June 23, 2009
NCA announces updated version of its mid-and-long term business plan : NCA Phoenix Project “Declaration of Evolution”
Nippon Cargo Airlines(NCA:Headquartered in Minato-ku, Tokyo:President, Tadamasa Ishida)today announced NCA Phoenix Project “Declaration of Evolution”, an updated version of its mid-and-long term business plan.
While the cargo industry has seen economic slowdowns in the past, what we are experiencing since the latter half of 2008 is proving to be unprecedented. Lack of consumer confidence worldwide has led to drastically decreased spending, resulting in lower demand for production. And without manufacturing production, airfreight will continue to suffer.
For NCA to survive, it means that we must be able to compete profitably under the current poor market conditions, and we must position ourselves to take advantage of the market recovery once it finally happens.
The current “NCA Phoenix Project” was designed to establish our independence as an airline and to capitalize on the strong market growth to expand our network with a fleet of 24 aircraft. Phase 1 ?Independence ? was very successful, and it was accomplished earlier than expected in FY2008.
However, as we enter Phase 2 of Phoenix Project, where we planned to dramatically grow our network, the current market situation and near-term outlook will not support such aggressive growth plans. Adding new routes and expanding our fleet in a time when the markets are already at an overcapacity situation would be unwise and very unprofitable. So we are forced to rethink our strategy and define a new plan that can succeed under these economic conditions.
Therefore, we created a new plan named “NCA Phoenix Project ? Declaration of Evolution”, focused on the restructure of NCA’s business model. While this new plan will create some pain, it is essential for our long term survival. And it will continue to support our long term goal to become a truly global, dedicated cargo airline, delivering safe, reliable, and high quality air freight services to our customers.
This new plan will allow NCA to improve the revenue and lower the operating cost in order to achieve a break-even result in FY2011, and it continues the network of 8 B747 freighters under NCA’s own operation.
【 l The direction of NCA’s business】
Our Future Vision
A truly global, dedicated all-cargo carrier that provides diversified services and contributes
to the development of society, economy and culture of the world.
Three pillars of NCA Phoenix Project ? “Declaration of Evolution”
□Build an adequate cost structure through drastic cost reduction and by reviewing
of business process.
□Strengthen profitability by rationalizing and simplifying our regular scheduled services.
□Improve profitability by increasing new business opportunities in different fields of air
logistics (chartered business and leased business).
【 II Key Structural Changes to our Business】
In order to lower our operating cost and improve our revenue, we must implement key changes
in our business:
□Structural change in our regular scheduled services (A)
We must reduce the overall cost structure within our scheduled network through
the elimination of fixed costs, lowering of overhead cost, and restructuring of
contracts for services so that we are more flexible to respond to changing market conditions
□Structural change to expand the scope of our business (B)
We will allocate resources to other parts of the business that compliment our regular
scheduled service and create a high rate of return.
Create Flexible Charter Flight Services
Implement Aircraft Leasing Capabilities
We will allocate our aircraft into “scheduled service”, “chartered service” and “leased service”
so that we can keep a good balance and portfolio of our business.
About the details, please refer to the page here.
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