Japan Airlines Corp said it would start talks to merge its ailing cargo business with a unit of shipping firm Nippon Yusen as the airline looks to return to profit with the help of State-backed funds.
JAL, Asia’s largest airline by revenue, secured a deal in June to borrow Y100 billion ($1.1 billion) from two state backed lenders and three commercial banks and is now destructing under state supervision.
CURTAILING FLIGHTS
The company has already announced plans to cut domestic and international flights but is under pressure to come up with more drastic cost-saving measures as it heads for its second-straight annual loss in the year to March 2010.
JAL and Nippon Yusen said they would begin talks towards a potential merger of their cargo business in April, biuldig on a code-sharing alliance between the two firms under which they mutually use each other’s networks to sell and transport cargo.
“The air cargo business has been one of the hardest hit industries by the recession from last year,” MR Hitoshi Oshika, corporate officer of Nippon Yuse, said at the briefing.
Merging businesses: A worker walks near a Japan Airlines cargo jet at Narita International Airport in Tokyo, on Friday, Japan Airlines, Asia’s largest airline by sales, and Nippon Yusen K.K., started a code-sharing agreement in March, and may merge their air-cargo business in April
$3 BILLION SALES
The combination of JAL’s cargo business with the Nippon Yusen unit, Nippon Cargo Airlines Co, would create a company with combined sales of about $3 billion and in control of roughly 30 per cent of Japan’s international air cargo market, JAL said.
Its global competitors would include FedEx Corp and UPS.”JAL reported an Y50.9 billion operating loss for the year to March 2009 and has forecast a Y59 billion loss for the current year, as it struggles to control costs and suffers to control costs and suffers along with other airlines due to a slump in global travel.
Nippon Yusen has been looking for ways to turn around its air cargo business, which booked an operating loss of 17.9 billion yen in the year to March 2009 on sales of 79.4 billion yen.
The shipping firm has implemented cost-cutting measures and replaced its fleet with more fuel –efficient cargo planes.
|
|
