All Nippon Airways Strategy and Outlook for FY2007

April 2007
ANA 2007

Introduction
ANA Groups Corporate Philosophy ANA Group Safety Principles Safety is our promise to the public and is the foundation of our business. Safety is assured by an integrated management system and
mutual respect

a On foundation of security and reliability, the ANA Group will: Create attractive surroundings for customers
Continue to be a familiar presence Offer dreams and experiences to people around the world

Our Commitments

Safety is enhanced through individual performance and dedication

ANA Groups Corporate Vision

Being the leader in Asia means that we will become With passenger and cargo transportation in Japan, With passenger and cargo transportation in Japan, elsewhere in Asia, and around the world as its core elsewhere in Asia, and around the world as its core field of business, the ANA Group aims to be one of field of business, the ANA Group aims to be one of the leading corporate groups in Asia. the leading corporate groups in Asia. Number one in quality Number one in quality Number one in customer satisfaction Number one in customer satisfaction Number one in value creation Number one in value creation

ANA 2007

Introduction

Safety is our promise to the public and is the foundation of our business. Safety is assured by an integrated management system and mutual respect Safety is enhanced through individual performance and dedication

Establish an Establish an organizational organizational structure ensuring structure ensuring that all Group that all Group companies companies maintain the same maintain the same level of safety level of safety

Strengthen the organizational function of Strengthen the organizational function of Group safety promotion Group safety promotion Set up ANA Group advisory panels with Set up ANA Group advisory panels with external experts periodically external experts periodically (From Aug to Feb2007) (From Aug to Feb2007)

Enhance the Enhance the corporate culture corporate culture prioritizing safety prioritizing safety

Educate personnel in safety culture Educate personnel in safety culture Organized safety promotion seminars Organized safety promotion seminars and forums and forums Set up ASEC (ANA Group Safety Set up ASEC (ANA Group Safety Education Center) (Feb 2007) Education Center) (Feb 2007)

ASECANA Safety Education Center

Build aarobust Build robust system enduring the system enduring the safety risk exposure safety risk exposure

Revised safety management manual Revised safety management manual Set up SMS (Safety Management Set up SMS (Safety Management System) System) Introduced LOSA (Aug2007) Introduced LOSA (Aug2007)

ANA 2007

Contents

I. Review of results for FY2006 II. Important issues for FY2007 III. Primary measures for FY2007 - International passenger operation - Cargo operation - Domestic passenger operation IV. Building robust business structure V. Summary

5 6 8

11 13

Forward-Looking Statements. This material contains statements based on ANAs current plans, estimates, strategies and beliefs; all statements that are not statements of historical fact are forward-looking statements. These statements represent the judgments and hypotheses of the Companys managers based on currently available information. Air transportation, the Companys core business, involves governmentmandated costs that are beyond the Companys control, such as airport utilization fees and fuel taxes. In additions, conditions in the markets served by the Company are subject to significant fluctuations. It is possible that these conditions will change dramatically due to a number of factors, such as trends in technologies, demand, prices and economic environments; foreign exchange rate fluctuations; and others. Due to these risks and uncertainties, it is possible that the Companys future performance will differ significantly from the contents of this material. Accordingly, there is no assurance that the forward-looking statements in this material will prove to be accurate.

ANA 2007

I. Review of Results for FY2006

Record operating income Record operating income exceeding original plans exceeding original plans
ANA op. income and net income
(billion

Summary of FY2006 results Summary of FY2006 results

Took appropriate response to soaring oil price Took appropriate response to soaring oil price Acquired high yield customers Acquired high yield customers Domestic market: Individ. & business travelers Domestic market: Individ. & business travelers Super Seat Premium Super Seat Premium Intl market: strong business demand Intl market: strong business demand Bolstered financial condition Bolstered financial condition FY2006 Change +120.8 +3.3 -0.3 +5.9 +0.3 -0.6
5

100 90 80 70 60 50 40 30 20 10 0 FY04
ANA 2007

921
Op. Income Net Income

326

Revenue (billion) Op. income (billion) Op. income Margin Net income (billion) ROA

1,489.6 92.1 6.2 32.6 6.0 2.8

FY05

FY06

D/E ratio (times) *

* Debts includes off balance lease obligation

II. Important Issues for FY2007

Advance mid-term plan following achievement of FY06 Advance mid-term plan following achievement of FY06
< ANA 06-09 Mid-term Corporate Strategy >

FY2006

FY2007
FY2009 FY2009 No.1 Airline No.1 Airline in Asia in Asia
Quality Quality Customer Customer Satisfaction Satisfaction Value Creation Value Creation

Establish safety to the highest standard in the world Establish safety to the highest standard in the world Improve fundamental quality of operations Improve fundamental quality of operations Focus on the growth areas of international passenger and cargo Focus on the growth areas of international passenger and cargo
International passengers Cargo China routes, India routes Fundamental network

Strengthen business structure to deal with the changing environment Strengthen business structure to deal with the changing environment
Counteract soaring high oil price Fleet strategy Supply demand matching Cost structure reform

Op. Income Op. Income 100billion 100 billion

Improve financial condition Improve financial condition

ANA 2007

Sale of hotel business

Macro environment: continuation of high oil price, intensifying competition

6

II. Important Issues for FY2007

Outlook for FY07: right direction to achieve 100 billion in FY09 Outlook for FY07: right direction to achieve 100 billion in FY09
Outlook for 2007 FY07 Revenues (billion) Op. income (billion) Op. income Margin Net income (billion) ROA Dividend per share () Dubai crude oil ($/BBL) Kerosene $/BBL) Exchange rate /$) 1,490 79 5.3 64 5.2 5.0 63 83 115
0 FY07E
ANA 2007
(bn)

ANA op. income, net income, and ROA

(

120

7 6 5

Change +0.4 -13.1 -0.9 +31.4

60 80 100

Op. Income Net Income ROA

4 3 40 2 20 1 0 FY08E FY09E
7

-0.8 +2.0

FY08-09 figures taken from original mid-term corporate plan

III. Primary Measures for FY2007

International passenger operation: continue International passenger operation: continue acquisition of high yield business demand acquisition of high yield business demand
Yield improved by marketing activities

FY2007 year on year FY2007 year on year ASK 108.5% Revenues 105.3 ASK 108.5% Revenues 105.3

Expand high yield routes and supply demand matching Network Schedule
Narita Guangzhou (May 07) Narita Bombay (Sep 07)
B737-700ERBusiness Jet, 36 business seats

Breakdown of yield improvement (vs. FY03)

FSC Price Hike

60 50 40 30 20 10 0 FY04
ANA 2007
Marketing Activities

Haneda Hongqiao (when available) Charter flights to China etc.

Supply Demand Matching

20 Anniversary

Narita Beijing Up-gauging B767B777) Nagoya - Shanghai Down-gauging (B767A320) Narita Xiamen Down-gauging B767A320)

FY05

FY06

FY07E

Introduce B777-300ER on London & San Francisco 8

III. Primary Measures for FY2007

Cargo operation: build fundamental Cargo operation: build fundamental revenue platform by expanding network revenue platform by expanding network
Revenue improved by increasing freighter fleet
(bn)

FY2007 Freighter year on year FY2007 Freighter year on year ATK157.2% Revenues 120.7 ATK157.2% Revenues 120.7 Weekday operation on main routes

Revenues of international cargo

Freighter Belly

80 70 60 50 40 30 20 10 0 FY05 FY06 FY07E

Bangkok

Seoul Centrair Shanghai Kansai Hong Kong

Taipei

Dalian Tianjin

Narita N

c eri m .A

# of freighters 3
ANA 2007

Lease from ABX

Weekday freighter operation

Other days

III. Primary Measures for FY2007

Domestic passenger operation: greater Domestic passenger operation: greater competitive strength raises unit price competitive strength raises unit price
Unit revenue improved by increased frequency
(thousand

FY2007 year on year FY2007 year on year ASK 98.8% Revenues 105.0 ASK 98.8% Revenues 105.0 Differentiating products assured better profitability

ASK and unit revenue (FY03=100)

130 125 120 115 110 105 100 95 90 85 80 2003
ANA 2007 Restructured Network Price Hike

No. of SSP passengers and ratio of revenues

Passengers Revenue Ratio
12 month moving average

140 120 100 80

5.0%

ASK

U/R

4.5%

4.0% 60 40 20
0405 1005 0406 1006

3.5%

2004

2005

2006

2007E

3.0%
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IV. Building Robust Business Structure

Sale of hotel business: strengthens competitiveness in core business // Sale of hotel business: strengthens competitiveness in core business accelerates improvement of financial conditions accelerates improvement of financial conditions
(bn

Financial targets
Interest Bearing Debt

1,400
D/ERatio

10 9 8 7 6

Cash flow FY2007 CF from operating activities

including lease payments

(bn

FY07 +183

1,300

1,200

Sale of hotel business

(Gross gain

280 -355 -82 +101

1,100

1,000

Target for 4 original midterm plan 3

2 1

Capital Expenditure

CF from investing activities FCF

900

800 FY03 FY04 FY05 FY06 FY07E FY09E

*Interest Bearing Debts and D/E ratio include off balance lease obligations

for investment in aircraft and to for investment in aircraft and to improve financial condition improve financial condition
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*Shareholders Equity = CapitalAdditional Paid in CapitalRetained Earnings

ANA 2007

IV. Building Robust Business Structure

Fleet strategy: accelerate switch-over to wide-body Fleet strategy: accelerate switch-over to wide-body aircraft with higher fuel efficiency aircraft with higher fuel efficiency
Fleet composition of wide-body aircraft

100% 80% 60% 40% 20% 0%

Retirement Retirement in FY05 in FY05

Mid body aircraft: Mid body aircraft: Introduce Boeing 787 (FY08) Introduce Boeing 787 (FY08) Narrow body aircraft: Narrow body aircraft: Streamline to Boeing 737 Series Streamline to Boeing 737 Series Boeing 777-300ER 4 additional Boeing 777-300ER 4 additional
17 aircrafts 17 aircrafts

Advance sale of Boeing 747-400 Advance sale of Boeing 747-400

(5 aircraft in FY07, 22in FY08, 22in FY09) (5 aircraft in FY07, in FY08, in FY09)

FY03
ANA 2007

FY06

FY09

FY11

23 at the end of FY06 23 at the end of FY06 14 at the end of FY09 14 at the end of FY09
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B747-100,200 B747-400 B777-300 B777-200

V. Summary
No.1 Airline in Asia and looking ahead No.1 Airline in Asia and looking ahead
2006 Airport Requirements Dom. Intl
Kansai 2nd runway

2007

2008

Shizuoka

2009

2010 Haneda expansion International routes Narita runway extension

New Mid-term corporate Strategy

06-09 Mid-term Corporate Strategy
Op. Income 79 billion Net Income 64 billion

No.1 Airline in Asia

Quality Customer Satisfaction Value Creation

Op. Income 100 billion

ANA 2007

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