NCA expansion plan fails to take off

NIPPON Cargo Airlines (NCA) expansion plan has been put on hold for at least three years.

NCA currently operates eight 747-400Fs but under its ‘Phoenix Project’ it had planned to aggressively increase that up to 24 by the end of 2013. Now, due to “unprecedented” economic woes, the carrier says that it will maintain its fleet at its current levels until  March 2012.

“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,” NCA said in a statement. “Adding new routes and expanding our fleet at a time when the markets are already in an overcapacity situation would be unwise and very unprofitable.”

“We will increase the charter business that is relatively profitable compared to our regular scheduled network,” says Nippon Cargo. “By focusing our resources to develop long-term partnerships or aircraft least activities with customers that are resistant to recession, we will try to change our earnings structure.”

“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,” it added.

NCA’s revenue fell 22.6 per cent in financial year 2008, down from US$834 million the year before – a pre-tax (ordinary) loss of $198 million.

To claw that back NCA says that it now aims to make $567 million revenue in financial year 2009 with $210 million ordinary loss; $746 million revenue and $79 million in ordinary loss in 2010 and then $851 million revenue and thus with no losses in 2011.