Nippon Cargo Airlines Establishes New Medium- to Long-Term Management Plan
May 12, 2006
On July 15 last year, NYK subsidiary Nippon Cargo Airlines (NCA) (Headquarters: Minato-ku, Tokyo; President: Takuro Uchiyama) set up a Take-Off Committee to formulate a medium- to long-term business plan. The plan, named "The Phoenix Project," has been completed and was publicly release today.
"The Phoenix Project"(2006-2015) is a more substantial,detailed version of the company's interim outline that was announced on November 15, 2005. "The Phoenix Project" details NCA's aim to establish independent flight and maintenance operations, introduce 14 advanced B747-8Fs into the company's fleet, and establish a global business for NCA as an independent all-cargo airline, all while guaranteeing safe and swift operations and dramatically improving the business structure on both sales and cost sides. At the same time, NCA will further develop its air-cargo business by utilizing its global network, high-performance aircraft, and the most advanced IT system in order to precisely respond to customers' needs.
NCA has identified the three years between 2006 and 2008 as its phase-1 period, and through the implementation of its new business model, NCA aims to become a Global and Efficient Common Cargo Carrier (GEC3). In phase 2, NCA will introduce the B747-8Fs to meet new demand in line with the increase in landing and take-off slots at Narita and Haneda airports, scheduled to be available from 2009. By 2015, when phase 3 will be completed, the fleet will be expected to have increased to between 22 and 24 aircraft and to be able to report a total operating revenue of ¥310 billion and current ordinary income of ¥37 billion.
NCA Phoenix Project (2006-2015)1. Financial Target / Fleet Plan
2. Mission
| (1) | To make the utmost effort to provide customer satisfaction and contribute to society as an independent all-cargo carrier through transport based on safe operations. |
| (2) | To swiftly establish itself as a GEC3 (Global and Efficient Common Cargo Carrier), a business model that includes sweeping reforms of NCA's business structure and the establishment of the company's own flight and maintenance operations. |
| (3) | To maintain stable profit as a global company that is part of the growth of air-cargo demand to, from, and within the Asia market. |
| Phase 1 (FY2006-2008): | |
| To reform NCA's business structure and establish the company's own flight and maintenance operations. | |
| Phase 2 (FY2009-2011): | |
| To address three significant events, namely the introduction of the B747-8Fs, the extension of the B Runway at Narita Airport and the resumption of international operations at Haneda Airport, and the establishment of the basis for the company's global business operations. | |
| Phase 3 (FY2012-2015): | |
| To be a part of the expansion of the economy through use of a high-quality fleet of between 22 and 24 aircraft including 14 advanced B747-8Fs, which will be introduced from 2009. | |
4. Six Pillars
| (1) | Commitment to fully meet customer needs |
| To make the utmost effort to satisfy customers' air-cargo transportation needs and to provide competitive and regular air-cargo transportation services as well as on-demand charter transport services. |
| (2) | Sweeping reforms of business structure and establishment of the company as a GEC3 (Global and Efficient Common Cargo Carrier) |
| The balance sheet for FY2005 will show a major deficit caused by continuing high fuel prices and aging aircraft, but in phase 1 (2006-2008), NCA will implement its GEC3 global business model, the most appropriate structure for an all-cargo airline. Under this business model, NCA will dramatically strengthen its business structure-from both the sales and costs sides-in order to establish a structure that will create profits. |
| (3) | Securing independent operations and maintenance as an all-cargo airline, as well as the introduction of environmentally friendly, high-performance aircraft |
| By taking advantage of the fact that NCA was a latecomer to the sector and has constructed a system that is purpose-made for its needs, NCA will have a cost competitiveness that is both safe and global and will help us accomplish a self-sustaining maintenance and operation system that is most appropriate for its role as a cargo carrier. In addition, NCA will set up a business infrastructure-IT center, maintenance hanger, facilities to train crew members, etc.-that will ensure the company's self-reliance. NCA intends to enhance its financial strength to back up the investment it needs in these areas. Following the phase-1 introduction of the B747-400Fs will be the phase-2 introduction of the B747-8Fs, which are high performance aircraft that have low noise levels and reduced emissions. |
| (4) | Strengthening of safe operations and corporate governance |
| NCA will swiftly build a safety-promotion and crisis-control system for its organization by continually reminding all employees that safety, in addition to operations and maintenance, is the basic premise upon which a cargo airline builds its business. NCA will implement in-house procedures to ensure security and emergency responses and will implement education and training programs for all employees. Further, to ensure sound management of its business, NCA will establish a corporate-governance function under an internal audit committee. |
| (5) | Expansion of global network |
| By accomplishing its objectives, NCA will pursue growth opportunities throughout all phases of the project. NCA will expand its network while simultaneously collaborating with other companies as a globally expanding network based in Asia. NCA will also develop a direct charter-flight business to the United States and Europe, departing from Asia and taking advantage of growth in the Asian market. In order to update its fleet into one that is highly efficient, NCA will not only improve its own fleet but also promote procurement from safe operators on wet-lease or ACMI charters. Moreover, as part of phase 2, when the extended Runway B at Narita Airport becomes operational and Runway D at Haneda is opened to international flights, NCA will introduce its B747-8F aircraft to expand and reinforce its "hub" capabilities and build solid foundations for economies of scale in phase 3. |
| (6) | Power of gemba and improving response speed |
| By enforcing the power of gemba in all sectors around the world, NCA hopes to provide stable and high quality air-cargo transport services that are on time, swift, and safe, while simultaneously responding rapidly and accurately to the needs of the company's clients. |