.5 Net income target: Customer satisfaction target: Net Promoter Score (NPS) in the NPS survey indicated in the annual business plan Employee satisfaction target: Points scored in ANA’s Way Survey (internal group survey) Safety target: Net income attributable to owners of the parent company indicated in the annual business plan Indicator for a reduction in payment as a result of a security or safety event that has a significant impact on society (to be confirmed by the Remuneration Advisory Committee) Stock-Based Compensation The payment coefficient is determined by combining the following five indicators. The figures in the graph show the percentage of each indicator related to the total stock-based compensation when a target is achieved (minimum 0%, maximum 150%). Payment Concept: Stock-Based Compensation ROE Operating Income Margin CO2 Emissions ESG Productivity Minimum (0%) Target Achieved (100%) Maximum (150%) 12.5 12.5 15 10 50 37.5 37.5 15 10 50 ROE target: Operating income margin target: Operating income margin at the end of fiscal 2022 indicated in the medium-term business plan CO2 emissions target: ESG target: ROE as of the end of fiscal 2022 in the medium-term business plan CO2 emissions per revenue ton-kilometer as of the end of fiscal 2022 indicated in the medium-term business plan Number of ESG indicators achieved as of the end of fiscal 2022, based on the following four external evaluation indicators (1) Selection as a component by DJSI World/Asia Ind (2) Selection as a component by FTSE4Good (3) Selected as a component by MSCI (4) CDP A– rating These four external evaluations reflect the latest global trends and demands from stakeholders. These evaluations also allow us to measure Productivity target: the group’s level of ESG management in comparison with other companies. Productivity improvement index at the end of fiscal 2022 Fiscal 2021 Director and Audit & Supervisory Board Member Remuneration Segment Directors (Outside directors) Audit & Supervisory Board members (Outside Audit & Supervisory Board members) Total Number of persons eligible Total amount of remuneration, etc. (¥ millions) Total amount by type (remuneration, etc.) (¥ millions) Basic remuneration Bonuses 9 (3) 6 (3) 15 283 (41) 107 (54) 390 187 (41) 107 (54) 294 – (–) – (–) – Stock-based compensation 95 (–) – (–) 95 Notes: 1. The table above includes one outside director and one outside Audit & Supervisory Board member who resigned as of the end of the 76th Ordinary General Meeting of Shareholders, held June 29, 2021. 2. One internal director who also serves as a director of ALL NIPPON AIRWAYS CO., LTD. is not included in the table above because he is fully compensated by the company. 3. The amount of stock-based compensation for fiscal 2021 is an estimate, as the evaluation period is the three-year period from fiscal 2020 to fiscal 2022. 4. The amounts listed above are rounded down to the nearest million yen. Basic remuneration for directors and members of the Audit & Supervisory Board in fiscal 2021 has continued to be reduced according to position and in response to deteriorating business performance. Performance-linked bonuses have not been paid. 91 Foundations for Sustainable Corporate Value Enhancement Trust Building with Stakeholders The ANA Group regularly engages in dialogue with experts on ESG issues to understand social trends in a timely manner and make flexible management decisions. We are enhancing the effectiveness of our activities by incorporating the latest informa- tion and findings from these discussions into our strategies. In addition, we are holding a variety of internal discussions to have each employee understand the importance of promoting ESG management and put it into practice in their daily work. These discussions were held online in fiscal 2021 as well. However, a greater number of employees were able to participate, and we were able to deepen mutual understanding. Our internal and external connections with stakeholders such as these helped greatly to build trusted relationships throughout the ANA Group. External Dialogue The following titles of our experts are as they were at the time of discussion. Dialogue with Experts on the Environment (December 2021) Participating Experts YAMAGISHI Naoyuki Director, Climate & Energy and Oceans & Fisheries, WWF Japan HIBI Yasushi Vice President, Conservation International Topic Progress of Initiatives for the ANA Group’s Environmental Targets Q What are your thoughts on the ANA Group’s environmental targets and their current initiatives? • It is important to set targets and disclose information for both international reduction targets, such as SBT*1, and the introduction of renewable energy. • In addition to issues such as the stable supply of Sustainable Aviation Fuel (SAF), in regard to the provision of sustainable foodstuffs for in-flight meals (certified foodstuffs, etc.), it is expected that the ANA Group will step forward and demon- strate leadership by involving other companies in the industry and suppliers, etc. • The external evaluation of the ANA Group’s environmental initiatives as a whole will greatly change by its initiatives and achievements regarding this 1%, by promoting energy conservation in its own facilities and vehicles, introducing renew- able energy, and transitioning to EVs and FCVs. *1 Science Based Targets (SBT): Reduction targets in line with what the latest climate science says is necessary to limit global warming to well below 2°C above pre-industrial levels. Q What are your thoughts on climate change and its relationship with biodiversity? • Biodiversity conservation refers to initiatives to protect nature. This includes everything ranging from ensuring the sustain- ability of foodstuffs used in in-flight meals to deforestation and plastics as marine pollution. SAF itself is also a field dependent on the natural environment. It is important to start with identifying, analyzing, and prioritizing what business is dependent on and what business is impacting in regard to the natural environment and resources. • From here on out, it will be important to address movements such as environmental due diligence and zero deforestation. Dialogue with Overseas ESG Investors (December 2021) Please visit our corporate website for more: https://www.ana.co.jp/group/en/csr/communications/ The following titles of our experts are as they were at the time of discussion. Participating Experts First Discussion: World Benchmarking Alliance Camille Le Pors World Benchmarking Alliance Lead, Corporate Human Rights Benchmark Charlotte Hugman World Benchmarking Alliance Lead, Corporate Human Rights Benchmark Second Discussion: Hermes EOS SUZUKI Sachi Associate Director – Engagement Topic Progress of ESG Management in the ANA Group First Discussion Q What are your thoughts on identifying issues to be addressed? • Through an impact assessment, first identify the impact of the company and significant human rights issues, and then confirm the environment surrounding the rights holders. It is important to prioritize the issues identified through dialogue with rights holders. • In assessing the impact of climate change on people, it is necessary to consider the direct impacts and the indirect impacts separately. When a company cannot resolve the indirect impacts on its own, more urgent actions will be needed hereafter. Q What are the key points on tackling information disclosure based on TCFD? • In order to come closer to successfully achieving the 1.5-degree scenario, it is important to quantitatively and qualitatively scrutinize the effectiveness and feasibility of what can be done and to what extent. • From the viewpoint of accountability, it is important to disclose specific plans, such as business and management systems, and CO2 reduction, as information disclosed deepens the stakeholders understanding of the company. Second Discussion Q What do you think about our initiatives toward becoming carbon neutral? • It is great that the ANA Group is switching to higher CO2 emission reduction targets and cooperating with other industries to develop SAF in order to work toward carbon neutrality. Even if investment is difficult at present, it is effective to partici- pate in the R&D to increase the total supply. Additionally, it is necessary to pressure and lobby the government. Q What do you think about our initiatives regarding diversity? • With regard to diversity, it is important to increase the proportion of women in voting positions such as directors. On the other hand, is also a problem to focus only on the proportion of female directors while the proportion of female executive officers and management-level employees is low. We expect to see improvements toward the current goal. Dialogue with Experts on Business and Human Rights (October 2021) Internal Dialogue Participating Experts Pauliina Murphy World Benchmarking Alliance*2 Engagement Director Neill Wilkins Institute for Human Rights and Business*3 Camille Le Pors World Benchmarking Alliance Lead, Corporate Human Rights Benchmark *2 World Benchmarking Alliance: An index initiative established by the United Nations Foundation, Aviva (a British insurance company), and other organizations. This organization develops benchmark indicators to evaluate company contribution levels to a sustainable society. *3 Institute for Human Rights and Business: An international think tank that works in the field of business and human rights and leads efforts in this area. Established in 2009. 92 Topic Promotion of Initiatives Relating to the ANA Group’s Business and Human Rights Q How can we enhance the effectiveness of the grievance mechanism? • Regarding the grievance mechanism*4, one of the disadvantages of a system that receives reports from individuals is that the companies become passive. It is important for the ANA Group to continue to approach the workers in the supply chain, and talk with those who are actually being affected, to enhance trust. *4 Grievance mechanism: A mechanism that enables the prevention and mitigation of negative impacts on the company throughout the value chain, including suppliers, as well as redress for victims of the negative impact that has occurred. Q How can we effectively address human rights issues in the global supply chain? • The company will be able to fulfill bigger roles and have a bigger impact through collaborations. Issues surrounding human rights violations inflicted by other countries and problems surrounding technical intern trainees living in Japan are not issues to be handled single-handedly. As such, it is expected that your influence will expand through collaborations with other companies and organizations. Q What are things to watch out for regarding Just Transition*5? • Even in Just Transition, it is important to consider the impact on human rights. Considering climate change and human rights together is very complex, but it is an issue for the ANA Group to address, and it is necessary to consider how climate change affects working conditions and the working environment. *5 Just Transition: A movement that aims to support those facing economic disadvantages, in addition to ensuring benefits are widely distributed, through the transition to a green economy. Internal Discussions to Promote ESG Management Awareness SDGs Seminar ESG TOP Discussions with Employees Seminars are available to all group employees in an online ANA Group officers ran a TOP discussion on the promotion format. They are a place to share information on the SDGs, of ESG management. After a panel discussion on the latest and we are learning to think about how we can contribute global trends and the status of initiatives in the depart- to the SDGs through our work, and to practice and deepen ments over which the officers have responsibility, employ- initiatives familiar to us. We have discussions planned with ees and officers participating online had the opportunity to overseas areas (Europe and the U.S.) that tie into creating exchange opinions and deepen their understanding of ESG awareness throughout the group. management. 93 Foundations for Sustainable Corporate Value Enhancement Trust Building with Stakeholders Internal Dialogue Outside Director Town Meeting Initiatives Topics for Fiscal 2021: Challenges and future direction regarding human resources that will lead the group back to a growth trajectory Since fiscal 2018, the group has been providing opportunities for town meetings in which outside directors can engage in direct dialogue with managers across various ANA Group departments. The purpose of these meetings is to gain a deeper understanding of the group’s business and corporate culture, and to assist in the future management of the board of directors. The Maintenance Center and each group maintenance company participated in fiscal 2018, the Flight Operations Center in fiscal 2019, and the CX Management Office in fiscal 2020. The unprecedented crisis we experienced due to the COVID-19 pandemic has once again confirmed that the greatest asset of the Group is its human resources. In order to achieve renewed growth in the post-COVID-19 world, the Human Resources Strategy Department, which is in charge of hiring, training, and establishing human resource systems, held a dialogue with outside directors on issues and future directions regarding the group’s human resources, which will be the driving force for achieving renewed growth. The necessity of autonomous career enrichment, which is a prerequisite of the discussion • The results of the ANA’s Way Survey, an internal awareness survey, show a high correlation between career fulfillment and the engage- ment in one’s work that arises from a sense of satisfaction and achievement. • In accordance with the idea that each individual should carve out their own career path based on their own ambitions, the company will offer support for individual growth while expanding opportunities for new challenges. At the same time, employees are encouraged to enhance autonomous career development through specific dialogues between supervisors and subordinates that utilize job descriptions. Topic 1 Enhancement of Autonomous Career Development that Respects Individual Motivations and Skills Q What are the challenges to enhancing autonomous career development? Is there a mismatch between the person’s ambitions and staffing needs? • Career paths are very important because they act as an incentive for one’s future. However, if we only place importance on the ambitions of the individual, human resources will be concentrated in the most popular departments and career paths, resulting in a considerable degree of mismatch. • A concentration of personnel in the most popular departments will result in a shortage of specialists in flight operations, maintenance, engineering, etc. Considering the overall balance of the company and its profits, it may be necessary to consider a system in which compensation increases as such specialized skills and expertise are acquired. Assessment of work aptitude • Sometimes a person finds that they are not suited for the job they want after they actually tried it. In determining suitability, the advice of a supervisor and certain guidelines are necessary. • While it is important to find interesting work, it is more important for supervisors to properly evaluate the strengths of their subordinates and assign them suitable work while improving their motivation through positive encouragement. • It is a standard practice to rotate personnel so that they can experience various departments and determine their own aptitudes. However, individuals who can thoroughly perform in one department will also demonstrate their abilities when performing other duties, so it may not be necessary to transfer them. Honing one’s expertise and developing standards by which to evaluate yourself is important. Toward a personnel system that emphasizes individual motivation and strengths • Although mismatches between requests and assignments are likely to occur, the highest priority will first be placed on the individual’s motivation and strengths. Furthermore, these discrepancies can likely be resolved to a certain extent by separating the career tracks for airport / operations and marketing departments, etc., at the recruitment stage. • In many Group companies, the company’s business areas were fixed and the range of careers was limited. In addition to the expansion of the Group Human Resources Recruitment Program, an intra-Group transfer recruit- ment system will be introduced. We expect that these measures will enable employees to develop a variety of careers within the Group, thereby strengthening engagement. Q We expanded secondment outside the group as part of the employment measures to cope with the COVID-19 crisis. What do we think about this system? It is an effective way to utilize new discoveries in one’s career without being restricted by one’s past work experience. • Currently, 1,580 employees (as of December 2021), mainly frontline employees, are on secondment outside the group. In addition to hospitality, we hear that they are active in human resources development, public relations, sales support, and general affairs. We would like them to bring new insights and culture from outside the company back to the ANA Group in order to create new value. • Experiencing the corporate culture of a completely different company through a secondment outside the group is very beneficial in helping one notice the strengths and shortcomings of ANA. After the COVID-19 pandemic, it may be beneficial to continue the program for the benefit of human resources development. • There are relatively few opportunities for cabin attendants, airport staffs, etc., to perform different duties, and these external assignments present new career opportunities. Opportunities for external secondments have led to personal growth, such as one case in which an employee returned to ANA to take on generalist position. We are considering continuing this system in the future. Town Meeting (December 2021) Topic 2 Diversity in Human Resources Q What are our thoughts on securing and developing human resources from diverse backgrounds, etc.? Needs for diversity among our human resources • We live in an age in which we do not know who will be able to demonstrate their strengths in which situations. We should recognize each person’s strengths as a portfolio and change our approach to selecting appropriate leaders according to the abilities needed at any given time. That is what it means to make the most of diversity. • While it is important to hire young people with expertise in IT, data science, etc., there is a sense that there is a shortage of personnel that can be targeted through their career paths. It may be necessary to hire outside experts. Expansion of opportunities for human resources to play an active role • As for seniors, some of them do not decline after the age of 60. On the contrary, some of them broaden their vision. If they are truly capable, they should be able to remain active regardless of their age. Not utilizing the elderly is a great loss for Japan as a whole. • We think that broadening the scope of work, by having overseas staff concurrently perform head office duties, for example, will increase motiva- tion. Having overseas staff is a great asset for globalization. It might be a good idea to energize our Japanese staff by having overseas staff remotely participate in various meetings and events. 94 95 Foundations for Sustainable Corporate Value Enhancement Foundations for Sustainable Corporate Value Enhancement Message from the Independent Outside Directors Reassessing the meaning of social and transportation infrastructure in building an organization capable of overcoming difficulties and sharing a sense of mission YAMAMOTO Ado Independent Outside Director As an emergency measure to push through the COVID-19 gradually, and it is important to meet employee expectations pandemic, the ANA Group was quick to take action, including as performance recovers, which includes restoring the early retirement of wide-body aircraft and securing cash bonus levels. on hand. Despite the tough business environment throughout President Shibata began serving in April. One important role fiscal 2021, I was gratified to see groupwide efforts bearing of the president is to speak cheerfully, openly, and in his own fruit, as the group returned to profitability in the third quarter, words about overcoming a challenging business environment supported by flexible adjustments of capacity and through and charting a course toward growth under the group vision. detailed yield management. To date, President Shibata has held many management-led The impact of the COVID-19 pandemic has been long and town meetings, visiting with all ANA Group employees. It will painful. But the main key to upholding and enhancing be important to continue to be proactive in creating these employee motivation will be to return to the basics by reas- opportunities, to engage in meaningful dialogue with stake- sessing the purpose of the group and its contribution to holders, including employees, and to reaffirm the strength of society as air transportation. In March 2022, the Tohoku the group. This strength has overcome many crises in the Shinkansen bullet train was suspended for a time after an past. The group must also recognize the spirit behind the earthquake off the coast of Fukushima Prefecture. The ANA phrase, Hardship Now, Yet Hope for the Future, as each indi- Group decided immediately to put extra flights into service, vidual fulfills their roles in embodying this motto. One of the fulfilling its social mission as a public transportation provider. Three Pillars of Business Structure Reform is to create new This is just one representative example, but when every profit-earning opportunities beyond the airline business. In the employee is aware of their responsibility as transportation process of taking on the challenges of entering brand-new infrastructure, and realizes their role in supporting the transfer fields, we sometimes find a clash of opinions. I expect man- of people and goods, this attitude will naturally add to agement will respect these diverse values and make decisions momentum and encourage employees to overcome resolutely, implementing initiatives decisively to transform difficulties. the organization into a strong, resilient airline group. Of course, we must not forget compensation is an extremely important part of employee motivation. The group ended monthly wage reductions at the end of fiscal 2021, and has set targets to phase out other measures in place to address COVID-19. I think employee motivation is increasing Even as the impact of the COVID-19 pandemic continued throughout fiscal 2021, the ANA Group implemented measures to return to growth in the post-COVID-19 world based on the Three Pillars defined under Business Structure Reform. As the group enters fiscal 2022, passenger demand is beginning to return. We asked outside directors YAMAMOTO Ado, KOBAYASHI Izumi, and KATSU Eijiro for their assessment of ANA Group efforts to recover business performance, future challenges heading to a post-COVID-19 world, and their expectations of President & Chief Executive Officer SHIBATA Koji. 96 97 97 Foundations for Sustainable Corporate Value Enhancement Foundations for Sustainable Corporate Value Enhancement Message from the Independent Outside Directors Sustainable value creation through new ideas generated by diverse human resources and flexible organizational development KOBAYASHI Izumi Independent Outside Director COVID-19 has reminded many companies of the importance convenience in the products and services they provided. of risk management. We have had many more opportunities to I think in the future, we may have to accept things that are not discuss risk at board meetings over the past year. No matter necessarily convenient, but that address measures toward how carefully measures are taken, the unexpected can sustainable societies, and execute these measures with happen. And it is impossible to predict all risks comprehen- conviction. sively. A strong business portfolio is important to ensure over- To create a flexible organization that accepts diverse ideas, all balance and avoid outsized harm in the event of a single it will be crucial to pursue diversity, equity, and inclusion (DEI), risk. Resilience, or the ability to recover when the unexpected which the group views as a pillar of our corporate strategy. happens, is also important. To harden the resilience of an The essence of a human resources strategy is to consider entire organization requires employees trained to make the how diverse human resources lead to increased corporate best decisions in their respective positions under any circum- value. Simply achieving numerical targets is meaningless. stances. Employees, including those on the front lines, must Certain of our employees will be active in management in the work without being constrained by manuals or rules, but future. Others will grow as professionals in their fields. I believe rather, encouraged to think about the essence of matters on a creating an environment in which each type of individual can regular basis. utilize their strengths within the organization, enjoy their work, One of the major risks facing society today is environmental grow personally, and realize great value through their work risk. The ANA Group understands its responsibility toward should be the aim of our human capital strategy. If everyone achieving sustainable societies, focusing particularly on decar- looks and acts in the same direction, as is the case in many bonization. While the group cannot be a sole actor in all mea- Japanese companies, new ideas will not emerge in an era of sures to reduce CO2 emissions, and ANA relies heavily on change. It is important to have a diverse group of people who external technological developments, it is important to have a leverage their strengths to create new things while sharing proactive attitude in looking for and implementing what can be different opinions. This leads to increased corporate value. done on our own. ESG management requires a flexible organi- The ANA Group is fortunate to have a diverse range of human zation in which each employee is aware of ESG, thinks for resources. I believe that our future challenge will be to maxi- themselves and proposes changes as they go about their mize and make the best use of the abilities of each employee. work, and accepts new ideas. In the past, companies pursued Combining the efforts of every employee to improve resilience, leveraging the strengths developed in the Air Transportation Business KATSU Eijiro Independent Outside Director Fiscal 2021 was the second year of the COVID-19 pan- Passenger demand has begun to recover more recently, demic, and I have had high regard for the group’s efforts, and it is important to develop services while accurately including its pursuit of Business Structure Reform. I am sure identifying how customer needs are changing under employees were burdened by the unprecedented measures COVID-19. ANA is moving forward in the development of taken, including the drastic reduction of wages and ANA Smart Travel utilizing the power of digital technology bonuses, even if only for a limited period of time. Clear such as online check-in processes. I believe there are two messaging from former-president Katanozaka reminded purposes of digitalization. The first is to pursue efficiency by employees to work with an increased sense of urgency and replacing routine human tasks with digital processes, which remain hopeful. I believe this ongoing encouragement in turn controls costs. The second is to utilize the enormous brought the group together as one to weather the pandemic. volumes of data obtained through digitalization and lever- The slump in passenger demand reduced opportunities for age this data in new businesses. This is a very important many employees to be active in their original assignments. issue for the group, which aims to improve resilience in the Even so, it was fortunate that these employees found a medium term. sense of fulfillment through secondments to various outside New businesses does not mean launching a new venture companies and organizations based on the promise to in the dark. Fields too far removed from the airline industry preserve their employment. Having entered fiscal 2022, entail great risk. The ANA Group can reduce risk by clearly President Shibata was very open-minded, and immediately defining the reasons why it is involved in a business and how after assuming office, met with a wide range of group the group can utilize its strengths. From the perspective of employees in a short period of time. He communicated that diversifying management risk, the ANA Group must expand management is moving to a new stage, demonstrating his non-air businesses over the medium term. In this process, strong determination to achieve profitability without fail. however, it is important to create business models that are I believe this attitude has contributed to an improved level unique and that also leverage the knowledge, expertise, and of employee engagement. data assets of the ANA Group, which have been accumulated over its years in the airline business. 98 99 99 Foundations for Sustainable Corporate Value Enhancement Responsible Dialogue with Stakeholders The ANA Group conducts business activities through our relationships with stakeholders. We engage in ongoing dialogue with stakeholders to build trust and offer peace of mind. As we do so, we increase the effectiveness of our strategies by incorporating the opinions and requests of stakeholders into our businesses. Major Dialogues during Fiscal 2021 The 77th Ordinary General Meeting of Shareholders (for institutional investors, analysts) Financial results presentations No. of attendees 664 Voting rights exercise ratio 58.5% 4 times (teleconferences) Dialogue with Shareholders and Investors Dialogue with institutional investors / analysts 202 times (117 in Japan / 85 overseas) (199 teleconferences / online meetings, 3 in-person meetings) ANA Group officer town meetings No. of meetings 2,694 Participants total: Approx. 33,500 people * Numbers include online interactions Communication with Our Employees External Recognition Inclusion in ESG Indexes, etc. • Dow Jones Sustainability Index • S&P Global Sustainability Awards 2022 - World Index - Asia Pacific Index • FTSE4Good Index - Gold Class • FTSEBlossom Japan Index • EcoVadis Sustainability Rating • MSCI Japan Empowering - BRONZE Women Index (WIN) • CDP Climate Change A- Quality • SKYTRAX COVID-19 Airline Safety Rating • CIRIUM (ANA Group, 2021) - Awarded first 5-STAR status in Asia • SKYTRAX World Airline Awards (ANA Group, 2021) - World’s Best Airline Cabin Cleanliness - COVID-19 Excellence Award - World’s Best Airport Services - Best First Class Lounge in Asia Management Strategy (ANA Group, 2021) Worldwide Major Airlines - Network Category: No. 1 - Mainline Category: No. 1 Asia-Pacific Major Airlines - Network Category: No. 1 - Mainline Category: No. 1 Training sessions for promotors of ESG and SDGs (online) SDGs seminar (online) No. of sessions 2 Participants 110 people No. of meetings 2 Participants 120 people • Ministry of Economy, Trade and Industry • Ministry of Health, Labour and Welfare - DX Certification Company Promoting Women’s Participation and Advancement in the • Tokyo Stock Exchange / Ministry of Economy, Trade and Industry Workplace - DX Stock 2022 “Eruboshi” Certification (ANA TELEMART CO., LTD.) • Japan Institute of Information Technology (ANA, ANA Systems Co., Ltd.) • Nippon Kenko Kaigi, Ministry of Economy, Trade and Industry - Best Customer Support of The Year 2021: Special Award (DX - Certified Health and Productivity Management Organization Dialogue with Experts Environment Human rights ESG investors 1 time 1 time 2 times (online meetings) Dialogue with Business Partners Procurement policy briefings 54 times (including 12 overseas suppliers) Dialogue with Communities Participation in community volunteer activities ANA NARITA AIRPORT SERVICES Co.,Ltd. No. of activities 22 Group employee participants: Approx.150 people Volunteer cleanup, aviation classes, crime prevention, etc. Promotion) • IATA (ANA) Diversity & Inclusion Award 2021 - Diversity & Inclusion Team • Job Rainbow (ANA) D&I AWARD - BEST Workplace2021 • work with Pride (ANA) - PRIDE Index 2020 Gold Award • Ministry of Health, Labour and Welfare Recognition Program 2022 –White 500– (ANA HOLDINGS INC., ANA AIRPORT SERVICES Co., Ltd., ANA OSAKA AIRPORT CO., LTD., ANA CHUBU AIRPORT CO., LTD., ANA KANSAI AIRPORT CO., LTD., ANA OKINAWA AIRPORT CO., LTD., ANA TELEMART CO., LTD., ANA Wing Fellows Vie Oji Co., Ltd., ANA CHITOSE AIRPORT CO., LTD., ANA FUKUOKA AIRPORT CO., LTD., ANA WINGS CO., LTD., ALL NIPPON AIRWAYS TRADING Co., Ltd.) - Certified Health and Productivity Management Organization Recognition Program 2022 (ANA Systems Co., Ltd., ANA AIRPORT SERVICES Co., Ltd., ANA “Platinum Kurumin” Certified by the Ministry in Recognition of Providing Business Solution Co., Ltd.) Superior Childcare Support (ANA, ANA AIRPORT SERVICES Co., Ltd.) “Kurumin” Certified by the Ministry (ANA CHUBU AIRPORT CO., LTD., ANA Akindo Co., Ltd., ANA TELEMART CO., LTD., ANA Systems Co., Ltd.) 100 * THE INCLUSION OF ANA HOLDINGS INC. IN ANY MSCI INDEX, AND THE USE OF MSCI LOGOS, TRADEMARKS, SERVICE MARKS OR INDEX NAMES HEREIN, DO NOT CONSTITUTE A SPONSORSHIP, ENDORSEMENT OR PROMOTION OF ANA HOLDINGS INC. BY MSCI OR ANY OF ITS AFFILIATES. THE MSCI INDEXES ARE THE EXCLUSIVE PROPERTY OF MSCI. MSCI AND THE MSCI INDEX NAMES AND LOGOS ARE TRADEMARKS OR SERVICE MARKS OF MSCI OR ITS AFFILIATES. 101 Foundations for Sustainable Corporate Value Enhancement Consolidated 11-Year Summary ANA HOLDINGS INC. and its consolidated subsidiaries (Note 1) (FY) (Note 2) 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Yen (Millions) For the Year Operating revenues (Note 4) Operating expenses Operating (loss) income (Loss) income before income taxes Net (loss) income attributable to owners of the parent Cash flows from operating activities Cash flows from investing activities Cash flows from financing activities Free cash flow Substantial free cash flow (Note 5) Depreciation and amortization EBITDA (Note 6) Capital expenditures At Year-End Total assets Interest-bearing debt Shareholders’ equity (Note 7) Per Share Data (Yen, U.S. dollars) (Note 8) (Loss) earnings per share Book value per share Cash dividends Average number of shares during the year (Thousand shares) Management Indexes Operating income margin (%) Net income margin (%) ROA (%) (Note 9) ROE (%) (Note 10) Shareholders’ equity ratio (%) Debt/equity ratio (Times) (Note 11) Asset turnover (Times) (Note 12) Payout ratio (%) Number of employees Operating Data International Passenger Operations Passenger revenues Available seat-km (Millions) Revenue passenger-km (Millions) Number of passengers (Thousands) Load factor (%) Unit revenues (¥) Yield (¥) Domestic Passenger Operations Passenger revenues Available seat-km (Millions) Revenue passenger-km (Millions) Number of passengers (Thousands) Load factor (%) Unit revenues (¥) Yield (¥) LCC Passenger Operations (Note 13) Revenues Available seat-km (Millions) Revenue passenger-km (Millions) Number of passengers (Thousands) Load factor (%) Unit revenues (¥) Yield (¥) International Cargo Operations Cargo revenues Cargo volume (Tons) Domestic Cargo Operations Cargo revenues Cargo volume (Tons) 1,020,324 1,193,451 (173,127) (175,374) (143,628) (76,413) 230,019 93,646 153,606 (111,948) 147,328 (25,799) 133,364 3,218,433 1,750,108 797,249 (305.37) 1,695.06 — 470,339 (17.0) (14.1) (5.3) (15.9) 24.8 2.2 0.3 — 42,196 70,151 20,524 5,550 825 27.0 3.4 12.6 279,877 34,288 16,382 17,959 47.8 8.2 17.1 37,813 7,863 4,846 4,267 61.6 4.8 7.8 328,750 976,644 24,932 251,332 728,683 1,193,457 (464,774) (545,372) (404,624) (270,441) (595,759) 1,098,172 (866,200) (373,464) 176,352 (288,422) 156,710 3,207,883 1,655,452 1,007,233 (1,082.04) 2,141.49 — 373,945 (63.8) (55.5) (16.0) (39.1) 31.4 1.6 0.3 — 46,580 44,726 14,465 2,840 427 19.6 3.1 15.7 203,119 26,896 11,567 12,660 43.0 7.6 17.6 22,071 4,932 2,403 2,080 48.7 4.5 9.2 160,503 655,019 20,881 218,032 1,974,216 1,913,410 60,806 51,501 27,655 130,169 (230,218) 23,869 (100,049) (79,149) 175,739 236,545 351,361 2,560,153 842,862 1,061,028 82.66 3,171.80 — 334,559 3.1 1.4 2.4 2.6 41.4 0.8 0.8 — 45,849 613,908 68,885 50,219 9,416 72.9 8.9 12.2 679,962 58,552 39,502 42,916 67.5 11.6 17.2 81,953 11,076 9,202 7,288 83.1 7.4 8.9 102,697 866,821 25,533 373,176 2,058,312 1,893,293 165,019 154,023 110,777 296,148 (308,671) (46,480) (12,523) (18,028) 159,541 324,560 375,864 2,687,122 788,649 1,099,413 331.04 3,285.46 75.00 334,632 8.0 5.4 6.4 10.6 40.9 0.7 0.8 22.7 43,466 651,587 65,976 50,776 10,093 77.0 9.9 12.8 696,617 58,475 40,704 44,325 69.6 11.9 17.1 93,611 12,052 10,394 8,153 86.2 7.8 9.0 125,015 913,915 27,454 393,773 1,971,799 1,807,283 164,516 196,641 143,887 316,014 (324,494) (29,989) (8,480) 61,410 150,408 314,924 304,707 2,562,462 798,393 988,661 417.82 2,954.47 60.00 344,372 8.3 7.3 6.8 15.1 38.6 0.8 0.8 14.4 41,930 597,446 64,376 49,132 9,740 76.3 9.3 12.2 689,760 58,426 40,271 44,150 68.9 11.8 17.1 87,555 11,832 10,212 7,797 86.3 7.4 8.6 118,002 994,593 30,710 436,790 1,765,259 1,619,720 145,539 139,462 98,827 237,084 (194,651) 3,349 42,433 39,655 140,354 285,893 254,425 2,314,410 729,877 919,157 28.23 262.44 6.00 3,500,205 8.2 5.6 6.5 11.6 39.7 0.8 0.8 21.3 39,243 516,789 60,148 45,602 9,119 75.8 8.6 11.3 678,326 59,080 38,990 42,967 66.0 11.5 17.4 — — — — — — — 93,301 954,027 30,860 451,266 1,791,187 1,654,724 136,463 131,064 78,169 263,878 (74,443) (133,257) 189,435 88,035 138,830 275,293 281,416 2,228,808 703,886 789,896 22.36 225.87 5.00 3,496,561 7.6 4.4 6.1 9.8 35.4 0.9 0.8 22.4 36,273 515,696 54,710 40,635 8,167 74.3 9.4 12.7 685,638 59,421 38,470 42,664 64.7 11.5 17.8 — — — — — — — 113,309 810,628 31,740 466,979 1,713,457 1,621,916 91,541 77,983 39,239 206,879 (210,749) (30,424) (3,870) (22,350) 131,329 222,870 274,702 2,302,437 819,831 798,280 11.24 228.45 4.00 3,492,380 5.3 2.3 4.2 5.1 34.7 1.0 0.8 35.6 34,919 468,321 49,487 35,639 7,208 72.0 9.5 13.1 683,369 60,213 38,582 43,203 64.1 11.3 17.7 — — — — — — — 124,772 841,765 32,584 475,462 1,601,013 1,535,027 65,986 36,391 18,886 200,124 (64,915) (85,569) 135,209 38,929 136,180 202,166 183,739 2,173,607 834,768 746,070 5.41 213.82 3.00 3,493,860 4.1 1.2 3.2 2.5 34.3 1.1 0.7 55.5 33,719 395,340 41,451 30,613 6,336 73.9 9.5 12.9 675,153 61,046 37,861 42,668 62.0 11.1 17.8 — — — — — — — 104,736 710,610 32,116 477,081 1,483,581 1,379,754 103,827 70,876 43,140 173,196 (333,744) 84,549 (160,548) 54,256 123,916 227,743 162,752 2,137,242 897,134 766,737 13.51 218.41 4.00 3,192,482 7.0 2.9 5.1 6.6 35.9 1.2 0.7 29.6 32,634 348,319 37,947 28,545 6,276 75.2 9.2 12.2 665,968 58,508 36,333 41,089 62.1 11.4 18.3 — — — — — — — 86,589 621,487 32,231 463,473 1,411,504 1,314,482 97,022 63,431 28,178 214,406 (166,323) 16,171 48,083 52,043 119,268 216,290 196,881 2,002,570 963,657 549,014 11.22 218.24 4.00 2,511,841 6.9 2.0 5.1 5.3 27.4 1.8 0.7 35.7 32,884 320,066 34,406 25,351 5,883 73.7 9.3 12.6 651,556 56,756 34,589 39,020 60.9 11.5 18.8 — — — — — — — 87,978 570,684 33,248 467,348 U.S. dollars (Thousands) (Note 3) 2021 8,336,661 9,751,213 (1,414,551) (1,432,911) (1,173,527) (624,340) 1,879,393 765,144 1,255,053 (914,682) 1,203,758 (210,793) 1,089,664 26,296,535 14,299,436 6,514,004 (2.49) 13.84 — 573,175 2,286,763 308,954 2,686,085 203,709 Notes: 1. As of March 31, 2022, there were 55 consolidated subsidiaries and 14 equity-method subsidiaries and affiliates. 2. From April 1 to March 31 of the next year 3. U.S. dollar amounts in this report are translated, for convenience only, at the rate of ¥122.39 = US$1, the approximate exchange rate as of March 31, 2022. 4. Effective from the fiscal year ended March 2015, revenue of jet fuel which is resold to airlines outside the group is offset by its purchasing cost and the net amount is recorded in operating revenues. 5. Substantial free cash flow after excluding payments into and proceeds from withdrawals of time deposits and payments for purchases and proceeds from redemptions of marketable securities (time and negotiable deposits with maturities exceeding three months) 6. EBITDA = Operating income + Depreciation and amortization 7. Total shareholders’ equity = Shareholders’ equity + Accumulated other comprehensive income 102 8. The group conducted a 1-for-10 reverse stock split effective October 1, 2017. Calculations have been made assuming a reverse stock split at the beginning of the fiscal 2017. 9. ROA = (Operating income + Interest and dividend income) / Simple average of total assets 10. ROE = Net income attributable to owners of the parent / Simple average of shareholders’ equity 11. Debt/equity ratio = Interest-bearing debt / Shareholders’ equity 12. Asset turnover = Operating revenues / Simple average of total assets 13. Revenues of LCC Operations include ancillary income. 14. We applied the Accounting Standard for Revenue Recognition as of the beginning of fiscal 2021. * Yen amounts are rounded down to the nearest million yen and percentages are rounded to the nearest one decimal place. U.S. dollar amounts are truncated. 103 Financial / Data Section Management’s Discussion and Analysis As of fiscal 2021 (April 1, 2021 to March 31, 2022) the group has applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, March 31, 2020). Economic Conditions General Economic Overview During the fiscal year under review, the Japanese economy showed signs of a gradual recovery in corporate production activities and other areas with the gradual easing of the challenging conditions caused by COVID-19. Looking to the future, the economy is expected to pick up, sup- ported by effects from various government policies amid further normalization of economic and social activities and rigorous imple- mentation of infection prevention measures. However, monetary tightening is underway worldwide, and downside risks to the econ- omy due to fluctuations in financial and capital markets, rising raw material prices, supply-side constraints, and other factors require close monitoring. While it is assumed that the pandemic will continue to affect the group’s performance, a gradual recovery is expected in air transport traffic demand amid some movement toward easing restrictions on travel and entry. Fuel Price Trends While energy demand grew alongside a recovery in the global economy as it moved toward the post-COVID-19 era, oil-producing countries, primarily OPEC Plus, showed reluctance to increase pro- duction on a large scale. This raised concerns about strained supply and demand, and Dubai crude oil prices continued to rise throughout the fiscal year. In the third quarter, prices temporarily declined due to the release of U.S. strategic oil reserves and concerns about an eco- nomic slowdown caused by the spread of the Omicron variant. However, toward the end of the fiscal year, market prices rose once again due to increased supply concerns caused by the deteriorating situation in Ukraine, resulting in an average price of $78.2 per barrel for the fiscal year under review and $106.0 per barrel on March 31, 2022. The market price of Singapore kerosene tracked the price of crude oil. The average price for the fiscal year was $85.1 per barrel, ending at $127.7 per barrel on March 31, 2022. Foreign Exchange Market The U.S. dollar-yen exchange rate for fiscal 2021 showed a continued weakening of the yen throughout the fiscal year as the U.S. steadily raised interest rates to normalize its monetary policy, while large-scale monetary easing in Japan was maintained and the interest rate dif- ferential between the U.S. and Japan widened. The Japanese yen averaged ¥112.38 per U.S. dollar for fiscal 2021, ending the year at ¥121.70 per U.S. dollar on March 31, 2022. Air Transport Traffic Trends International Air Transport Association (IATA) member airlines reported 540 million passengers on scheduled international flights for in 2021 (14.4% increase year on year). Passengers on scheduled domestic flights numbered 1.76 billion (33.0% increase). At the same time, scheduled global air cargo volume increased 15.5%. (Source: IATA Global Outlook for Air Transport, 2022) In Japan, passengers on trunk routes* increased 47.0% year on year to 22.06 million. The number of passengers on local routes* increased 47.3% to 27.64 million. In total, passengers on scheduled domestic flights increased 47.2% to 49.69 million. Cargo volume increased 12.1% to 0.47 million tons. The number of passengers carried by Japanese airlines on international flights increased 120.6% to 1.76 million, while the volume of international cargo handled by Japanese airlines increased 29.8% to 1.76 million tons. (Source: Ministry of Land, Infrastructure, Transport and Tourism Air Transportation Statistics) * Trunk routes refer to routes connecting Sapporo (New Chitose), Tokyo (Haneda), Tokyo (Narita), Osaka (Itami), Osaka (Kansai), Fukuoka, and Okinawa (Naha) airports with one another. Local routes refer to all other routes. Monthly Prices for Dubai Crude Oil and Singapore Kerosene (U.S. dollars per barrel) 150 100 50 0 20/4 5 6 7 8 9 10 11 12 21/1 2 3 4 5 6 7 8 9 10 11 12 22/1 2 3 (Year/ Month) Dubai Crude Oil Singapore Kerosene Source: Bloomberg Monthly Yen-Dollar Exchange Rate (Yen/U.S. dollars) 120 115 110 105 100 20/4 5 6 7 8 9 10 11 12 21/1 2 3 4 5 6 7 8 9 10 11 12 22/1 2 3 (Year/ Month) Source: Bloomberg Global Air Transportation Passenger Volume by Region Performance for Fiscal 2021 Overview of the ANA Group The ANA Group (“the group”), led by holding company ANA HOLDINGS INC., consists of 134 subsidiaries (including ALL NIPPON AIRWAYS CO., LTD.) and 41 affiliates. A total of 55 companies are treated as consolidated subsidiaries, with another 14 treated as equity-method subsidiaries and affiliates. Group employees num- bered 42,196 individuals, a decrease of 4,384 compared to the previous fiscal year-end. Despite a still-challenging situation for the airline industry, demand is on a recovery track, especially for domestic flights, and there are signs of recovery in demand for international flights as entry restric- tions are gradually eased. So too did the group’s operating revenues increase over the previous fiscal year, when impact was significant from the COVID-19 pandemic, due to a gradual recovery in the movement of people. In terms of costs, while the scope of flight operations was greatly expanded from the previous fiscal year, operating expenses were held at the same level thanks to ongoing rigorous cost management. However, due to the continuing impact of the pandemic, losses were recorded at each profit stage. In terms of financial position, in addition to recording a net loss, retained earnings decreased due to the application of the Accounting Standard for Revenue Recognition, etc. In addition, we raised ¥170.0 billion by issuing convertible bonds with stock acquisition rights and straight bonds for future capital expenditures. Consolidated Operating Revenues, Operating Expenses, and Operating (Loss) Income In fiscal 2021, consolidated operating revenues amounted to ¥1,020.3 billion, a ¥291.6 billion (40.0%) increase over the previous fiscal year, when impact was significant from the COVID-19 pandemic. This increase came as the company took full advantage of passenger demand recovering in stages and steady cargo demand. We succeeded in making cost reductions of approximately ¥325.0 billion (including subsidies for employment adjustment) through our own efforts in rigorous cost management. However, operating loss was ¥173.1 billion (versus an operating loss of ¥464.7 billion in the previous fiscal year), mainly due to a delayed recovery in passenger demand amid the COVID-19 pandemic. Review by Segment The Group operates four reportable segments: Air Transportation, Airline Related, Travel Services, and Trade and Retail. Segment Information Operating Revenues Operating (Loss) Income EBITDA (¥ Millions) (Fiscal Year) 2021 2020 Change 2021 2020 Change 2021 2020 Change Air Transportation ¥ 885,096 ¥ 604,014 ¥281,082 ¥(162,932) ¥(447,894) ¥284,962 ¥(22,379) ¥(278,942) ¥256,563 Airline Related Travel Services Trade and Retail Subtotal Others 206,806 222,139 (15,333) 46,282 81,694 45,050 79,958 1,232 1,736 (660) (2,105) 549 3,691 (5,084) (4,282) (4,351) 2,979 4,831 4,390 (1,971) 1,642 8,764 (4,568) (2,915) (4,374) 2,597 4,557 1,219,878 951,161 268,717 (165,148) (453,569) 288,421 (18,318) (277,661) 259,343 38,130 36,643 1,487 1,388 (9,367) (34) (11,171) 1,422 1,804 1,886 (9,367) 410 (11,171) 1,476 1,804 RPK (Billions) Adjustments (237,684) (259,121) 21,437 9,000 6,000 3,000 0 3,652 1,166 1,001 928 250 232 72 2015 2016 2017 2018 2019 2020 2021 3,000 2,000 1,000 0 (CY) Total (Left) (Right) Asia-Pacific Latin America Africa Source: International Air Transport Association (IATA), 2022 North America Europe Middle East Total (Consolidated) ¥1,020,324 ¥ 728,683 ¥291,641 ¥(173,127) ¥(464,774) ¥291,647 ¥(25,799) ¥(288,422) ¥262,623 Notes: 1. “Others” represents all operating segments that are not included in reportable segments, including facility management, business support, and other operations. 2. Adjustments of segment profit represent the elimination of intersegment transactions, group management expenses of ANA HOLDINGS INC., and other certain items. 3. Segment operating income is reconciled with operating income in the consolidated financial statements. 4. EBITDA = Operating income + Depreciation and amortization Air Transportation Business Air Transportation Business operating revenues amounted to ¥885.0 billion, a year-on-year increase of 46.5%. This was mainly due to increased passenger demand and record-high cargo revenues as we captured strong demand proactively, despite severe effects amid the COVID-19 pandemic. Our losses were improved versus the previous fiscal year due to steady implementation of Business Structure Reform and reductions in fixed costs such as depreciation and amor- tization, maintenance expenses, and personnel expenses. However, operating loss amounted to ¥162.9 billion (versus an operating loss of ¥447.8 billion in the previous fiscal year). Due to the deteriorating situation in Ukraine, the Haneda–London and Haneda–Paris routes were temporarily suspended from March 2022. However, the Haneda–Frankfurt and Narita–Brussels routes continued operation, circumventing Russian airspace. On the other hand, the impact of the situation on revenues was limited due to expanding flight operations in the International Cargo Business on U.S. routes, which have been performing well. 104 105 Financial / Data Section Management’s Discussion and Analysis Changes in Operating Income (Loss) (FY2021 vs FY2020) (¥ Billions) –447.8 Decrease in Expenses –3.8 Increase in Operating Income +284.9 Revenues from contracted maintenance and handling, Mileage and Card, etc. Sales commissions and promotion expenses, in-flight services, ground services ANA Cargo & Mail ANA Other Revenues –11.7 LCC +15.7 Sales- Linked –18.3 Fuel & Fuel Tax +84.2 Depreciation and amortization, maintenance, personnel, contracts, aircraft leasing fee excluding code-share, others –162.9 +6.3 –76.1 +174.9 ANA Domestic Passenger +76.7 Increase in Revenues +281.0 ANA International Passenger +25.4 FY2020 Operating Income (¥ Billions) Operating revenues Operating expenses Operating (loss) income 2021 885.0 1,048.0 (162.9) 2020 604.0 1,051.9 (447.8) Change YoY (%) +281.0 –3.8 +284.9 +46.5 –0.4 — Operation- Linked Other Expenses (Including impact of cost reduction measures) Landing and navigation fees, code-share costs, travel expenses for crew FY2021 Operating Income Results by business are as follows. ANA International Passenger Business Passenger demand remained significantly sluggish due to the resur- gent spread of COVID-19 and the outbreak of mutated strains. However, both passenger numbers and revenues outperformed the previous fiscal year amid newly recovering business demand, mainly for overseas assignments and citizens returning home, and newly recovering demand for connecting flights from Asia to North America following the relaxation of entry restrictions in various countries. In order to maximize revenues per flight, including cargo, we made efforts to dynamically adjust our route network and operate extra flights, such as transferring some North American routes to go to and from Narita Airport, rather than Haneda, starting in July. (Fiscal Year) ASK (Millions) RPK (Millions) Number of passengers (Thousands) Load factor (%) Passenger revenues (¥ Billions) Unit revenues (¥) Yield (¥) Unit price (¥) * Difference 2021 2020 YoY (%) 20,524 14,465 5,550 2,840 825 27.0 70.1 3.4 12.6 427 19.6 44.7 3.1 15.7 84,978 104,648 +41.9 +95.4 +93.2 +7.4* +56.8 +10.5 –19.7 –18.8 In terms of sales and services, we launched Face Express, a new boarding procedure using facial recognition technology, on some routes to and from Narita Airport in July. In addition, we have endeav- ored to improve convenience by introducing ANA Travel Ready, a service that allows passengers to pre-register and confirm their travel documents online for some routes departing from Japan from February 2022 to ensure smooth boarding. As a result, available seat-kilometers (ASK) and revenue passen- ger-kilometers (RPK) increased 41.9% and 95.4%, respectively, while load factor increased 7.4 points to 27.0%. Passenger numbers increased 93.2% to 0.82 million, while unit price decreased 18.8% to ¥84,978. Passenger revenues increased 56.8% to ¥70.1 billion. ANA International Passenger Business Results (¥ Billions) 750 500 250 0 18/4 2017 2018 2019 2020 2021 (Left) Passenger Revenues (Right) ASK RPK Yield 150 100 50 0 (FY) * Figures for ASK, RPK, and Yield are indexed using the figures for fiscal 2017 as 100. ANA Domestic Passenger Business Although demand was sluggish in the first half of the fiscal year due to repeated declarations of a state of emergency, demand began to recover in the third quarter after the declarations were lifted, and passenger numbers and revenues reached their highest levels on a quarterly basis amid the COVID-19 pandemic. Demand declined again with the spread of mutant strains in the fourth quarter and priority preventative measures applied to prevent the spread of COVID-19. However, demand began to recover strongly from mid- March 2022, when it was clear that the measures were to be lifted. As a result, both passenger numbers and revenues for the full year outperformed levels from the previous fiscal year, when impact was significant from the COVID-19 pandemic. In the route network, we adjusted the scale of flight operations in line with demand trends, and especially since October, we have proactively captured the gradual recovery in demand by dynamically operating extra flights, including during weekends, the year-end and New Year holidays, spring break periods, etc. In terms of sales and services, we introduced new Boeing 787-9 aircraft in December to improve comfort. This aircraft features new specifications for domestic flights, with all its seats upgraded to new models equipped with personal monitors. In addition, we strove to further stimulate demand by carrying out a boarding campaign and providing in-flight services tied to the animated TV series Demon Slayer: Kimetsu no Yaiba and by launching two specially designed aircraft featuring characters from the show. As a result, ASK and RPK increased 27.5% and 41.6%, respec- tively, while load factor increased 4.8 points to 47.8%. Passenger numbers increased 41.9% to 17.95 million, while unit price decreased 2.9% to ¥15,584. Passenger revenues increased 37.8% to ¥279.8 billion. ANA Domestic Passenger Business Results (¥ Billions) (Fiscal Year) ASK (Millions) RPK (Millions) 2021 2020 YoY (%) 34,288 26,896 +27.5 16,382 11,567 +41.6 Number of passengers (Thousands) 17,959 12,660 +41.9 Load factor (%) Passenger revenues (¥ Billions) Unit revenues (¥) Yield (¥) Unit price (¥) * Difference 47.8 279.8 8.2 17.1 43.0 +4.8* 203.1 +37.8 7.6 17.6 +8.1 –2.7 –2.9 15,584 16,043 ANA Cargo and Mail Business The International Cargo Business saw continued strong air cargo demand, especially for commercial products such as automobile- related components, semiconductors, and pharmaceuticals, mainly due to more active cargo demand thanks to economic recovery and a shift to air transportation in response to congestion in marine trans- portation. Against the backdrop of this strong demand, we launched Boeing 777F aircraft on the Narita–Los Angeles route in April, the Narita–Hong Kong and Narita–Taipei routes in October, and the Narita–Qingdao route in November. In addition to maximizing the use of cargo freighters, we actively captured cargo demand by dynami- cally operating cargo-only flights using passenger aircraft to expand capacity. As a result, international cargo volume for fiscal 2021 amounted to 0.976 million tons (up 49.1% year on year), while cargo revenues amounted to a record-high ¥328.7 billion (up 104.8%). Available ton-kilometers (ATK) increased 51.8% year on year and revenue ton-kilometers (RTK) increased 59.5%. 750 500 250 0 2017 2018 2019 2020 2021 (Left) Passenger Revenues (Right) ASK RPK Yield 150 100 50 0 (FY) * Figures for ASK, RPK, and Yield are indexed using the figures for fiscal 2017 as 100. The Domestic Cargo Business dynamically implemented measures to increase revenues, including operating extra flights, mainly on trunk routes like Haneda–Sapporo and Haneda–Okinawa and utiliz- ing wider-body aircraft, given strong growth in parcel transportation due to increased demand for e-commerce. As a result, ATK for the fiscal year rose 35.2% year on year while RTK increased 17.3%. Cargo volume increased 15.3% to 0.251 million tons, and cargo revenues increased 19.4% to ¥24.9 billion. Operating revenues for international and domestic mail business amounted to ¥5.4 billion and to ¥2.6 billion, year-on-year increases of 84.8% and 4.5%, respectively. As a result, the ANA Cargo and Mail Business recorded fiscal 2021 operating revenues of ¥361.7 billion, a year-on-year increase of 93.6%. 106 107 Financial / Data Section Management’s Discussion and Analysis ANA Cargo and Mail Business Results International Cargo Business Results (Fiscal Year) 2021 2020 YoY (%) Cargo and mail services revenues (¥ Billions) 361.7 186.8 +93.6 International cargo ATK (Millions) RTK (Millions) 6,966 4,588 +51.8 5,186 3,251 +59.5 Cargo volume (Thousand tons) 976 655 +49.1 Cargo revenues (¥ Billions) 328.7 160.5 +104.8 245 +37.4 18/4 Unit price (¥/kg) Mail revenues (¥ Billions) Domestic cargo ATK (Millions) RTK (Millions) Cargo volume (Thousand tons) 337 5.4 957 281 251 2.9 708 240 218 Cargo revenues (¥ Billions) 24.9 20.8 Unit price (¥/kg) Mail revenues (¥ Billions) 99 2.6 96 2.5 +84.8 +35.2 +17.3 +15.3 +19.4 +3.6 +4.5 LCC (Peach Aviation) On domestic routes, we launched the Kansai–Memanbetsu route in July and the Fukuoka–Ishigaki route in October, while assessing the recovery in demand following the lifting of emergency declarations and priority measures to prevent the spread of COVID-19. In August, we began code-sharing and mileage partnerships with ANA on Narita and Chubu routes, expanding options for ANA brand customers and improving convenience. In addition, from the winter schedule onward, we expanded our network by transferring some routes from ANA to Peach. In terms of sales and services, we sold Tabi Kuji on Peach flights and in dedicated vending machines, offering travelers a random destination. The Tabi Kuji comes with Peach points that can be used to purchase airline tickets to the designated destination, missions at the destination, etc. Through these offerings providing new travel experiences leaving our customers’ destinations to chance and other measures, we have strengthened our sales promotion measures for generating new travel demand. As a result, ASK and RPK increased 59.4% and 101.7%, respec- tively, while load factor increased 12.9 points to 61.6%. Passenger Others Other operating revenues in the Air Transportation Business amounted to ¥135.4 billion, an 8.0% decrease year on year. Results include revenues from mileage memberships, in-flight sales, con- tracted maintenance, etc. (¥ Billions) 360 1,600 1,200 240 800 120 400 0 0 2017 2013 2018 2014 2019 2015 2020 2016 2021 2017 (Left) International Cargo Revenues (Right) ATK RTK Unit Price * Figures for ATK, RTK, and Yield are indexed using the figures for fiscal 2017 as 100. 300 200 150 200 100 100 50 0 0 (FY) numbers increased 105.1% to 4.26 million, while unit price decreased 16.4% to ¥8,862. Operating revenues increased 71.3% to ¥37.8 billion. LCC Business Performance (Peach Aviation Limited) (Fiscal Year) ASK (Millions) RPK (Millions) Number of passengers (Thousands) Load factor (%) Passenger revenues (¥ Billions) Unit revenues (¥) Yield (¥) Unit price (¥) * Difference 2021 2020 YoY (%) 7,863 4,846 4,267 61.6 37.8 4.8 7.8 4,932 +59.4 2,403 +101.7 2,080 +105.1 48.7 22.0 4.5 9.2 +12.9* +71.3 +7.5 –15.0 –16.4 8,862 10,606 New initiatives to increase revenues amid the pandemic included holding in-flight weddings by renting out parked international aircraft. We also utilized ANA Blue Base, the ANA Group comprehensive training center, to offer tours to experience the jobs of pilot, mainte- nance crew, and cabin attendant, as well as to offer facility tours. Operating Expenses Air Transportation Business operating expenses decreased ¥3.8 billion year on year to ¥1,048.0 billion. Specific expense amounts and explanations of year-on-year changes are described below. Breakdown of Operating Revenues and Expenses (¥ Millions) (Fiscal Year) 2021 2020 Change Segment operating revenues ¥ 885,096 ¥ 604,014 ¥281,082 International Passenger 70,151 44,726 25,425 Cargo Mail 328,750 160,503 168,247 5,448 2,948 2,500 Domestic Passenger 279,877 203,119 76,758 Cargo Mail LCC revenues Other revenues Segment operating expenses 24,932 20,881 2,666 2,550 4,051 116 37,813 22,071 15,742 135,459 147,216 (11,757) 1,048,028 1,051,908 (3,880) Fuel and fuel tax 193,966 109,670 84,296 Landing and navigation fees 42,981 45,847 Aircraft leasing fees 113,054 107,592 (2,866) 5,462 Depreciation and amortization 140,553 168,952 (28,399) Aircraft maintenance 96,181 109,467 (13,286) Personnel 158,505 163,776 (5,271) Sales commissions and promotion Contracts Others Segment operating (loss) income 27,618 47,289 (19,671) 168,836 182,869 106,334 116,446 (14,033) (10,112) ¥ (162,932) ¥ (447,894) ¥284,962Fuel and fuel tax expenses amounted to ¥193.9 billion, a ¥84.2 billion (76.9%) increase year on year. This expense accounted for 18.5% of Air Transportation Business operating expenses, compared with 10.4% in the previous fiscal year. This ¥84.2 billion increase was mainly due to an increase in ANA unit price factors (including hedging effectiveness) of approximately ¥51.0 billion, and increases in consumption volume factors of approximately ¥27.5 billion for ANA and approximately ¥6.0 billion for the LCC. During fiscal 2021, we engaged in the same measures related to fuel tax reduction as we followed in the previous fiscal year. Domestic and international passenger flights increased 31.0% and 32.2%, respectively (excluding Peach Aviation flights). Freighter flights increased 24.7%. Landing and navigation fees amounted to ¥42.9 billion, down ¥2.8 billion (6.3%) year on year due to measures to reduce landing fees and other costs, despite the increased number of flights. Aircraft leasing fees increased ¥5.4 billion (5.1%) to ¥113.0 billion, mainly due to increases in domestic code-share flights operated by other airlines along with a gradual recovery in passenger demand. Depreciation and amortization expenses decreased ¥28.3 billion (16.8%) year on year to ¥140.5 billion. This was due to the effects of early retirement of aircraft implemented in the previous fiscal year as part of Business Structure Reform. Aircraft maintenance expenses decreased ¥13.2 billion (12.1%) to ¥96.1 billion. This was mainly due to a decrease in maintenance frequency linked to early retirement of aircraft implemented in the previous fiscal year. Personnel expenses decreased ¥5.2 billion (3.2%) year on year to ¥158.5 billion, mainly due to controlled salaries and bonuses. Sales commissions and promotion expenses decreased ¥19.6 billion (41.6%) year on year to ¥27.6 billion due to the application of the Accounting Standard for Revenue Recognition, etc. Contract expenses decreased ¥14.0 billion (7.7%) year on year to ¥168.8 billion. Ground handling contracts and other contracted operations were lower than the previous fiscal year due to the impact of COVID-19. Other expenses decreased ¥10.1 billion (8.7%) year on year to ¥106.3 billion. This was mainly due to limiting advertising and other expenses. 108 109 Financial / Data Section Management’s Discussion and Analysis Airline Related In the sale of in-flight meals online, which we began in the previous fiscal year, we expanded the product lineup in November and contin- ued efforts to increase sales, including newly launching sales of in- flight meals for ANA’s international business class flights. However, operating revenues declined from the previous fiscal year due to a decrease in the volume of system development work handled as a result of investment limitations within the Group. As a result, fiscal 2021 operating revenues amounted to ¥206.8 billion, a ¥15.3 billion (6.9%) decrease year on year. Operating loss amounted to ¥0.6 billion (versus operating income of ¥3.6 billion in the previous fiscal year). Trade and Retail Despite reductions in revenue due to application of the Accounting Standard for Revenue Recognition, etc. from the fiscal year under review, revenue increased at ANA FESTA airport shops in conjunction with a gradual recovery in passenger demand, and transaction volume in the electronics business increased due to strong demand in the semiconductor market. As a result, Trade and Retail recorded operating revenues of ¥81.6 billion, up ¥1.7 billion (2.2%) year on year. Operating income amounted to ¥0.5 billion (versus an operating loss of ¥4.2 billion in the previous fiscal year). Performance in the Trade and Retail Segment Performance in the Airline Related Segment (¥ Millions) (¥ Millions) (Fiscal Year) 2021 2020 Change (Fiscal Year) 2021 2020 Change Segment operating revenues ¥81,694 ¥79,958 ¥ 1,736 Segment operating revenues ¥206,806 ¥222,139 ¥(15,333) Segment operating expenses 207,466 218,448 (10,982) Segment operating (loss) income ¥ (660) ¥ 3,691 ¥ (4,351) Segment operating expenses 81,145 84,240 (3,095) Segment operating income (loss) ¥ 549 ¥ (4,282) ¥ 4,831 Others Although transaction volume declined in the building and facility maintenance and management business due to impact from COVID- 19, transaction volume increased in the real estate business, includ- ing housing development and property management. As a result, the Others business recorded operating revenues of ¥38.1 billion, a ¥1.4 billion (4.1%) increase year on year. Operating income amounted to ¥1.3 billion (versus operating loss of ¥0.0 billion in the previous fiscal year). Performance in the Others Segment (Fiscal Year) 2021 2020 Change Segment operating revenues ¥38,130 ¥36,643 ¥1,487 Segment operating expenses 36,742 36,677 65 Segment operating income (loss) ¥ 1,388 ¥ (34) ¥1,422 (¥ Millions) Travel Services In addition to the cancellation of all overseas tours organized by the group, domestic travel volume declined versus the previous fiscal year, when the Go To Travel Campaign had a positive effect. However, contract revenues increased due to the transfer of digital marketing and other functions from within the group. As a result of the above, fiscal 2021 Travel Services operating revenues amounted to ¥46.2 billion, a ¥1.2 billion (2.7%) increase year on year. Operating loss amounted to ¥2.1 billion (versus operat- ing loss of ¥5.0 billion in the previous fiscal year). In April, to strengthen sales in the digital domain, we transferred our Travel Services business to ANA X Inc., which handles the platform business utilizing customer data, and established ANA Akindo Co., Ltd., a regional revitalization company. We will promote efforts to create a world in which people live in a mileage-based ecosystem, including the launch of ANA Pocket, a mobile app service that allows users to earn points from travel not only by air but also by foot, train, or other means. These points can be converted into miles or other coupons. Performance in the Travel Services Segment (¥ Millions) (Fiscal Year) 2021 2020 Change Segment operating revenues ¥46,282 ¥45,050 ¥ 1,232 Domestic package products 26,243 38,530 (12,287) International package products 171 492 (321) Other revenues 19,868 6,028 13,840 Segment operating expenses 48,387 50,134 (1,747) Segment operating (loss) income ¥ (2,105) ¥ (5,084) ¥ 2,979 Cash Flows Basic Approach The ANA Group’s fundamental approach to cash management is to conduct continuous investments strategically to strengthen competi- tiveness over the medium and long term, while maintaining financial soundness. We secure funds for working capital and capital expenditures (mainly aircraft) through self-financing, bank loans, or through the issuance of bonds. Our basic policy is to secure stable sources of liquidity and funds necessary for business operations. As of March 31, 2022, we have secured commitment line agreements totaling ¥148.0 billion with several financial institutions. The group has access to the Japan Bank for International Cooperation (JBIC)’s guarantee system for investments in aircraft, our primary assets. Overview of Fiscal 2021 Free cash flow resulted in proceeds of ¥153.6 billion (sum of cash flows from operating activities and investing activities). Net cash proceeds from financing activities totaled ¥93.6 billion. As a result, cash and cash equivalents increased ¥250.7 billion from the begin- ning of the fiscal year, amounting to ¥621.0 billion at the end of the fiscal year. Cash Flows from Operating Activities After adjusting the ¥175.3 billion in loss before income taxes for depreciation and amortization, notes and accounts payable, notes and accounts receivable, and other non-cash items, net cash used in operating activities amounted to ¥76.4 billion, an improvement of ¥194.0 billion versus the previous fiscal year. Non-Operating Income / Expenses, Special Income / Expenses Fiscal 2021 non-operating and special income and expenses amounted to a loss of ¥2.2 billion. Depreciation and amortization expenses on inactive aircraft was transferred to non-operating expenses, which resulted in the recording of grounded aircraft expenses. Non-Operating (Loss) Income / Expenses (Fiscal Year) Interest income Dividend income Foreign exchange gain, net Gain on sales of assets Gain on donation of non-current assets (¥ Millions) 2021 2020 Change ¥ 297 ¥ 663 ¥ (366) 988 2,540 4,256 1,446 4,143 3,422 (458) (1,603) 834 653 2,405 (1,752) Subsidies for employment adjustment 23,955 43,470 (19,515) Interest expenses (25,343) (16,689) (8,654) Equity in losses of unconsolidated subsidiaries and affiliates Loss on sales of assets Loss on disposal of assets Commission fee Loss on valuation of derivatives (2,031) (3,630) 1,599 (677) (7,974) — — (2,825) (5,609) (7,742) (8,044) 2,148 (2,365) 7,742 8,044 Grounded aircraft expense (12,697) — (12,697) Gain on sales of investment securities 8,278 328 7,950 Compensation payments received — 1,770 (1,770) Gain on sales of property and equipment Loss on valuation of investment securities 20,032 2,834 17,198 (5,337) (8,384) 3,047 Impairment loss (9,357) (4,231) (5,126) Business restructuring expense — (86,350) 86,350 Loss on cancellation of contracts (4,055) — (4,055) Other, net Total 4,225 2,425 1,800 ¥ (2,247) ¥(80,598) ¥ 78,351 Net (Loss) Income Attributable to Owners of the Parent As a result, loss before income taxes amounted to ¥175.3 billion, a reduction of ¥369.9 billion versus the previous fiscal year. After income taxes, municipal taxes, business taxes, and other adjust- ments, net loss attributable to owners of the parent amounted to ¥143.6 billion, an improvement of ¥260.9 billion versus the previous fiscal year. Loss per share amounted to ¥305.37 (compared to loss of ¥1,082.04 in the previous fiscal year). Comprehensive loss amounted to ¥93.7 billion, an improvement of ¥259.4 billion compared to the previous fiscal year, mainly due to smaller net loss attributable to owners of the parent. 110 111 Financial / Data Section Management’s Discussion and Analysis Cash Flows from Investing Activities Net cash provided by investing activities totaled ¥230.0 billion, com- pared to an outflow of ¥595.7 billion in the previous fiscal year. Net cash used in investing activities amounted to ¥35.5 billion when excluding cash movements that resulted in net inflow of ¥265.5 billion related to the acquisition and sale of time deposits and nego- tiable deposits of more than three months. Free Cash Flow Net cash used in operating activities totaled ¥76.4 billion. Since net cash provided by investing activities was ¥230.0 billion, free cash flow for fiscal 2021 amounted to net inflow of ¥153.6 billion, com- pared to net expenditures of ¥866.2 billion for fiscal 2020. Substantial free cash flow amounted to an outflow of ¥111.9 billion, an improve- ment of ¥261.5 billion year on year, when excluding cash movements associated with the acquisition and sale of time deposits and nego- tiable deposits of more than three months. Cash Flows from Financing Activities Net cash provided by financing activities totaled ¥93.6 billion. This result was mainly due to the procurement of funds through the issu- ance of convertible bonds, despite a decrease of ¥1,004.5 billion compared to the previous fiscal year, when we procured funds through borrowings, public offerings, and third-party allotments. Capital Expenditures and Aircraft Procurement Capital Expenditures From fiscal 2020, the ANA Group has been temporarily restraining the scale of investment, particularly in aircraft, and reviews the timing of investment as appropriate. Capital expenditures for fiscal 2021 amounted to ¥133.3 billion, a decrease of 14.9% year on year. By segment, Air Transportation Business capital expenditures decreased 13.7% year on year to ¥130.5 billion. Airline Related Business expenditures decreased 90.4% to ¥0.1 billion, while Travel Services Business expenditures increased 203.7% to ¥0.4 billion. Trade and Retail Business expenditures decreased 62.4% to ¥0.4 billion, and Others decreased 59.4% to ¥0.3 billion. Capital Expenditures* / Depreciation and Amortization 375.8 351.3 304.7 150.4 159.5 175.7 176.3 156.7 157.5 133.3 (¥ Billions) 400 300 200 100 0 18/4 2017 2018 2019 2020 2021 (FY) Capital Expenditures Depreciation and Amortization * Capital expenditures contains only fixed assets. Fundamental Approach to Aircraft Procurement Aircraft are major investments used over the long term (10-plus years). Decisions regarding the selection of aircraft types suited to routes and networks and the pursuit of the best fleet composition are among the most important issues for airline management. The ANA Group fleet strategy is based on three basic policies: (1) Strengthening cost competitiveness by introducing fuel-efficient aircraft, (2) Optimizing supply to demand by increasing the ratios of narrow- and medium-body aircraft; and (3) Enhancing productivity by integrating aircraft types. Fundamentally, the group purchases and owns strategic aircraft we intend to use over the medium to long term. We employ operat- ing leases to procure aircraft for use over the short term or for capac- ity adjustment. The group may also utilize sale-leaseback transactions as a means to diversify corporate financing methods. In these and other ways, the group selects the most economical aircraft procurement method. Aircraft Procured in Fiscal 2021 Based on our fleet strategy, total number of aircraft was 276 as of the end of fiscal 2021, a decrease of 17 compared to the end of the previous fiscal year. During the fiscal year, the ANA Group added 14 new aircraft. These additional aircraft included three Boeing 787-9s, one Airbus A380, five Airbus A321-200neos, four Airbus A320-200neos, and one Airbus A321-200neoLR. At the same time, we sold or returned from lease a total of 31 aircraft, consisting of ten Boeing 777-300s, four Boeing 777-200s, three Boeing 767-300s, five Boeing 737- 700s, and nine Airbus A320-200s. The table below shows changes in the number of aircraft. Changes in the Number of Aircraft in Fiscal 2021 ( ) changes Aircraft Number of Aircraft Owned Leased Airbus A380 Boeing 777-300 Boeing 777-200 Boeing 777F Boeing 787-10 Boeing 787-9 Boeing 787-8 Boeing 767-300 Boeing 767-300F (Freighter) Airbus A321-200neoLR Airbus A321-200neo Airbus A321-200 Airbus A320-200neo Airbus A320-200 Boeing 737-800 Boeing 737-700 De Havilland Canada DASH 8-400 Total (+1) (–10) (–4) (+3) (–3) (+1) (+5) (+4) (–9) (–5) 3 20 10 2 2 39 36 18 9 1 22 4 18 29 39 0 24 (+1) (–10) (–2) (+3) (–3) (–5) 3 11 8 2 2 33 31 18 6 0 0 0 11 0 24 0 24 (–2) (+1) (+5) (+4) (–9) 0 9 2 0 0 6 5 0 3 1 22 4 7 29 15 0 0 276 (–17) 173 (–16) 103 (–1) Figures for Airbus A320-200neoLRs, Airbus A320-200neos, and Airbus A320-200s included 37 aircraft (all leased) operated by Peach Aviation Limited. Separate from the figures above, as of March 31, 2022, 19 aircraft were leased outside the group (17 as of March 31, 2021). Aircraft Procurement Plan for Fiscal 2022 We plan to add a total of 18 aircraft during fiscal 2022. These addi- tional aircraft consist of five Boeing 787-10s, five Boeing 787-9s, two Airbus A321-200neoLRs, and six Airbus A320-200neos. Meanwhile, the group plans to retire eight aircraft, consisting of two Boeing 777-300s, three Boeing 767-300s, and three Airbus A320-200s. 112 113 Financial / Data Section Management’s Discussion and Analysis Financial Position Assets Total assets as of March 31, 2022 amounted to ¥3,218.4 billion, an increase of ¥10.5 billion compared to March 31, 2021. Total current assets amounted to ¥1,293.9 billion, up ¥67.6 billion from the end of the previous fiscal year due to increases in operating accounts receivable and others. Cash and deposits amounted to ¥452.6 billion, a decrease of ¥12.0 billion compared to the end of the previous fiscal year. Marketable securities decreased ¥2.6 billion to ¥498.3 billion. As a result, liquidity on hand amounted to ¥950.9 billion, down ¥14.7 billion year on year. Total non-current assets at the end of the fiscal year stood at ¥1,922.8 billion, down ¥56.6 billion from one year earlier. This was mainly due to a reduction in aircraft as a result of sale and recording of impairment losses. Liabilities Total liabilities as of March 31, 2022 amounted to ¥2,415.0 billion, up ¥219.4 billion from one year earlier. Total current liabilities totaled ¥687.8 billion at the end of the fiscal year, an increase of ¥184.4 billion. This is mainly due to application of the Accounting Standard for Revenue Recognition, etc., and the recording of contract liabilities from the beginning of the fiscal year under review. Total long-term liabilities amounted to ¥1,727.1 billion, an increase of ¥34.9 billion. Interest-bearing debt, including finance lease obligations, increased ¥94.6 billion to ¥1,750.1 billion, mainly due to the issuance of euro- yen convertible bonds with stock acquisition rights. The debt/equity ratio amounted to 2.2 times, an increase of 0.6 points compared with the end of the previous fiscal year. Net debt/equity ratio on a net interest-bearing debt basis was 1.0 times. Given the current external environment, we intend to maintain the current level of cash on hand for the time being. However, we plan to reduce total assets over the medium term and shift to more efficient financial management. Interest-Bearing Debt / Debt/Equity Ratio* (¥ Billions) 2,000 1,500 1,000 500 0 18/4 (Times) 1,750.1 2.2 1.0 799.1 2.4 1.8 1.2 0.6 2017 2018 2019 2020 2021 0 (FYE) (Left) Interest-Bearing Debt Net Interest-Bearing Debt (Right) Debt / Equity Ratio Net Debt / Equity Ratio * Excluding off-balanced lease obligations Interest-Bearing Debt (¥ Millions) Bond Ratings Fuel and Exchange Rate Hedging (End of Fiscal Year) Short-term debt: 2021 2020 Change ¥ 236,902 ¥ 173,036 ¥ 63,866 Short-term loans 100,070 100,070 0 Current portion of long- term loans Current portion of bonds with stock acquisition rights 62,775 69,443 (6,668) 70,000 0 70,000 Finance lease obligations 4,057 3,523 534 Long-term debt*: ¥1,513,206 ¥1,482,416 ¥ 30,790 Bonds 185,000 165,000 20,000 Convertible bonds with stock acquisition rights 220,000 140,000 80,000 Long-term loans 1,102,218 1,168,252 (66,034) Finance lease obligations 5,988 9,164 (3,176) Total interest-bearing debt ¥1,750,108 ¥1,655,452 ¥ 94,656 * Excluding current portion of long-term loans and current portion of bonds Net Assets Net assets as of March 31, 2022 amounted to ¥803.4 billion, a decrease of ¥208.9 billion compared to the end of the previous fiscal year. Shareholders’ equity decreased by ¥258.3 billion from the end of the previous fiscal year to ¥702.3 billion. This was due to a decrease in retained earnings resulting from a net loss and the application of the Accounting Standard for Revenue Recognition, etc. Total accumulated other comprehensive income amounted to ¥94.8 billion, an increase of ¥48.3 billion compared to the end of the previous fiscal year. This was mainly due to an increase in deferred gain on derivatives under hedge accounting. As a result, total shareholders’ equity decreased ¥209.9 billion from the end of the previous fiscal year, amounting to ¥797.2 billion. Shareholders’ equity ratio decreased 6.6 points to 24.8%. Book value per share (BPS) at the end of the fiscal year was ¥1,695.06, compared to ¥2,141.49 as of the end of the previous fiscal year. The company has obtained credit ratings on its various long-term bonds from the Japan Credit Rating Agency, Ltd. (JCR) and Rating and Investment Information, Inc. (R&I). Bond ratings as of March 31, 2022 were as follows: Bond Ratings Issuer rating Outlook JCR A– Stable R&I BBB+ Stable Retirement Benefit Obligations The ANA Group has established a defined contribution pension plan and a defined benefit pension plan. The defined benefit plans consist of defined benefit corporate pension plan and lump-sum retirement benefit plans. Certain employees are entitled to additional benefits upon retirement. Certain consolidated subsidiaries adopting defined-benefit corpo- rate pension plans and lump-sum retirement benefit plans use a simplified method for calculating retirement benefit expenses and liabilities. Retirement Benefit Obligation and Related Expenses (¥ Millions) (Fiscal Year / End of Fiscal Year) 2021 2020 Retirement benefit obligation ¥(217,959) ¥(224,180) Plan assets at fair value 61,524 64,064 Unfunded retirement benefit obligation (156,435) (160,116) Liability for retirement benefits (157,395) (160,885) Asset for retirement benefits 960 769 Net liability arising from defined benefit obligation in the consolidated balance sheet (156,435) (160,116) Net periodic benefit costs 14,364 15,297 Main basis for actuarial calculations Discount rates 0.1–1.2% 0.1–1.2% Expected rates of return on plan assets 1.0–2.5% 1.0–2.5% Contribution to defined contribution pension plans ¥ 3,884 ¥ 4,467 The ANA Group pursues and conducts optimal hedge transactions that reduce the impact of volatility in fuel prices and foreign exchange rates to control the risk of fluctuations in earnings. The objective of this hedging is to both stabilize profitability and equalize expenses in response to rising fuel surcharges and foreign currency revenues associated with growth in ANA’s international business. The group conducts fuel hedging (for ANA) three years in advance of the applicable period after considering fuel surcharge revenues. The group hedges U.S. dollar payments for ANA HOLDINGS and ANA related to fuel expenses three years in advance and U.S. dollar payments associated with capital expenditures for aircraft and other items five years in advance of the payment periods. Based on a balance of foreign currency revenues, revenues linked to foreign exchange market fluctuations, and foreign currency expenses with respect to U.S. dollar payments, the group uses forward exchange agreements to hedge any portion of foreign currency expenses in excess of foreign currency revenues. Allocation of Profits Basic Policy on Allocation of Profits We recognize that shareholder returns are an important management priority for the group. The group strives to bolster shareholder returns while maintaining financial soundness. This goal will be accomplished as we secure the funds needed in light of earnings fluctuations and to conduct growth investments (aircraft, etc.) to support future business development. We examine the shareholder returns in terms of dividend levels and share buybacks on an ongoing basis, while considering the level for free cash flow. Our basic policy is to pay a year-end dividend of surplus once a year. Our General Meeting of Shareholders is the decision-making body for the distribution of surpluses. Dividends for Fiscal 2021 and Plans for Fiscal 2022 We deeply regret to announce that we will not be paying a dividend for the fiscal year under review due to the tremendous impact of COVID-19 on the group’s business performance. For the time being, our top priority will be to maintain and strengthen our financial base. However, we intend to continue implementing Business Structure Reform on a steady basis, striving to improve earnings and resume dividend payments as quickly as possible. 114 115 Financial / Data Section Operating Risks As a corporate group whose core business is air transportation, we consider safety to be our most important social mission. We con- sider damage or impediment to this mission to be the most impor- tant risk. These risks include the risk of infectious diseases, which continue to have a significant impact; the risk of climate change, for which urgent measures are needed worldwide; risks related to the international situation; which is increasingly affected by the global- ization of business, and risks related to investments required to strengthen our non-air businesses. The following is a summary of risks that the group believes may have a significant impact on investor decisions. The following matters are based on the group’s judgment as of the end of the period under review. As these statements include future projections, these matters may not conform to reality. In addition, other matters not mentioned below may affect the group. Further, forward-looking statements that follow are based on group judgments as of the end of the fiscal year under review. Important Factors The ANA Group has experienced the significant negative impact of COVID-19, resulting in declining operating revenues. Given these unprecedented circumstances, we have reduced personnel expenses, and depreciation and maintenance expenses through the early retirement of aircraft, wide-body aircraft, in the previous fiscal year. We have also carefully scrutinized and limited capital investment in aircraft and other equipment, revising the timing of implementation. During the consolidated fiscal year under review, we raised ¥170.0 billion through issues of convertible and straight bonds. We also refinanced ¥100.0 billion from private banks. These and other measures resulted in ¥950.9 billion in liquidity on hand (cash and deposits plus marketable securities) as of the end of the fiscal year. In the future, we will raise more funds as necessary to secure liquidity on hand for every group company. Accordingly, it is our judgment that there are no material uncertain- ties regarding the going concern assumption for the ANA Group. (1) Most Important Risk The most important risk to the ANA Group is the risk of damage or impairment to safety. Summary Safety is the foundation of our business and our promise to the public. In case of any event that damages or impedes safety, it will have a major negative impact on the group. In particular, any human casualties could shake the foundations of the group’s social credibil- ity and trust. In the event of an airline accident or other incident that results in personal or property damage, we may be held liable for compensation for such damages. If safety is impaired or compro- mised, the impact could be far-reaching, even leading to a decline in group revenues over the medium term as customers become hesitant to fly with the group or choose to fly with another airline. In the event that a manufacturing defect or other issue is discov- ered in an aircraft, we may be forced to suspend the operation of said aircraft as a precautionary measure to ensure safety. Taking such measures may reduce group revenues or damage competi- tiveness in the industry due to flight cancellations or reductions caused by a shortage of aircraft. Changes and Outlook We believe this risk continues to be the most important risk for the ANA Group. Response The ANA Group has an organization dedicated to the promotion of safety. This team conducts safety quality audits and has built a sustainable mechanism to ensure safety. Beyond reactive safety risk management, we engage in safety risk management that incorpo- rates preventive and predictive measures. We pursue further safety improvements through risk management focusing factors that include the Three Task Categories (First Time Task, Procedure Changes, and Task After Extended Time Gap) and fatigue risk management for flight crew and flight attendants. Further, we provide visibility to safety through safety performance indicators (SPI) and engage in numerous other means to improve safety further. At the same time, we conduct ongoing and recurring education and training for flight crew, flight attendants, and other employees involved directly in aircraft operations. We also provide constant safety awareness activities for all employees in the ANA Group. In these ways, and through the ANA Group Safety Education Center, we strive to foster and strengthen a corporate group culture committed to safety. We also work closely with aircraft manufactur- ers and other parties to exchange information and opinions that support safety and high-quality operations. (2) Major Risks 1. The ANA Group continues to experience the significant impact of infectious disease. Summary The negative impact of COVID-19 has yet to subside. If govern- ments or local authorities impose restrictions or bans on travel, or tighten immigration controls, passenger demand will decline sharply, which will have a significant impact on group revenues. In such an event, controlling Air Transportation Business expenditures will not be easy, since aircraft expenses, personnel expenses, and other fixed costs account for a large portion of the business. Even if official measures taken by governments and local authorities are lifted, the impact may be ongoing if customers continue to suspend their business trips and leisure travel. During the demand recovery phase, the group’s plans for business capacity could be affected by overseas contractors, etc., who have temporarily reduced the scale of their operations. These contractors, etc., may require time to restore their capacity to accept our business contracts. Changes and Outlook The recent outbreak of COVID-19 has once again highlighted the major nature of this risk. In general, climate change (global warming) is said to increase the risk of infectious disease. While scientific evidence has yet to be established, we believe this risk will be increasingly important to address in the future. Response The ANA Group secured passenger aircraft and freighters as resources allowing for a proactive response to the movement of goods, even when personal travel has declined. At the same time, we are able to serve personal travel to limited demand in the most appropriate approach through our three brands: ANA, Peach, and AirJapan. We are currently diversifying our business portfolio. We plan to strengthen our non-air businesses built on a growing platform business founded on the ANA Mileage Club, which has nearly 38 million members worldwide as of March 2022. 2. Addressing climate change issues is becoming even more important and urgent. Summary Aircraft operations emit CO2 and other greenhouse gases. Reducing these emissions is a pressing matter for the group. The ANA Group is working to achieve net-zero CO2 emissions by 2050. To this end, we aim to replace aircraft with more fuel-efficient models and utilize sustainable aviation fuel (SAF). SAF is jet fuel produced from sustainable sources that emit less CO2 during the entire process from raw material production and collection to combustion. At this point in time, there are no technical prospects indicating that SAF will be in sufficient supply on a stable basis at a reasonable price. If SAF is not in stable or sufficient supply, the group may be forced to purchase CO2 emission credits or allowances from other industries, which may increase operating expenses. If SAF prices remain high, the operating cost of aircraft may increase, affecting group profitability. High operating costs could also affect competi- tiveness against other modes of transportation, such as railway and ocean transportation, as we must pass on costs in the form of higher fares. In the event that group plans to reduce CO2 emissions do not progress as targeted, customers may choose other modes of transportation, such as rail, which emit relatively lower levels of CO2. If an adequate supply of SAF cannot be sourced in Japan, group aircraft may encounter restrictions or limitations in access among certain countries or regions that have adopted strict environmental standards. Changes and Outlook An awareness of climate change is spreading rapidly worldwide, and we believe addressing this risk has become an extremely high priority. We also believe that more stringent and sophisticated measures may be required to address this risk in the future. Response In addition to taking proactive measures, including replacing aircraft with newer, more fuel-efficient types, we will work with other com- panies in the industry and SAF manufacturers to establish a cross- sector cooperative relationship. In this way, we will strive to develop and secure SAF supply as we collaborate with other companies and industries to solve this issue. The ANA Group discloses information in line with the recommen- dations of the Task Force on Climate-related Financial Disclosures (TCFD) on our corporate website. 3. Increased risks due to instability in the international situation Summary The ANA Group has expanded our international business in search of further growth opportunities. However international affairs have become unstable due to U.S.–Chinese frictions, the Russia–Ukraine situation, and other factors. Uncertainties regarding future events are on the rise. International air transportation has grown against the backdrop of economic globalization. However, if this trend stag- nates or reverses due to conflicts among major powers, or if peace fails due to war or conflict, ANA Group revenues could be affected negatively due to slow demand for business travel or a decrease in demand for tourism. Instabilities in the international situation could affect not only our international business but also our domestic business, caused by lower inbound demand (foreign tourists visiting Japan), etc. In addition, instabilities could increase the cost of doing business, as aircraft may be rerouted, unable to fly over war or conflict zones. The impact of these costs could be far-reaching. Changes and Outlook The expansion and acceleration of economic globalization, which has progressed since the end of the Cold War, is now subject to uncertainties. We believe the need has increased to manage and address the international situation as a risk. Response In developing our international business, we focus not only on short-term profitability when building an airline network but also on the risks associated with the global situation. We will continue to focus on this risk in the future. The ANA Group will also take care that we do not rely overly on passenger acquisition in certain countries or regions overseas, but rather strive for a balanced approach. In the event that an emergency response is required to an escalation in the global situation, we will be flexible in altering flight plans and routes to mitigate the impact. 4. The impact of a system failure is significant. Summary The group seeks to systematize business operations to provide air transportation services of ever-higher quality and efficiency. The potential impact of system failures on our business continues to increase, regardless of whether the failure is caused by internal or external factors, such as a cyberattack. In the event of a systems failure related to aircraft operations, it may become difficult to operate aircraft. And in the event of a failure in peripheral systems such as reservations, payments settlements, and boarding manage- ment, it may become impossible to accept and settle reservations or manage boarding at airports. In effect, the group would not be able to provide air transportation services. Changes and Outlook We believe the risk of system failures increases with increases in systems sophistication, interconnectivity, and access. Further, we are seeing an increasing number and sophistication of cyberattacks in society in general. We believe there is a growing social demand to prevent and reduce this risk. 116 117 Financial / Data Section Operating Risks Response We established the Group IT Management Department as a special- ized organization with responsibility for systems operations and management for the ANA Group. This department is also respon- sible for preventing systems failures and to build a comprehensive and multifaceted operating system to reduce the impact of system failures and to restore systems as soon as possible. The group is also bolstering our response to intangible aspects through improved education and system failure-response training for our employees. 5. Dealing with the risk of information leakage is increas- ingly important. Summary The ANA Group retains a great deal of information, which includes the personal data of nearly 38 million ANA Mileage Club members worldwide as of March 2022. In the event of an unauthorized leakage of such information, the ANA Group may be sued for damages, ordered to pay fines and penalties by governments, and lose the trust of our customers and society, thereby experiencing competitive disadvantage. Changes and Outlook We believe the need to address this risk appropriately is only rising in light of heightened social awareness regarding the handling of information, based on increasingly strict laws and regulations. Response We engage in appropriate information management in accordance with the laws and regulations of each country. We also implement computer virus countermeasures, email security checks, monitoring for unauthorized operations, restrictions on employee access to information, and information management training for all employees. In addition, we take measures to prevent cyberattacks and informa- tion leaks, engaging in ongoing inspections of group systems to detect and respond to aging systems and vulnerabilities as early as possible. 6. Human rights risk involves expanding factors demanding greater attention. Summary Any violation of human rights will bring social criticism or boycotts, whether the violation occurs within our group or within the business chain related to our business, including contractors, suppliers, and business partners. Changes and Outlook As we respond to the shrinking labor force in Japan and expand our businesses overseas, our base of human resources becomes more diverse. In light of growing social and international awareness of human rights, we believe in the need to address this risk from multiple perspectives. Response The ANA Group conducts business operations in line with the Guiding Principles on Business and Human Rights endorsed by the United Nations Human Rights Council. We conduct internal human rights-related training and awareness activities, as well as periodic monitoring at management-level meetings. In addition, we strive to manage this risk appropriately through the direct confirmation and investigation of external parties as necessary. 7. The risk of severe natural disasters is increasing. Summary Air transportation has the advantage of being relatively more resilient to natural disasters among most transportation systems, as this means of travel connects points by air. Even if certain airports fail to function, alternative flights can be provided using nearby airports. However, the ANA Group business is based and concentrated in the Tokyo metropolitan area. Therefore, major restrictions or disrup- tions to flight operations could occur if the Haneda or Narita airports are impacted severely by a natural disaster. Changes and Outlook In general, climate change (global warming) is said to lead to more frequent and severe natural disasters. We believe this risk will be increasingly important to address in the future. Response We formulated a business continuity plan (BCP) and regularly review the plan to ensure we restore operational functions quickly and fulfill our mission as a public transportation service in the event of a large-scale natural disaster, such as an earthquake directly under the Tokyo metropolitan area. We have backup systems in place for the various core functions essential to our flight operations. These systems include satellite phones, emergency provisions, employee safety confirmation systems, etc. In addition, we conduct regular disaster drills in cooperation with related parties, including airport companies, etc. 8. The ANA Group business is affected significantly by market fluctuations, including foreign exchange rates, crude oil prices, and interest rates. Summary a. Foreign exchange rates Since the aircraft used by the group are manufactured by overseas manufacturers, a significant depreciation of the yen will increase the cost of aircraft procurement. Aircraft fuel, which accounts for a major portion of our operating expenses, relies on the import of crude oil, which is used as a raw material. Here as well, operating expenses will increase if the yen depreciates significantly. The yen depreciation boosts yen-equivalent revenues earned overseas by the ANA Group. However, the group has more foreign currency- denominated expenses than foreign currency-denominated reve- nues, and the effect will not offset the entire increase in expenses. The group also takes measures to mitigate the impact of exchange rate fluctuations through hedging transactions, etc. And while these measures may mitigate or equalize the impact, they do not completely eliminate the impact. Nor can these measures be expected to be effective in controlling costs in all cases. b. Crude oil prices The price of jet fuel is linked to the price of crude oil. A sharp rise in crude oil prices inevitably leads to an increase in aircraft fuel costs. In certain of our businesses, the ANA Group adopts measures that include assessing and collecting fuel surcharges based on fuel prices. However, these revenues do not always offset the entire increase in fuel costs. The group also takes measures to mitigate the impact of crude oil prices through hedging transactions, etc. And while these measures may mitigate or equalize the impact, they do not completely eliminate the impact. Nor can these measures be expected to be effective in controlling costs in all cases. c. Interest rates The ANA Group business operations leverage aircraft financing and other external funds. A significant rise in interest rates could affect the group in the form of increased financing costs. but also through our investment management committee, which oversees investments for the group. In this way, we ensure a hierarchical and multi-layered management system that incorpo- rates pre-investment evaluation and post-investment withdrawal standards. Changes and Outlook Although market fluctuations have always been a possibility, we believe the potential of this risk has increased in light of growing uncertainties regarding international and economic conditions. Response As described above, we take measures to control, mitigate, and equalize risks through the use of hedging transactions, etc. As a group, we strive to enhance resilience to market fluctuations. To this end, we engage in more fundamental measures that include increasing foreign currency-denominated revenues to build a revenue structure that is resilient to the effects of exchange rates, replacing our fleet with new aircraft having superior fuel efficiency, diversifying our business portfolio to develop businesses less susceptible to market fluctuations, and procuring funds under appropriate financial discipline. 9. Investments designed to strengthen competitiveness and achieve new growth also entail risks. Summary At present, the ANA Group is experiencing the severely negative impact of the COVID-19 pandemic. We are considering and execut- ing investments to overcome the pandemic, restore business stability, and achieve growth for the future. However, these invest- ments also entail risks. We make investments in our Air Transportation Business that include new aircraft to maintain and improve our competitiveness against other companies, as well as to reduce greenhouse gas emissions. However, potential risks include the possibility that these investments will not have the expected effect in the event that the shrinking market does not recover to expected levels in the wake of COVID-19, that unexpectedly large changes in social behavior patterns occur due to spread of various online technologies, or that unexpectedly large changes in globalization of economic activities arise due to international circumstance. In addition, we strive to increase the risk tolerance of the group through the consideration and execution of investments in related businesses that we expect to have synergies with the Air Transportation Business and similar businesses. These businesses may utilize expertise from the Air Transportation Business, namely, customer-related businesses (platform-type businesses), drone businesses, Mobility as a Service (MaaS) businesses, space-related businesses, etc. While we expect these investments to be highly impactful when they produce the expected results, these invest- ments may not produce the expected results in all cases. Changes and Outlook Given the current and severe impact of the pandemic, we believe that risk management related to investments has become even more important. 10. A declining population may cause existing markets to contract, or make it more difficult to secure a workforce. Summary The most significant business foundation of the ANA Group exists in Japan. But as Japan’s population continues to decline, the size of this market may contract in the future. Given the characteristics of air transportation, which is responsible for business and leisure travel demand, the population-related market size may be affected by changes in working-age populations, which decline at a faster rate than the general population. Population declines may also have an impact on the ability to secure the labor force necessary for business operations. In this event, unit labor costs may increase or business operations may be limited due to labor shortages. Changes and Outlook Although we do not expect a significant impact in the immediate future, we believe there is a high probability that this risk will materi- alize over the medium to long term. Response We take into account and reflect assumptions of social change (declining populations, etc.) when forming corporate strategies. We also strive to revitalize the market as a whole by utilizing our LCC brand. Over the medium to long term, we will continue to expand our international business, which addresses a market likely to continue growing in the future. To secure a sufficient workforce, we will improve our ability to compete in recruitment via proactive investment in people. These investments will include allocating and expanding education and training opportunities appropriately. To prepare for the decline in the working population, we will pursue mechanization, labor savings, and unattended operations, which we understand may not repre- sent a source of differentiation with other companies. 11. Expansion of high-speed rail networks, etc., may inten- sify competition between air and land transportation. Summary Further expansion of the high-speed rail network in Japan is sched- uled in the future, and competition with the shinkansen bullet train and other railways may become more intense. The extension of bullet train lines and the acceleration of existing lines may impact the group’s domestic operations. This impact could include a decline in market share or a drop in unit prices due to intensified price competition. Changes and Outlook We believe this risk is likely to emerge in the future. Response When considering and executing investments, we strive to manage risk appropriately, not only through discussions and deliberations at board of directors’ meetings and other management-level meetings, Response We take into account and reflect assumptions of changes in the competitive environment such as an extension of high-speed rail networks, etc., when forming corporate strategies. We also strive to revitalize the market as a whole by utilizing our LCC brand. Over the 118 119 Financial / Data Section Operating Risks medium to long term, we will continue to expand our international business, which addresses a market likely to continue growing in the future. (3) Other Risks a. Risks related to transportation and aviation policies Certain key airports, such as Haneda, have already reached a maximum number of slots for departures and arrivals. Given that the throughput capacity is essentially up to national policy, such airports may limit the future business development of the group. Further, future policies could result in the reduction or recovery of slots at these airports currently in use by our group. b. Risks related to taxation and taxes and public dues Our Air Transportation Business is subject to taxes and public dues that include airport landing fees, parking fees, and navigation and facility usage fees. These fees run in addition to fuel tax and other taxes. Any raises to existing taxes or new taxes and public dues could have a negative impact on the group. c. Risks related to economic fluctuations Medium- to long-distance air transportation is more susceptible to economic fluctuations than regular short-distance transportation. d. Risks related to profit structure, financial platform, and funds procurement The Air Transportation Business uses costly aircraft and incurs many expenses (fuel, maintenance, etc.) linked to flight operations, regardless of the volume of passengers and cargo carried. A significant decline in demand could cause a major reduction in profitability. In addition, the group has recorded deferred tax assets. However, these assets may be reversed in the event of a decrease in expected future taxable income. The ANA Group may procure funds necessary for capital invest- ment, etc., from financial institutions and the market. However, if the group is constrained in its ability to procure funds due to changes in creditworthiness or market turmoil, such events may have a nega- tive impact on the group. e. Risks related to business portfolio In addition to the Air Transportation Business, which accounts for a large percentage of group revenues and earnings, many of the group’s other businesses are related to air transportation, such as travel services and airline-related businesses. Any significant nega- tive impact on the Air Transportation Business could affect other businesses materially. f. Risks related to lawsuits Lawsuits filed in Japan or overseas related to group business activities could have a negative impact on the group. Joint Venture A joint business in the international airline industry between two or more airlines. Restrictions such as bilateral air agreements between countries and caps on foreign capital investments still exist in the international airline industry. Therefore, airlines form ATI-based joint ventures, instead of the commonly known methods used in other industries such as capital tie-ups and M&As, etc. By forming joint ventures, airlines in the same global alliance are able to offer travelers a broader, more flexible network along with less expensive fares, thus strengthening their compet- itiveness against other alliances (or joint ventures). Full Service Carrier (FSC) An airline company that serves a wide range of markets based on a route network that includes code-sharing connecting demand. FSCs offer multiple classes of seats and provide in-flight food and beverages that are included in advance in the fare paid. FSCs are also called network carriers or legacy carriers when compared with low cost carriers (LCCs). Low Cost Carrier (LCC) An airline that provides air transportation services at low fares based on a low-cost system that includes using a single type of aircraft, charging for in-flight services, and simplifying sales. Fundamentally, LCCs operate frequent short- and medium-haul point-to-point flights (flights between two locations). Maintenance, Repair, and Overhaul (MRO) Business A business that is contracted to provide aircraft maintenance services using its own maintenance crew and other personnel, along with dedicated facilities. Services include the maintenance, repair, and overhaul of aircraft and other equipment owned by airlines. Glossary Passenger Business Terms Available Seat-Kilometers (ASK) A unit of passenger transport capacity, analogous to “production capacity.” Total number of seats x Transport distance (kilometers). Revenue Passenger-Kilometers (RPK) Total distance flown by revenue-paying passen- gers aboard aircraft. Revenue-paying passengers x Transport distance (kilometers). Load Factor Indicates the seat occupancy ratio (status of seat sales) as the ratio of revenue passenger- kilometers to available seat-kilometers. Revenue passenger-kilometers / Available seat-kilometers. Yield Unit revenues per revenue passenger-kilometer. Revenues / Revenue passenger-kilometers. Unit Revenues Quantitatively measures revenue management performance by showing unit revenues per available seat-kilometer (Revenues / Available seat-kilometers). Calculated as yield (Revenues / Revenue passenger-kilometers) x load factor (Revenue passenger-kilometers / Available seat-kilometers). Unit Cost Indicates cost per unit in the airline industry. Calculated as cost per available seat-kilometer. Revenue Management This management technique maximizes revenues by enabling the best mix of revenue-paying passengers through yield management that involves optimum seat sales in terms of optimum timing and price based on network and fare strategy. Optimizing Supply to Demand Involves flexibly controlling production capacity (available seat-kilometers) according to demand trends in ways such as increasing or decreasing the frequencies on routes and adjusting aircraft size. VFR (Visiting Friends and Relatives) Refers to travel for the purpose of visiting friends and relatives. Cargo Business Terms Available Ton-Kilometers (ATK) A unit of cargo transport capacity expressed as “production capacity.” Total cargo capacity (tons) x Transport distance (kilometers). Revenue Ton-Kilometers (RTK) Total distance carried by each revenue-paying cargo aboard aircraft. Revenue-paying cargo (tons) x Transport distance (kilometers). Freighter Dedicated cargo aircraft. Seats are removed from the cabin space where passengers would normally sit, and the space is filled with containers or palletized cargo. Belly The space below the cabin on passenger aircraft that is used to transport cargo. Airline Industry and Company Terms IATA The International Air Transport Association. Founded in 1945 by airlines operating flights primarily on international routes, functions include managing arrival and departure slots at airports and settling receivables and payables among airline companies. Approximately 290 airlines are IATA members. ICAO The International Civil Aviation Organization. A specialized agency of the United Nations created in 1944 to promote the safe and orderly develop- ment of international civil aviation. More than 190 countries are ICAO members. Star Alliance Established in 1997, Star Alliance was the first and is the world’s largest airline alliance. ANA became a member in October 1999. As of July 2022, 26 airlines from around the world are members. Code-Sharing A system in which airline alliance partners allow each other to add their own flight numbers on other partners’ scheduled flights. The frequent result is that multiple companies sell seats on one flight. Also known as jointly operated flights. Antitrust Immunity (ATI) Granting of advance approval for immunity from competition laws when airlines operating international routes cooperate on planning routes, setting fares, conducting marketing activities, or other areas, so that the airlines are not in violation of the competition laws of such countries. In Japan, the United States, and South Korea, the relevant department of transportation grants ATI based on an application (in countries other than these three, it is common for a bureau such as a fair trade commission to be in charge), but in the European Union the business itself performs a self-assessment based on the law. ATI approval is generally based on the two conditions that the parties do not have the power to control the market and approval will increase user convenience. 120 121 Financial / Data Section Consolidated Financial Statements Consolidated Balance Sheet ANA HOLDINGS INC. and its consolidated subsidiaries As of March 31, 2022 As of March 31 ASSETS Current assets: Cash and deposits Marketable securities Notes and accounts receivable Accounts receivable from and advances to unconsolidated subsidiaries and affiliates Lease receivables and investments in leases Inventories Prepaid expenses and other Allowance for doubtful accounts Total current assets Property and equipment: Land Buildings and structures Aircraft Machinery and equipment Vehicles Furniture and fixtures Lease assets Construction in progress Total Accumulated depreciation Net property and equipment Investments and other assets: Investment securities Investments in and advances to unconsolidated subsidiaries and affiliates Lease and guaranty deposits Deferred tax assets Goodwill Intangible assets Other assets Total investments and other assets TOTAL Yen (Millions) 2022 2021 U.S. dollars (Thousands) 2022 ¥ 452,679 ¥ 464,739 $ 3,698,660 498,310 149,437 3,787 17,628 44,074 128,251 (245) 500,980 107,573 3,763 19,112 38,855 91,511 (231) 4,071,492 1,220,990 30,942 144,031 360,111 1,047,887 (2,001) 1,293,921 1,226,302 10,572,113 44,385 260,000 48,748 301,266 362,652 2,124,356 1,783,736 1,943,795 14,574,197 99,234 33,353 60,933 10,612 101,014 33,525 64,772 10,660 810,801 272,514 497,859 86,706 176,446 198,389 1,441,670 2,468,699 2,702,169 20,170,757 (1,118,362) (1,255,862) (9,137,690) 1,350,337 1,446,307 11,033,066 113,968 129,930 31,632 15,003 34,245 15,526 931,187 258,452 122,583 273,452 219,618 2,234,267 20,230 73,050 46,840 22,346 87,839 25,770 165,291 596,862 382,711 574,175 535,274 4,691,355 ¥3,218,433 ¥3,207,883 $26,296,535 As of March 31 LIABILITIES AND EQUITY Current liabilities: Short-term loans Current portion of long-term debt Accounts payable Accounts payable to unconsolidated subsidiaries and affiliates Advance ticket sales Contract liabilities Accrued expenses Income taxes payable Other current liabilities Total current liabilities Long-term liabilities: Long-term debt Liability for retirement benefits Deferred tax liabilities Asset retirement obligations Other long-term liabilities Total long-term liabilities Equity: Common stock: Authorized – 1,020,000,000 shares; Yen (Millions) 2022 2021 U.S. dollars (Thousands) 2022 ¥ 100,070 ¥ 100,070 $ 817,632 136,832 126,273 3,322 — 256,023 25,174 2,908 37,287 72,966 182,241 2,508 44,718 1,117,999 1,031,726 27,142 — — 2,091,862 39,286 10,696 50,920 205,686 23,760 304,657 687,889 503,405 5,620,467 1,513,206 1,482,416 12,363,804 157,395 160,885 1,286,011 1,498 1,550 53,480 222 1,153 47,482 12,239 12,664 436,963 1,727,129 1,692,158 14,111,683 Issued – 484,293,561 shares in 2022 and 484,293,561 shares in 2021 Capital surplus Retained earnings (Accumulated deficit) 467,601 407,328 (113,228) 467,601 407,329 145,101 Treasury stock – 13,956,694 shares in 2022 and 13,950,901 shares in 2021 (59,350) (59,335) Accumulated other comprehensive income: Unrealized gain on securities Deferred gain (loss) on derivatives under hedge accounting Foreign currency translation adjustments Defined retirement benefit plans Total Non-controlling interests Total equity TOTAL 3,820,581 3,328,115 (925,140) (484,925) 264,000 589,647 30,133 (108,407) 6,514,004 50,379 32,311 72,167 3,688 (13,268) 797,249 6,166 38,468 21,652 2,666 (16,249) 1,007,233 5,087 803,415 1,012,320 6,564,384 ¥3,218,433 ¥3,207,883 $26,296,535 122 123 Financial / Data Section Consolidated Statement of Comprehensive Income ANA HOLDINGS INC. and its consolidated subsidiaries Year Ended March 31, 2022 Year Ended March 31 Net loss Other comprehensive income (loss): Unrealized (loss) gain on securities Deferred gain on derivatives under hedge accounting Foreign currency translation adjustments Defined retirement benefit plans Share of other comprehensive income in affiliates Total other comprehensive income Comprehensive loss Total comprehensive (loss) income attributable to: Owners of the parent Non-controlling interests Yen (Millions) 2022 2021 ¥(142,239) ¥(407,690) (6,104) 50,438 1,142 2,954 45 48,475 ¥ (93,764) 16,253 36,242 31 1,606 323 54,455 ¥(353,235) U.S. dollars (Thousands) 2022 $(1,162,178) (49,873) 412,108 9,330 24,135 367 396,069 $ (766,108) ¥ (95,267) 1,503 ¥(350,452) (2,783) $ (778,388) 12,280 Consolidated Statement of Operations ANA HOLDINGS INC. and its consolidated subsidiaries Year Ended March 31, 2022 Year Ended March 31 Operating revenues Cost of sales Gross loss Selling, general and administrative expenses Operating loss Other income (expenses): Interest income Dividend income Foreign exchange gain, net Gain on sales of assets Gain on donation of non-current assets Subsidies for employment adjustment Interest expenses Equity in losses of unconsolidated subsidiaries and affiliates Loss on sales of assets Loss on disposal of assets Commission fee Loss on valuation of derivatives Grounded aircraft expense Gain on sales of property and equipment Impairment loss Business restructuring expense Loss on cancellation of contracts Other, net Other income (expenses), net Loss before income taxes Income taxes: Current Deferred Total income taxes Net loss Net income (loss) attributable to non-controlling interests Net loss attributable to owners of the parent Year Ended March 31 Per share of common stock: Basic net loss Cash dividends applicable to the year Yen (Millions) 2022 ¥1,020,324 1,049,414 (29,090) 144,037 (173,127) 2021 ¥ 728,683 1,000,000 (271,317) 193,457 (464,774) 297 988 2,540 4,256 653 23,955 (25,343) (2,031) (677) (7,974) – – (12,697) 20,032 (9,357) – (4,055) 7,166 (2,247) (175,374) 663 1,446 4,143 3,422 2,405 43,470 (16,689) (3,630) (2,825) (5,609) (7,742) (8,044) – 2,834 (4,231) (86,350) – (3,861) (80,598) (545,372) U.S. dollars (Thousands) 2022 $ 8,336,661 8,574,344 (237,682) 1,176,869 (1,414,551) 2,426 8,072 20,753 34,774 5,335 195,726 (207,067) (16,594) (5,531) (65,152) – – (103,742) 163,673 (76,452) – (33,131) 58,550 (18,359) (1,432,911) 2,682 (35,817) (33,135) (142,239) 1,389 ¥ (143,628) 3,990 (141,672) (137,682) (407,690) (3,066) ¥ (404,624) 21,913 (292,646) (270,732) (1,162,178) 11,348 $ (1,173,527) Yen 2022 2021 U.S. dollars 2022 ¥(305.37) – ¥(1,082.04) – $(2.50) – Net income per share assuming full dilution is not disclosed as the Company had no potentially dilutive shares outstanding during the years ended March 31, 2022 and 2021. 124 125 Financial / Data Section Consolidated Statement of Changes in Equity ANA HOLDINGS INC. and its consolidated subsidiaries Year Ended March 31, 2022 Consolidated Statement of Cash Flows ANA HOLDINGS INC. and its consolidated subsidiaries Year Ended March 31, 2022 Total equity ¥1,068,870 297,624 (404,624) (13) 112 48 (660) (454) Yen (Millions) Accumulated other comprehensive income Retained earnings (Accumulated deficit) Treasury stock Total shareholders’ equity Unrealized gain on securities Deferred gain (loss) on derivatives under hedge accounting Foreign currency translation adjustments Defined retirement benefit plans Non- controlling interests Total ¥22,120 ¥(14,595) ¥2,668 ¥(17,828) ¥ (7,635) ¥ 7,842 Thousands Number of shares of common stock outstanding 334,519 135,795 (5) 32 Common stock ¥318,789 148,812 Capital surplus ¥258,470 148,812 (1) 48 Balance at March 31, 2020 Issuance of new shares N et loss attributable to owners of the parent Purchase of treasury stock Disposal of treasury stock C hange in the parent’s ownership interest due to transactions with non-controlling interests Changes in scope of consolidation Changes in scope of equity method Net changes in the year Total changes during the fiscal year Balance at March 31, 2021 470,342 C umulative effects of changes in ¥ 550,839 ¥(59,435) (404,624) (13) 113 (660) (454) ¥1,068,663 297,624 (404,624) (13) 112 48 (660) (454) – 148,812 467,601 148,859 407,329 (405,738) 100 (107,967) 145,101 (59,335) 960,696 16,348 16,348 38,468 36,247 36,247 21,652 (2) (2) 2,666 1,579 1,579 (16,249) 54,172 54,172 46,537 (2,755) (2,755) 5,087 51,417 (56,550) 1,012,320 accounting policies Restated balance Issuance of new shares N et loss attributable to owners of the parent Purchase of treasury stock Disposal of treasury stock C hange in the parent’s ownership interest due to transactions with non-controlling interests Changes in scope of consolidation Changes in scope of equity method Net changes in the year Total changes during the fiscal year 467,601 407,329 (114,656) 30,445 (59,335) (114,656) 846,040 38,468 21,652 2,666 (16,249) 46,537 5,087 (6) (143,628) (1) (143,628) (16) 0 (16) 1 (45) (45) 0 (1) (143,673) (15) (143,689) (6,157) (6,157) 50,515 50,515 1,022 1,022 2,981 2,981 48,361 48,361 1,079 1,079 (114,656) 897,664 (143,628) (16) 0 (45) 49,440 (94,249) Balance at March 31, 2022 470,336 ¥467,601 ¥407,328 ¥(113,228) ¥(59,350) ¥ 702,351 ¥32,311 ¥ 72,167 ¥3,688 ¥(13,268) ¥94,898 ¥6,166 ¥ 803,415 Thousands Number of shares of common stock outstanding Common stock Capital surplus Retained earnings (Accumulated deficit) Treasury stock Total shareholders’ equity Unrealized gain on securities Deferred gain (loss) on derivatives under hedge accounting Foreign currency translation adjustments Defined retirement benefit plans Non- controlling interests Total Total equity U.S. dollars (Thousands) Accumulated other comprehensive income 470,342 $3,820,581 $3,328,123 $ 1,185,562 $(484,802) $ 7,849,464 $314,306 $176,909 $21,782 $(132,764) $380,235 $41,563 $8,271,263 3,820,581 3,328,123 (936,808) 248,753 (484,802) (936,808) 6,912,656 314,306 176,909 21,782 (132,764) 380,235 41,563 (6) (1,173,527) (8) (1,173,527) (130) 0 (130) 8 (367) (367) (936,808) 7,334,455 (1,173,527) (130) 0 (367) (8) (1,173,894) (122) (1,174,025) (50,306) 412,737 (50,306) 412,737 8,350 8,350 24,356 24,356 395,138 395,138 8,816 8,816 403,954 (770,071) Balance at March 31, 2021 C umulative effects of changes in accounting policies Restated balance Issuance of new shares N et loss attributable to owners of the parent Purchase of treasury stock Disposal of treasury stock C hange in the parent’s ownership interest due to transactions with non-controlling interests Changes in scope of consolidation Changes in scope of equity method Net changes in the year Total changes during the fiscal year Balance at March 31, 2022 470,336 $3,820,581 $3,328,115 $ (925,140) $(484,925) $ 5,738,630 $264,000 $589,647 $30,133 $(108,407) $775,373 $50,379 $6,564,384 Year Ended March 31 Cash flows from operating activities: Loss before income taxes Adjustments for: Depreciation and amortization Impairment loss Amortization of goodwill (Gain) loss on disposal and sales of property and equipment Loss on cancellation of contracts (Gain) loss on sales and valuation of investment securities Increase (decrease) in allowance for doubtful accounts Increase (decrease) in liability for retirement benefits Interest and dividend income Interest expenses Subsidies for employment adjustment Foreign exchange (gain) (Increase) in notes and accounts receivable Decrease in other current assets Increase (decrease) in notes and accounts payable Decrease in advance ticket sales Increase in contract liabilities Other, net Subtotal Interest and dividends received Interest paid Proceeds from subsidy income Income taxes (paid) refunded Net cash used in operating activities Cash flows from investing activities: Increase in time deposits Proceeds from withdrawal of time deposits Purchases of marketable securities Proceeds from redemption of marketable securities Purchases of property and equipment Proceeds from sales of property and equipment Purchases of intangible assets Purchases of investment securities Proceeds from sales of investment securities Proceeds from withdrawal of investments in securities Other, net Yen (Millions) 2022 2021 U.S. dollars (Thousands) 2022 ¥(175,374) ¥ (545,372) $(1,432,911) 157,505 176,352 1,286,910 9,357 2,116 (15,637) 4,055 (2,941) 770 664 (1,285) 25,343 (23,955) (3,404) (44,964) 20,687 2,473 – 15,445 (43,432) (72,577) 1,682 (26,081) 26,046 (5,483) (76,413) (655,500) 635,713 (253,889) 539,230 (120,591) 87,055 (12,773) (2,975) 12,806 1,670 (727) 75,575 2,115 10,759 – 8,058 (251) (44) (2,109) 16,689 (43,470) (2,454) (5,107) 52,880 (25,160) (67,109) – 49,496 (299,152) 2,427 (12,466) 38,001 749 (270,441) (372,626) 162,300 (437,280) 154,870 (134,174) 54,415 (22,536) (7,168) 746 2,527 3,167 76,452 17,288 (127,763) 33,131 (24,029) 6,291 5,425 (10,499) 207,067 (195,726) (27,812) (367,382) 169,025 20,205 – 126,194 (354,865) (592,997) 13,742 (213,097) 212,811 (44,799) (624,340) (5,355,829) 5,194,158 (2,074,426) 4,405,833 (985,301) 711,291 (104,363) (24,307) 104,632 13,644 (5,940) Net cash provided by (used in) investing activities 230,019 (595,759) 1,879,393 Cash flows from financing activities: Increase in short-term loans, net Proceeds from long-term loans Repayment of long-term loans Proceeds from issuance of bonds Repayment of bonds Repayment of finance lease obligations Proceeds from issuance of shares Proceeds from share issuance to non-controlling shareholders Net decrease (increase) of treasury stock Other, net Net cash provided by financing activities Effect of exchange rate changes on cash and cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Net (decrease) resulting from changes in scope of consolidation Cash and cash equivalents at end of year – – (72,702) 169,799 – (3,011) – – (16) (424) 93,646 3,626 250,878 370,322 (163) 97,747 827,988 (98,949) – (20,000) (4,668) 296,098 318 99 (461) 1,098,172 2,649 234,621 135,937 (236) – – (594,019) 1,387,360 – (24,601) – – (130) (3,464) 765,144 29,626 2,049,824 3,025,753 (1,331) ¥ 621,037 ¥ 370,322 $ 5,074,246 126 127 Financial / Data Section ANA-Operated International Routes Stockholm Dusseldorf London Paris Vienna Brussels Frankfurt Munich Milano Moscow Istanbul Chengdu Hangzhou Delhi Hong Kong Mumbai Chennai Phnom Penh Vladivostok Shenyang Dalian Beijing Seoul Shanghai Wuhan Shenzhen Qingdao Xiamen Taipei Guangzhou Hanoi Yangon Bangkok Manila Ho Chi Minh City Kuala Lumpur Singapore Jakarta Osaka (Kansai) Perth Sydney Haneda routes Narita routes Haneda / Narita routes Osaka routes Dalian Beijing Qingdao Shanghai Hangzhou Hong Kong Haneda Narita Vancouver Note: Including routes suspended due to COVID-19 Compilation by ANA HOLDINGS INC. (As of August 1, 2022) Seattle San Francisco Chicago New York Los Angeles Washington, D.C. Honolulu San Jose Houston Mexico City Peach Aviation-Operated Routes Niigata Nagoya (Chubu) Sapporo (New Chitose) Memanbetsu Kushiro Fukuoka Seoul (Incheon) Nagasaki Miyazaki Kagoshima Shanghai Taipei (Taoyuan) Hong Kong Ishigaki Kaohsiung Amami Oshima Sendai Osaka (Kansai) Oita Tokyo (Narita) Tokyo (Haneda) Okinawa (Naha) Bangkok セブ 128 129 Financial / Data Section Market Data Environmental and Social Data International Passenger Market Environmental For further information, Fact Book 2022 can be downloaded from the ANA Group corporate website in PDF format. https://www.ana.co.jp/group/en/investors/irdata/annual/ Global Air Transportation Passenger Volume by Region Foreign Visitor Arrivals / Number of Japanese Overseas Travelers RPK (Billions) 9,000 6,000 3,000 0 3,000 2,000 3,652 1,166 1,001 928 1,000 2017 2018 2019 2020 2021 250 232 72 0 (CY) (Thousands) 32,000 24,000 16,000 8,000 0 2017 2018 2019 2020 2021 (FY) 280 602 CO2 Emissions (10,000 tons) 2,000 1,500 1,000 500 0 A Fuel-Efficient Aircraft (No. / Ratio) B (Aircraft) 240 180 120 60 0 975.8 199.3 6.6 769.9 188 74.6 (%) 100 75 50 25 0 (FY) 2017 2018 2019 2020 2021 (FY) 2017 2018 2019 2020 2021 (Left) Total (Right) : Asia-Pacific : North America : Europe Foreign Visitor Arrivals Japanese Overseas Travelers Scope 1 Scope 2 Scope 3 (Left) Aircraft (Right) Ratio : Middle East : Latin America : Africa Source: International Air Transport Association (IATA), 2022 Source: Japan National Tourism Organization (JNTO), 2022 * Fiscal 2017: Scope 3, categories 6 and 7 calculated / Fiscal 2018: Scope 3, categories 2–4, 6, and 7, calculated / Fiscal 2019– : Scope 3, all categories calculated * ANA brand aircraft (jets) until fiscal 2018; ANA Group aircraft (jets) in fiscal 2019 and onward * Fuel-efficient aircraft: Boeing 777, 787, 737-700 and -800; Airbus A320neo and A321neo Number of Domestic Passengers and LCC Share ANA Domestic Passenger Business: ASK, RPK, and Number of Passengers Ratio of Female Managers / Ratio of Female Directors (ANA) C Number of Employees Hired Overseas (ANA) D Domestic Passenger Market Social Number of Passengers (Millions) 100 80 60 40 20 0 LCC Share (%) 15.1 20 16 12 8 4 0 (FY) (Millions) 80,000 60,000 40,000 20,000 0 (Thousands) 60,000 (%) 45,000 30,000 34,288 17,959 2017 2018 2019 2020 2021 15,000 16,382 0 (FY) 20 15 10 5 0 18.3 16.3 (People) 2,000 1,500 1,000 500 0 1,375 2018 2019 2020 2021 2022 (As of April 1 of each year) 2018 2019 2020 2021 2022 (As of March 31 of each year) 2017 2018 2019 2020 2021 (Left) Full Service Carriers LCC (Right) LCC Share (Left) ASK RPK (Right) Number of Passengers Ratio of Female Managers Ratio of Female Directors Source: Ministry of Land, Infrastructure, Transport and Tourism, fiscal 2021 International Cargo Market Global Freight Ton Carried by Region ANA International Cargo Operations: ATK and RTK Ratio of Employees with Disabilities (ANA) E Ratio of Managers Hired Mid-Career / Ratio of Non-Japanese Managers* (ANA) F (Thousand Tons) 80,000 60,000 40,000 20,000 0 28,000 21,000 65,805 22,818 21,345 14,000 11,724 6,774 7,000 2,039 1,104 0 (Millions) 8,000 6,000 4,000 2,000 0 6,966 5,186 2017 2018 2019 2020 2021 (CY) 2017 2018 2019 2020 2021 (FY) (Left) Total (Right) : Asia-Pacific : North America : Europe ATK RTK : North America : Europe : China : Middle East : Latin America : Africa : Asia / Oceania : Others Source: International Air Transport Association (IATA), 2022 Notes: 1. Figures for China include the Hong Kong routes. 2. Figures for Asia / Oceania include the Vladivostok routes. 3. Figures for Others include RFS (Road Feeder Service). 130 (%) 3.0 2.0 1.0 0 2.75 2.3 (%) 12.0 9.0 6.0 3.0 0 10.9 4.3 2018 2019 2020 2021 2022 (As of June 1 of each year) 2018 2019 2020 2021 2022 (As of March 31 of each year) Ratio of Employees with Disabilities Legally Mandated Ratio Ratio of Managers Hired Mid-Career Ratio of Non-Japanese Managers * Ratio of non-Japanese managers is calculated excluding TC1 (Americas region) as defined by the International Air Transport Association (IATA). 131 Financial / Data Section Environmental Data The following data is the environmental results related to the ANA Group. (Aggregate figures for fiscal 2021 are preliminary) From fiscal 2019, we have also added the results of Peach Aviation. Climate Change Countermeasures (FY) Carbon dioxide (CO2) emissions*1 Unit 2017 2018 2019 2020 2021 Total (Aircraft, ground equipment and vehicles) 10,000 tons Aircraft Passenger Cargo Ground equipment and vehicles A*9 Total (Scope 1, 2, and 3) Scope 1 Scope 2 Scope 3 [Breakdown by Category]*5 1 Purchased goods and services 2 Capital goods 10,000 tons 1,000 tons 3 Fuel- and energy-related activities (not included in Scope 1 or 2) 4 Upstream transportation and distribution 5 Waste generated in operations 6 Business travel 7 Employee commuting 11 Use of sold products 13 Downstream leased assets Aircraft CO2 emissions per RTK kg-CO2 Total energy consumption Total Aircraft energy Ground energy (non-aircraft operations) Ozone depletion (ANA only) Fluorocarbon Aircraft Ground (non-aircraft operations) Halon Aircraft B*9 Fuel-efficient aircraft (Fiscal year-end)*8 Number of aircraft ANA Group (jet aircraft) Ratio Crude oil equivalent: 10,000 kl kg Aircraft % *1 We have not yet reflected the impact of Sustainable Aviation Fuel (SAF) on CO2 emissions *2 All categories under Scope 3 have been calculated beginning in fiscal 2019 *3 Scope 3, categories 2-4, 6, and 7 for fiscal 2018 were calculated and certified by a third party *4 Scope 3, categories 6 and 7 for fiscal 2017 were calculated and certified by a third party *5 Scope 3, categories 8, 9, 10, 12, 14, and 15 are not applicable *6 Not applicable *7 Calculated beginning fiscal 2020 *8 Boeing 777, 787, 737-700, -800, Airbus A320neo, and A321neo *9 A to B : See graphs on P.131 1,161.1 1,147.6 1,097.3 50.4 13.5 1,161.6 1,152.0 9.2 0.4*4 1,156.0 1,142.8 1,098.0 44.9 13.2 1,306.3 1,147.0 8.9 150.4*3 — — — — — 2.0 1.8 — — 0.96 448 441 6.5 5.3 — 5.0 162 60.4 — 926.4 572.6 1.4 — 1.4 2.0 — — 0.97 446 439 6.4 9.4 — 28.8 183 65.3 1,245.8 1,233.2 1,196.8 37.4 12.6 1,682.2 1,237.3 8.4 436.4*2 986.6 788.6 1,664.1 1.7 30.8 1.6 9.4 881.7 *6 1.01 480 474 6.3 2.7 — 31.7 199 70.3 548.0 538.7 470.9 67.8 9.3 723.3 541.4 7.0 174.9 624.9 361.3 734.2 0.6 17.5 0.3 9.9 0.0 *6 1.21 212 207 4.8 2.9 254*7 20.5 195 72.5 776.3 767.2 692.7 74.5 9.1 975.8 769.9 6.6 199.3 548.8 327.2 1,038.1 0.7 13.6 0.4 8.9 0.0 55.6 1.09 300 295 4.7 0.0 169 12.8 188 74.6 Resource Savings (FY) Waste produced Total General waste (Cabin waste and sewage included) General waste (Ground waste included) Industrial waste Water consumption Total Clean water Non-potable water 132 Unit 2017 2018 2019 2020 2021 1,000 tons 10,000 kl 37.5 31.5 2.6 3.4 70.8 61.4 9.4 34.3 28.4 2.7 3.2 69.7 61.1 8.6 22.9 15.3 2.9 4.7 68.4 60.7 7.8 12.7 7.8 1.0 3.8 35.1 30.6 4.5 13.7 3.0 0.8 9.9 31.3 26.9 4.4 Social Data Please visit our corporate website for more: WEB https://www.ana.co.jp/group/en/csr/data/ Human Resources Data (ANA) C*5 D*5 E*5 Number of employees (As of March 31 of each year) Average age of employees (As of March 31 of each year) Average years worked (As of March 31 of each year) R atio of female managers (As of April 1 of each year, excluding individuals 60 years old and over) Ratio of female directors (As of April 1 of each year) Number of employees hired overseas (As of March 31) Number of overseas managers hired locally (As of March 31 of each year) Ratio of employees with disabilities*1 (As of June 1 of each year) Number of employees on nursing care leave (As of March 31 of each year) N umber of employees on pregnancy or childcare leave / Male (As of March 31 of each year) F*5 Ratio of managers hired mid-career (As of March 31 of each year) Ratio of non-Japanese managers*2 (As of March 31 of each year) Work-related accidents (As of March 31 of each year) Ratio of employees with healthy BMI*3 (As of March 31 of each year) Male Female Ratio of employees that smoke (As of March 31 of each year) Male Female Employee obesity rate*4 (As of March 31 of each year) Male Female Unit People Years Years % % People People % People People % % % % % % % % 2018 2019 2020 2021 2022 13,982 37.4 13.8 13.9 9.3 1,475 135 2.49 15 578/19 9.2 — 82 70.2 72.0 19.1 3.9 15.7 1.3 14,242 37.5 14.2 14.6 11.1 1,442 161 2.57 16 629/20 9.3 2.7 111 72.9 72.6 17.2 3.7 11.1 1.4 14,830 38.0 13.6 16.9 12.5 1,464 157 2.68 10 645/29 9.4 2.9 69 72.5 73.0 16.7 3.1 12.9 1.0 15,114 37.9 12.5 17.0 14.6 1,404 173 2.80 11 643/27 9.9 3.5 25 67.7 70.1 14.5 2.6 8.2 1.7 13,689 38.9 13.4 18.3 16.3 1,375 198 2.75 17 727/61 10.9 4.3 26 74.3 69.1 14.1 2.3 11.2 1.3 *1 Total of ANA HOLDINGS INC., ANA, and qualified ANA Group companies (total of 11 companies including 1 special subsidiary) *2 Excluding TC1 (Americas region) as defined by the International Air Transport Association (IATA) *3 Ratio of employees with BMI of 18.5%–25.0% *4 Changing calculation standards from 2018 Before 2017: Ratio of employees receiving guidance from designated healthcare professionals 2018 and later: Ratio of employees meeting criteria for metabolic syndrome *5 C to F : See graphs on P.131 Please visit our website for more details about the 37th Yen-Based Bond (Social Bond), issued in May 2019: https://www.anahd.co.jp/group/en/pr/201904/20190417.html Flight-Related Data (All Passenger Flights on ANA International and Domestic Services) (FY) In-service rate On-time departure rate*6 On-time arrival rate*6 *6 Delays of 15 minutes or less, excluding canceled flights Unit % % % 2017 2018 2019 2020 2021 98.8 86.1 84.0 98.2 88.4 86.5 97.4 88.7 87.5 43.5 97.3 96.8 59.3 94.5 93.6 Customer-Related Data (FY) Number of customer feedback reports [Breakdown by route type] Domestic International Other [Breakdown by report type] Complaint Compliment Comment / Request Other Unit 2017 2018 2019 2020 2021 114,273 105,723 117,628 59,862 69,661 % % % % % % % 56.0 40.1 3.9 41.1 18.5 20.8 19.5 62.4 34.8 2.7 45.8 19.8 16.5 17.8 59.5 37.9 2.7 42.3 21.1 16.6 20.1 54.6 11.7 33.7 30.1 20.8 28.8 21.3 65.6 11.2 23.2 29.1 28.3 21.9 20.7 133 Financial / Data Section The ANA Group Profile Corporate Data (As of March 31, 2022) ANA HOLDINGS INC. Organization (As of July 1, 2022) General Meeting of Shareholders Internal Audit Division Board of Directors Chairman President & Chief Executive Officer Group Management Committee Group ESG Management Promotion Committee Group Productivity Enhancement Committee Audit & Supervisory Board Members Audit & Supervisory Board Audit & Supervisory Board Members Office Corporate Communications and Branding General Administration Corporate Sustainability Executive Secretariat Government & Industrial Affairs Legal & Insurance Human Resources Employee Relations DEI Promotion Group IT Management Corporate Planning Corporate Strategy Airline Management Business Management Digital Design Lab Future Creation Innovation & KAIZEN Planning Finance, Accounting, Investor Relations & Business Management Mobility As A Service Corporate Planning Finance, Accounting & Investor Relations Business Management Facilities Planning Number of Subsidiaries and Affiliates (As of March 31, 2022) Operating segment Total of subsidiaries of which, consolidated of which, equity method Total of affiliates of which, equity method Air Transportation Airline Related Travel Services Trade and Retail Others Total 5 41 7 71 10 134 4 30 5 8 8 55 — — — — 1 1 3 5 3 2 28 41 1 2 1 — 9 13 Major Subsidiaries (As of March 31, 2022) Company name Amount of capital (¥ Millions) Ratio of voting rights holding (%) Principal business Air Transportation ALL NIPPON AIRWAYS CO., LTD. 25,000 Air Japan Co., Ltd. ANA WINGS CO., LTD. Peach Aviation Limited Airline Related ANA Cargo Inc. Overseas Courier Service Co., Ltd. ANA Systems Co., Ltd. Travel Services ANA X Inc. Trade and Retail 50 50 100 100 100 80 25 ALL NIPPON AIRWAYS TRADING Co., Ltd. 1,000 Note: No specified wholly owned subsidiaries as of the end of the fiscal year under review 134 100.0 100.0 100.0 77.9 100.0 91.5 100.0 100.0 100.0 Air transportation Air transportation Air transportation Air transportation Cargo operations Express shipping business Innovation and operation of IT systems Planning and sales of travel products, and other customer-related businesses Trading and retailing Corporate Profile Trade Name ANA HOLDINGS INC. Administrator of Register Date of Foundation December 27, 1952 of Shareholders Sumitomo Mitsui Trust Bank, Limited Head Office Shiodome City Center, 1-5-2 Higashi-Shimbashi, Minato-ku, (Stock Transfer Agency Department) 1-4-1, Marunouchi, Chiyoda-ku, Tokyo Number of Employees 42,196 (Consolidated) American Depositary Receipts Ratio (ADR:ORD): 5:1 Tokyo 105-7140, Japan Independent Auditor Deloitte Touche Tohmatsu LLC Paid-In Capital Fiscal Year-End Number of Shares of ¥467,601 million March 31 Common Stock Authorized: 1,020,000,000 shares Issued: 484,293,561 shares Number of Shareholders 771,327 Stock Listing Ticker Code Tokyo 9202 Scope of This Report High Exchange: OTC (Over-the-Counter) Symbol: ALNPY CUSIP: 032350100 Depositary: The Bank of New York Mellon 240 Greenwich Street New York, NY 10286, U.S.A. Tel: 1-201-680-6825 U.S. Toll Free: 1-888-269-2377 (888-BNY-ADRS) URL: https://www.adrbnymellon.com S t a k e h o d e r s ’ l p r i o r i t i e s Reported in this report Annual Report (PDF) https://www.ana.co.jp/group/en/investors/irdata/annual/ Reported on the website Management priorities High For Further Information (Website) Corporate Profile https://www.ana.co.jp/group/en/about-us/ Investor Relations https://www.ana.co.jp/group/en/investors/ Sustainability https://www.ana.co.jp/group/en/csr/ Fact Book 2022 Fact Book 2022 can be downloaded from the Company’s corporate website in PDF format. This document contains financial data and information on the domestic and international markets and LCC status. https://www.ana.co.jp/group/en/investors/irdata/annual/ Forward-Looking Statements This report contains statements based on the ANA Group’s current plans, estimates, strategies, and beliefs; all statements that are not statements of historical fact are forward- looking statements. These statements represent the judgments and hypotheses of the group’s management based on currently available information. Air Transportation Business, the group’s core business, involves government-mandated costs that are beyond the Company’s control, such as airport utilization fees and fuel taxes. In addition, conditions in the markets served by the ANA Group are subject to significant fluctuations. Factors that could affect actual results include, but are not limited to, economic trends, sharp changes in exchange rates, fluctuations in the price of crude oil, and disasters. Due to these risks and uncertainties, the group’s future performance may differ significantly from the contents of this report. Accordingly, there is no assurance that the forward-looking statements in this report will prove to be accurate. ANA HOLDINGS INC. Contact Shiodome City Center, 1-5-2 Higashi-Shimbashi, Minato-ku, Tokyo 105-7140, Japan Investor Relations Email: ir@anahd.co.jp 135 Financial / Data Section