Discussion Between the Chairman of the Board and an Outside Director

The latest ANA Group Corporate Strategy calls for investing in safety and human resources in addition to medium- and long-term strategy. We had a discussion with outside director Ado Yamamoto about critical perspectives of the ANA Group as an airline business. Mr. Yamamoto offered insights based on his extensive experience in transport industry management.

Safety

Ito:Financial performance improved steadily throughout fiscal 2017, supported by strong demand. I believe this result was not only due to high levels of quality and service, but also due to high levels of safety. The ANA Group Safety Principles state that safety is our promise to the public and is the foundation of our business. As a person involved in transport industry leadership for many years, what is your opinion of the ANA Group status related to safety? What do you see as issues to be addressed?

Yamamoto:The ANA Group has worked out an ambitious growth strategy, while dealing with a changing environment at the same time. This strategy has translated into steady results over time.In the transport industry, safety is the primary management concern before all others. The Fiscal 2018-2022 ANA Group Corporate Strategy identifies safety as an issue of the highest priority. The Group has gone to great lengths to address and instill safety.
The front lines of the airline industry extend across the globe.Compared to the rail business, airlines make enormous investments in safety and systems to back up the human element. Even if systems and organizations are flawless, those ultimately responsible for securing safety are the people. The same goes for the rail industry.I frequently visit and observe ANA front-line operations. I feel that discussions there are mutually respectful and fair, not dictated by the hierarchical relationships one might expect between a captain and a first officer, for example. A workplace encouraging abundant communication and an open atmosphere is important for ensuring safety.

A workplace encouraging abundant communication and an open atmosphere is important for ensuring safety.-Yamamoto

Ito:The ANA Group is very supportive of assertiveness activities.Before we begin work, we make a statement that we will assert ourselves, which makes it easier for subordinates to point out an error on the part of a superior. But, we must ingrain this movement deeper into our organization. We must pay more respect to those divisions that work so hard on the front lines of our businesses.
We truly value the activities taking place at the ANA Group Safety Education Center. The more than 40,000 group employees receive training to ensure lessons of the past are never forgotten.By experiencing the process through which human error occurs, we raise our awareness of safety. As we go through our day-to-day tasks, persistent efforts are extremely important in preventing incidents that may threaten safety.

Yamamoto:When I visited the aircraft maintenance hangar,I saw how our young employees answered questions firmly, carrying themselves with confidence and pride as technical professionals.Our board of directors discuss things overheard at the front lines of our business. I am confident that employee comments are shared at the management level.

Human Resources

Ito:Investing in safety is obviously important. Investing in people is also important, as people represent the foundation of our ability to compete in quality and service. As we continue to grow, we hire and train large numbers of employees. With so many young employees on the front lines, sometimes we field complaints from customers about lacking service. In fiscal 2018,we intend to go back to basics, pursuing foundational management matters that include quality and service.

Yamamoto:Raising customer satisfaction with a rapidly growing international business is not always an easy task. One key to meeting customer expectations is investing in groupwide employee training. In this context, I think opening a new training center is a very good idea. We are faced with providing human resources training on a global basis, hiring staff and shoring up our Japanese national support structure.

Ito:To provide better service, it is important that every employee understand and support the thoughts of top management for a more customer-oriented mindset. I hope the new training center will be a place for employees from various departments to come together, sharing ideas and perspectives to improve service quality, including punctuality and comfort. We will raise the standard of our comprehensive group capabilities, living up to our motto and shared value, "Trustworthy, Heartwarming, Energetic!"

Yamamoto:An indispensable part of future global growth will be our endeavors, fostered through human resources training rooted in ANA's Way. ANA has been called a group of wandering samurai in the past, and the ANA Group does have a reputation for taking on bold challenges. Now, as our organization has grown to a tremendous size and our financial performance has stabilized, we must hand down the vitality and ambition that make up our DNA to the next generation.

We must hand down the vitality and ambition that make up our DNA to the next generation.-Yamamoto

Ito:We should never forget the words of our founder, who said, "Impoverished today, hopeful tomorrow." The ANA Group has overcome difficult times, taking on any number of daunting challenges. During my tenure as president, we experienced the Lehman Shock. Today, one wrong step could spell serious trouble for a company in the airlines industry. That we were able to recover against adversity owed much to the relationships of trust we developed with our customers. We must keep in mind that the basics consist of daily quality improvements. As we're facing the issue of hiring and recruiting, we need to be more productive by embracing efficient and effective practices.

Strengthening Board of Director Functions

Ito:As we move forward in these initiatives, it is important that we improve the functions of the board of directors for stronger governance. In my experience, our discussions are much more active and meaningful than ever. We are receiving very important opinions. Do you have any comments regarding improvements or issues?

Yamamoto:First, I want to commend the Group for revising the authority of the Group Management Committee and holding active discussions that include opinions from specialists in each division. We are receiving better agenda documents prior to the meetings, which let us follow and participate in the deliberations more easily.

Ito:There is probably room for improvement in putting together our agenda. For example, discussions about group corporate strategy could include more information about the state of the industry, so all participants begin from a common understanding. While time is a factor, we want to provide more opportunities to observe the situation at the front lines of our business and listen to the true opinions of employees.

We want to provide more opportunities to observe the situation at the front lines of our business and listen to the true opinions of employees.-Ito