NYK to Make NCA a Consolidated Subsidiary

July 12, 2005

Nippon Yusen Kaisha (NYK) and All Nippon Airways (ANA) have reached an agreement to develop a new air-cargo-transport business. On July 12, 2005, at separate meetings of each company's board of directors, NYK adopted a resolution to make Nippon Cargo Airlines (NCA) a consolidated subsidiary of NYK, while ANA passed a resolution to transfer the shares it holds of NCA to NYK.

NYK and ANA intend to complete this transaction in August 2005.

1. Overview

NYK and ANA each hold 27.6 percent of NCA's shares and provide support to NCA's management. Following conclusion of this agreement, NYK will expand its air-cargo-transport business with NCA as an NYK subsidiary, while ANA will further develop its air-cargo-transport business as one of ANA's three pillar businesses along with its domestic and international passenger-flight businesses.

NYK will hold 55.2 percent of NCA's shares, the total percentage of shares currently held by NYK and ANA.

2. Background and Future Business Development

Since its inaugural flight between Japan and the U.S. in 1985, NCA, has been the only air-cargo-transport company in Japan, and has steadily increased its number of aircraft and enhanced its transport performance. NCA, with support from NYK and ANA, has established a solid position in the air-cargo-transport industry.

Meanwhile, the market for air cargo transport in Asia, centered on the Chinese market, and the market for air cargo transport between Asia and countries in North America and Europe are expected to continue to grow significantly. In this year commemorating the 20th anniversary of NCA's inaugural flight, NCA will become a consolidated subsidiary of NYK, and ANA will enhance its independent air-cargo-transport business. NYK and ANA believe that this resolution is the best choice to alertly respond to market growth, further expand business scales, improve customer services, and reduce costs with the aim of strengthening competitiveness.

Until about the end of October 2005, NYK, ANA, and NCA will confer on the details about the start of operations under the new framework.

It has been agreed that ANA will provide its utmost support for NCA's flight and maintenance-related services, so that NCA will be able to operate autonomously. Since safe operations are the most significant management issue, thorough safety will be pursued without compromise. Moreover, NYK and ANA will strive to maintain their good relationship for mutual growth.

All Nippon Airways (ANA)

ANA has been in the air transport business for over 50 years, and now ranks among the ten largest passenger airlines in the world, flying almost 50 million passengers annually to 22 destinations worldwide and 49 cities within the Japanese archipelago. Further, ANA's fleet of 180 aircraft will be complemented by the 787 in 2008. ANA's network extends across Europe, the U.S., Asia, and the pacific islands of Hawaii and Guam. ANA joined the world's foremost airline family, the Star Alliance, in October 1999, giving ANA's customers access to 772 airports in 133 countries, as well as benefits such as mileage recognition and lounge access.

Nippon Cargo Airlines (NCA)

NCA was created as a scheduled/nonscheduled cargo airline in September 1978, and made its first maiden flight on the Tokyo-San Francisco-New York route in May 1985. NCA currently operates a fleet of 12 Boeing 747 freighter aircraft on a network extending from Japan to the rest of Asia, the U.S., and Europe. NCA's principal shareholders are Nippon Yusen Kaisha (27.6 percent), ANA (27.6 percent), Kawasaki Kisen Kaisha (13.2 percent), and Mitsui O.S.K. Lines (13.2 percent).

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