NYK Line sells 'costly' Nippon Cargo Airlines to ANA

   Release date: 08/03/2023     Hits: 3499    Comment: 0    
Note: NYK Line has bucked the flying liner trend, becoming the first shipping line to ditch its air cargo subsidiary citing to

NYK Line has bucked the flying liner trend, becoming the first shipping line to ditch its air cargo subsidiary citing too high a cost.

This morning it announced it intended to sell 100% of the shares in Nippon Cargo Airlines (NCA) to rival All Nippon Airways (ANA) – but there will be no job losses, ANA pledged.

NYK, which has capital stock worth ¥10bn ($73m), agreed an MoU with ANA to complete the deal on 1 October. NYK bought all the shares in 2010 “with the aim of becoming a comprehensive logistics company offering ocean, land and air transport”.

But, it said: “However, the continuous introduction of new aircraft to expand the operation and maintenance system, and the continuous training of personnel engaged in operation and maintenance required a considerable expenditure

“In the highly volatile business environment of airfreight, NCA has been facing challenges in expanding its business scale at a level that is commensurate with such costs.”

It added that ANA wanted to “dramatically enhance its international air cargo network”, and had expressed a “strong desire” to add NCA to its portfolio.

One source close to the Japanese air cargo market told The Loadstar: “NCA honestly never made money, and then it had its fleet grounded in 2018. ANA has helped it with maintenance.

“On its own, and in today’s market, it would fold – it’s best to go back with ANA for expansion plans.”

Following the grounding of its fleet over maintenance issues, NCA outsourced five 747-400Fs to Atlas Air on a CMI deal, as well as two 747-400Fs which were leased to AirBridgeCargo, but are now operated by ASL Airlines. NCA retained its eight 747-8Fs, but suffered a series of “extraordinary losses”. However, the last fiscal year, to 31 March 2022, saw it make a net profit of $450m.

It is not clear what ANA will do with NCA’s fleet. “ANA has been more focused on the 777F as a strategy,” explained the source.  “I don’t think it would be in a hurry to get back -400Fs.”

But an ANA spokesperson confirmed to The Loadstar that “ANA will be taking on the 15 NCA aircraft”, although added that further details had not yet been decided. The spokesperson also confirmed that there would be no job losses.

“The aim of the NCA acquirement pending approval from relevant authorities is to complement each other’s networks, leveraging NCA’s ability to operate large capacities on long-haul routes with the B747 freighters and combining this with ANA’s robust Asia network, including belly space for passenger aircraft. This will enable ANA to cater to more demand connecting between Asia and the Americas as well as Europe.”

ANA announced last month that one of its three business strategy pillars up to FY2025 was to “maximise profit in the airline business by optimising the ANA group’s multiple brands and expanding the cargo business”.

It added that it plans to “maximise cargo business profit by leveraging strength as a “combination carrier” that utilises both passenger aircraft and freighters”.

“With growing demand between Asia and North America, and the utilisation of large freighters, increase capacity to 110% in FY2025 compared with FY2019 levels.”

ANA has seven 767Fs operating, and one parked, and it also has two 777Fs on its books. The source explained: “ANA was supposed to phase out the 767Fs that ply out of Okinawa as a regional distribution hub. Now it has the 767Fs, 777Fs as well the 8Fs and potentially the -400Fs. It will be interesting to see how ANA will manage its fleet.”

The source added that the airline was likely to receive antitrust approval.

“NCA was born of a partnership between both carriers and I reckon they won’t have any antitrust issues in Japan. However from a competition perspective, it will be another Korean Air in the making.

“It will be something of a monopoly ex-Japan, and I’m not sure how Japan Air Lines will react. It is not so cargo-centric, but has worked with Kalitta and Western Global, etc, for main deck access in recent years.”

The news comes as shipping lines begin to struggle with their airline capacity, with Maersk reportedly changing routes, although it told The Loadstar that reports had been “speculative”.

It also raises the question over the potential loss of contracts at Atlas Air, which despite expecting to close its takeover by Apollo in the first quarter, appears to still be “awaiting final approval from the US Department of Transportation”, it said last month.


 
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