ANA Group Announces Revisions to Fleet Plans and Changes to Personnel and Organizational Structure

Changes will result in improved profitability and a stronger financial position

All Nippon Airways (ANA), today announced revisions to fleet plans and changes to personnel and organizational structure.

Over the past two years, ANA has worked in accordance with its medium-term corporate plan (fiscal 2000-2003) to increase revenues, focus investment, and reduce costs.

Based on the medium-term corporate plan's key words of "selection and concentration," ANA will take the following steps to optimize its aircraft fleet.

(1) Reduce the number of aircraft types in its fleet.

(2) Strengthen its network, especially on domestic routes, by adding aircraft as needed to take advantage of new opportunities, such as increased capacity at Haneda Airport.

(3) Improve profitability through "selection and concentration" of aircraft types.

(4) Accelerate the reduction in interest-bearing debt by maximizing cash flow.

ANA will take the following steps to improve its personnel and management systems.

(1) Introduce an executive officer system and reduce the number of board of directors.

(2) Reorganize the responsibilities of the board of directors, including the assignment of overall responsibility for both flight operations and engineering & maintenance.

(3) Integrate marketing functions.

(4) Strengthen the organization through such measures as the upgrading of cargo and mail operations to division status. With a new president and chairman leading the company from

April 1, ANA will be prepared to effectively implement the third year of its medium-term corporate plan.

Revised Plans for the ANA Group Fleet

(1) All A321 and B767-200 aircraft 18 in total will be retired.

(2) The number of B767-300 and A320 aircraft will be increased to strengthen the route network.

(3) This "selection and concentration" of aircraft, will contribute about \15.0 billion a year to profitability.

(4) The reduction in interest-bearing debt will be accelerated faster than originally called for in the medium-term corporate plan.

From the standpoint of "selection and concentration", the ANA Group has analyzed the consolidation of aircraft types and the strengthening of its route network. Effective March 28, the fleet plans in the medium-term corporate plan have been revised as outlined below.

(1) Measures to consolidate aircraft types will be aimed at improving profitability. This improvement will be the result of higher productivity achieved through reductions in the number of types of aircraft in the fleet. Specifically, by the end of fiscal 2004, ending March 2004, all A321 aircraft (currently 7 in the fleet) and all B767-200 aircraft (currently 11) will be retired.

(2) In fiscal 2003, the opening of a new runway at Narita and the further expansion of capacity at Haneda will present new business opportunities. The ANA Group will introduce 9 B767-300 aircraft (currently 42 in the fleet) in fiscal 2003 and 3 A320 aircraft (currently 25) in fiscal 2004. The Group will further strengthen its route network, centered on high-demand domestic routes, such as those to and from Haneda.

(3) Through the "selection and concentration" of aircraft types outlined above, cost reductions will be achieved as a result of greater efficiencies in such areas as spare parts requirements. Also, the stronger network will lead to increased revenues. As a result, ANA anticipates a contribution to profitability of about \15 billion a year from these measures.

(4) Following these changes, the ANA Group will have 164 jet aircraft in use at the end of fiscal 2003, in contrast to the 157 aircraft called for in the medium-term corporate plan. However, the reduction of interest-bearing debt, which is an important part of the medium-term corporate plan, will be accelerated.

Specifically, the plan calls for consolidated interest-bearing debt (including lease obligations), which was \1,600 billion at the end of fiscal 1999 and \1,500 billion at the end of fiscal 2000, to be reduced to \1,280 billion at the end of fiscal 2003. However, through such measures as maximizing operating cash flow, ANA expects to be able to exceed those goals and reduce interest-bearing debt to \1,100 billion by the end of fiscal 2003.

ANA is currently considering its fleet plans for fiscal 2004 and thereafter, and the Company will announce detailed information when the plans are finalized.

Changes to Personnel and Organizational Structure

Effective April 1, ANA will implement a senior vice president system, realign the responsibilities of directors, improve its organizational structure, and reassign managers. Under the leadership of a new president, Yoji Ohashi, the Company will be prepared to implement the third year of its medium-term corporate plan.

(1) As one facet of the medium-term corporate plan, a senior vice president system will be introduced from April 1. At the same time, the number of directors will be reduced. In this way, ANA will strive for rapid management decision-making and solid operational implementation. After the ordinary general meeting of shareholders, the number of directors will be reduced from the current level of 20 to 14.

(2) With the goal of maximizing the capabilities of the two divisions with primary responsibility for safety, ANA will assign overall responsibility for both flight operations and engineering & maintenance.

(3) Marketing functions, which had been distributed in a range of areas, will be integrated as headquarters functions. Thus, the Company will work to improve profitability and raise customer satisfaction by developing strategies based on market trends and customer needs.

(4) In addition, cargo and mail operations will be upgraded to division status.