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Nippon Cargo Airlines, owned by Japanese shipping line NYK, is set to report “extraordinary” losses, according to its parent.
The financial report for its third quarter, ending 31 March, will show an impariment loss of ¥15.7bn ($144m).
The parent shipping line said: “Given that air cargo market conditions remain more difficult than expected, we have reviewed the future recoverability of the non-current asset, including the airframes, spare engines and parts.
“This extraordinary loss has been incorporated into the consolidated financial results through the third quarter of the fiscal year, announced today, as well as the full-year consolidated forecast.
“Due to deterioration in the business results, in line with the [NCA] loss, provision of allowance for doubtful accounts of about ¥19.2bn for the loans made to [NCA] was recorded as an extraordinary loss in the third quarter.”
NCA’s traffic out of China declined markedly last year, taking a heavy toll on eastbound loads across the Pacific.
“Transpacific demand from Asia is way down,” Sean McWhorter, president of NCA Americas, told The Loadstar last month. “This peak season has not been a great one for us. Inbound. it’s been a struggle, because there’s not enough out of China.”
A weekly freighter route from Tokyo via Shanghai to Chicago, using fifth freedom rights and launched in October, proved disappointing, despite cutting 12 hours from the transit time from its previous routing of Shanghai via Narita to Chicago.
Mr McWhorter added that US export traffic across the Pacific had been relatively steady, and he was looking to tap into perishables flows from Latin America to Asia.
NCA, which is now providing the majority of Flexport’s air capacity, is adding Taipei to its network this year, where demand has grown.
No further details on the loss were available.