Japanese LCC Peach Aviation slipped to a net loss in its fiscal year ended March 31, which the carrier partly attributed to costs associated with its merger with Vanilla Air.

Peach reported a net loss of ¥193 million ($1.8 million) for the 2018 fiscal year, reversed from a profit of ¥3.7 billion in the previous year. The airline noted that “integration-related costs were recorded ahead of schedule.”

Vanilla Air and Peach are both subsidiaries of the All Nippon Airways (ANA) Group, and the parent announced last year that the two would be merged under the Peach brand. Commenting on the latest results, Peach CEO Shinichi Inoue said the carrier has “steadily been promoting the integration process, which is due to be completed by around the end of this fiscal year” on March 31, 2020.

Inoue said the route from Tokyo Narita Airport to Okinawa was the first to be transferred from Vanilla to the Peach brand on June 1. Such moves will “further enhance both our domestic and international routes via the network centered on the Tokyo metropolitan area that has been cultivated by Vanilla Air.”

For FY2018, Peach achieved an operating profit of ¥4.1 billion, down from ¥5.8 billion in the previous year. Operating revenue increased to ¥60.4 billion, compared to ¥54.7 billion in FY2017. Load factor for FY2018 was 87.8%, which the airline said was its highest since launch.

Inoue reaffirmed Peach’s intention to launch medium-haul international flights in 2020. The carrier has previously said it will use Airbus A321LRs for these services, joining the A320s it uses on domestic and short-haul international routes.

On June 18, Air Lease Corp. announced long-term lease deals covering two additional A320neos and two A321LRs for Peach, boosting the airline’s existing orders. The four aircraft are scheduled for delivery from 2020 to 2022.

Adrian Schofield, adrian.schofield@informa.com