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Japan Airlines and Japan Air System plan to merge

A Japan Air System aircraft, top, passes a pair of Japan Airlines at Tokyo's Haneda Airport yesterday. The companies plan to merge next year, a business daily said. PHOTO: AFP

Japan's first and third-largest airlines are close to a merger that will create the world's number-six carrier in terms of annual passenger miles flown, media said yesterday.

Japan Airlines Inc, the world's eighth-biggest airline, and regional carrier Japan Air System Inc plan to merge their operations under a holding company in the fall of 2002, the Nihon Keizai financial daily reported, without citing sources. They hope to finalize the deal by the end of this year and have it approved by shareholders next June, it said.

Other Japanese news media carried similar reports Sunday.

The merger would be the first realignment in the Japanese airline industry in 30 years and give the new company 48 percent of the domestic market at a time that prospects for a recovery in international travel remain uncertain, the newspaper said.

Japan Airlines is the nation's leading international carrier but its 25 percent share of the domestic market is only half that of Japan's number-two airline, All Nippon Airways Co.

Japan Air System, a regional carrier which serves other destinations in Asia as well as the country's main domestic routes, was itself formed by a merger in 1971. It has been hard hit by Japan's decade-long economic slump.

Japan Airlines spokesman Geoffrey Tudor said yesterday he could not confirm whether the two companies were discussing a merger. Japan Air System spokesman Kyosuke Takeda said he was still looking into the media reports and could not comment immediately.
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