Japan Airlines Corp (JAL), Asia’s largest airline by sales, and Nippon Yusen KK are in talks to merge their air cargo operations to reduce costs as demand for freight delivery plunges.
The two Tokyo-based companies, which started a code-sharing agreement in March, aim to complete the deal by April 1, JAL said in a joint statement yesterday.
The airline, which saw a 20 percent drop in global cargo in June, forecasts a second year of losses and aims to cut ¥195 billion (US$2.1 billion) in costs as the global recession hit its passenger load.
“It’s a step in the right direction,” said Osuke Itazaki, an analyst in Tokyo at Credit Suisse Group AG. “Japan Air still needs to review its international network and aircraft fleet.”
By merging its cargo division with Nippon Yusen’s Nippon Cargo Airlines Co unit, JAL may save ¥20 billion, the Nikkei Shimbun reported earlier yesterday.
The newspaper said Yamato Holdings Co, Japan’s biggest parcel-delivery service company, would take a stake in a venture between JAL and Nippon Cargo.
“We want to make a company that is capable of delivering firm profits,” Kunio Hirata, a senior vice president in charge of cargo at the airlines, told reporters in Tokyo. “We don’t have any concrete figures on cost savings.”
The carrier closed unchanged at ¥168 as of the close of trading on the Tokyo Stock Exchange. Nippon Yusen, Japan’s largest shipping line by sales, also closed unchanged, at ¥399.
Japan’s transport ministry has set up a panel to help restructure JAL. The group, which includes legal and academic experts, held its first meeting on Thursday. The carrier in June won a loan of ¥100 billion from the state-owned Development Bank of Japan and other Japanese lenders after announcing cost-reduction plans.
The transport ministry’s panel will meet again in the middle of next month, before JAL’s mid-term business plan is released later that month, Yasuhiro Shinohara, an official at Japan’s transport ministry said on Thursday.
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