Oct 31, 2013

ANA Holdings to develop ANA Cargo, deepen relations with NCA, LCAG, Yamato

ANA Holdings on October 30 set the direction of its targets under the ANA Group's business strategies for the next fiscal year. The said strategies are due to be turned into concrete plans by the end of January next year. In the cargo business, ANA Holdings will develop ANA Cargo, the cargo company that was put up in October, toward turning it into a core business alongside the passenger business. The company also aims to swing back to the black in terms of balance of payments early on by boosting its network and raising the operation rate of its machines. The strategies also incorporate the move to deepen relations with airline and logistics companies such as Nippon Cargo Airlines (NCA), Lufthansa Cargo (LCAG) and Yamato Holdings.

As of the international passenger services, ANA will take advantage of the expansion in the number of slots available for daytime departure/arrival of flights at Haneda Airport starting spring next year and then build a complete network at the Tokyo metropolitan area for international routes. Specifically, it will: (1) capitalize on the superiority of Haneda's largest international route network to get hold of the high-value demand for businesses to/from the Tokyo metropolitan area and the demand for services to/from the region, (2) build a connection network in Narita, including the efficient use of the Star Alliance and its joint-venture (jv) partner, in order to secure the global flow of goods between Asia and North America, (3) promote further differentiation through products and services as a full-service carrier, and (4) reinforce its overseas marketing program and expand its non-Japanese passengers against the exchange rate fluctuations in the market.

As for the domestic passenger services, ANA aims to curb its operation costs by maximizing the use of its resources and adjusting to the supply-demand balance through the flexible deployment of aircrafts. Further, it will set strategic fares to reflect its costs that exceed its own efforts amid the skyrocketing prices of fuel in the market.

In the airline business, the company plans to beef up its business foundations through strategic investments.

With regard to the fostering of pilots, ANA acquired this year all shares in such subsidiaries as the U.S.-based pilot training company Pan Am Holdings, Inc. and Pan Am International Flight Academy. So while it aims to steadily generate profits at its hitherto bases of North and South Americas, it will also open a new base in Bangkok jointly with the Assumption University and Pan Am International Flight Academy in a bid to address the burgeoning demand for the cultivation of pilots in Southeast Asia.

In terms of equipment maintenance repair overhaul (MRO), ANA will make a full-fledged foray into the business of aircraft maintenance at the Naha Airport, eyeing the maintenance demand that is projected to grow following the expansion in the airline business in Asia.

Now while ANA has set in its current mid-term strategy of ANA that its cost reduction target is Y100 billion by the end of fiscal 2014, it will also take into account the changes in the external environment. Specifically, it will: (1) make sure that each group company operates in a cost-competitive manner by researching into the business models of the other companies in the industry that boast of superior cost competitiveness, (2) attain the targeted reduction in indirect manpower (by 30%) through the review and reinforcement of its systems, such as the reform of its work methods, and (3) optimize overall costs by focusing its management resources into services that enhance the brand value from the perspective of the "scrap and build" method.

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